Health care consumerism gets its 1st test

Amid the backdrop of several new hospital construction projects, the notion of consumer-driven health care may get its first test in southeastern Wisconsin this year.
Health care costs in the Milwaukee area have been higher than most similar-sized metropolitan areas in the nation.
Critics say expensive hospital construction projects have contributed to those high health care costs, but hospital officials contend that bricks and mortar projects actually comprise a relatively small portion of health care costs.
Regardless, businesses are passing on greater portions of their health care costs to employees, and hospital executives say they are trying to respond to pressures to hold down costs.
"I think there will be continued focus on cost for this community," said William Petasnick, president and chief executive officer of Froedtert Memorial Lutheran Hospital and Community Health.. "There will be an ongoing dialogue between the health care providers and the business community on cost and value."
This year will be the beginning of a major test for consumerism as a way to reduce health care costs.
"There has been in this community concern about health care costs," said Paul Dell Uomo, president and CEO of Covenant Healthcare in Milwaukee. "What’s the response to that? Companies are changing their health plans, increasing deductibles and co-payments for their employees. This is what’s called consumer-driven health care. The consumer is more responsible for paying for a portion of their health care. I remember when employees paid nothing. Now, it’s a different story. It’s forcing consumers to be educated about health care, that’s good. I think from the health care system, you’ll see more emphasis on service, quality and price."
Advocates of making health care a more consumer-driven marketplace say employees should pay higher co-payments and deductibles to receive care, giving them a bigger stake in the costs of their care and motivating them to utilize providers that provide good care at lower costs.
"I think this year, we’re going to start backing into meaningful discussion on health care reform," Petasnick said. "Is the competitive market an effective way for dealing with health care costs? I think it’s highly questionable."
"Our view of the world is this is the beginning of the final test of the market," said Ford Titus, CEO of ProHealth Care in Waukesha. "Markets have not worked in health care. There certainly is, with the Bush administration, a continuing belief that markets can work. We’re skeptical, but we’re doing everything we can to help our local market work."
The Bush administration supports market-based approaches to drive down health care costs for businesses and their employees.
In 2004, President George W. Bush signed into law the creation of health savings accounts (HSAs), which allow workers to get a low premium and high deductible health insurance plan and use tax-free savings to pay for their health expenses.
Bush also wants to create association health plans, in which individuals, families and small employers can band together in pools and use their collective buying power to obtain health care at lower costs.
"The story this year will be as people move toward HSAs, do they work?" Petasnick said. "I think it is part of the puzzle. It’s not the whole answer."
"If (health care consumerism) does not work by about the year 2010, the pressure for a political solution will be great on whoever is in office," Titus said. "The pressure for a solution to the health care crisis will be too much for anyone to bear."
Titus says four things need to happen in employer-provided health care for the free market to reduce health care costs. He says employers must: provide health care price and quality information to their employees; design health insurance plans that provide incentives for employees to choose lower-cost health care providers that still provide high quality care; provide incentives for employees to have healthy lifestyle behaviors; and force employees to pick up a greater share of the cost of receiving health care by making them pay higher co-payments and deductibles.
Many Milwaukee area businesses have already changed their health plans to require their employees to pay higher deductibles and co-payments when receiving health care. As a result, some health care providers say they are noticing patient health care consumption patterns change.
"Visits to primary care physicians’ offices are leveling off," Titus said. "For the last several years, there used to be high single-digit (percentage) growth of inpatient and outpatient visits. In 2004, our inpatient visits were up by only 3 percent, and our increase in outpatient visits was zero (percent)."
Leo Brideau, president and chief executive officer of Columbia St. Mary’s.Hospital in Milwaukee, said patients, many who now have to pay higher co-payments and deductibles when receiving health care, are taking more interest in the costs of their care.
"Patients come to us and express an interest of, ‘What is this going to cost?’" Brideau said. "There is an economic awareness. We’re getting it much more often. A patient might say, ‘I’m having a hip replaced, and I need to know what it’s going to cost. I’m shopping around.’ That was unheard of before."
However, for the time being, the shift of employers dropping coverage or forcing employees to pay more for health care is having a curious side-effect that may be defeating the purpose. Because health care costs are so high, and employees are shouldering more of the cost burden, more people are unable to pay their bills for care.
That results in area hospitals taking on more charity care and bad debt. Hospitals traditionally have tried to recover some of those costs by passing them along to patients who were insured.
With market pressures to cut costs, that approach may no longer be a viable option, leaving hospitals in a cash conundrum.
"The issue becomes a burden for us," Dell Uomo said. "We’re a not for-profit organization. I don’t believe the burden of the indigent can rest on the shoulders of the health care system."
The combination of lower increases in patient visits, inadequate government funding and an increased number of patients unable to pay for health care provides a challenge to health care providers.
This year, Covenant Healthcare has budgeted $30 million in cost reductions in response to expected losses.
"Typically what happened in the past was to deal with revenue decreases (by increasing) raised prices," said Dell Uomo said. "You can’t do that anymore. There is still pressure to provide high quality of care and excellent service."
Health systems will also have to improve their collection systems, Dell Uomo said.
"We have to be more efficient at what we do," Brideau said. "That is not a bad thing."
Officials from Aurora Health Care in Milwaukee were not available to comment for this report.
No slowdown in new hospital projects
By Andrew Weiland, of SBT
Aurora Health Care is expected to finally find out early this year if it will be allowed to build its proposed $85 million hospital in the Town of Summit.
The Town Board has unanimously approved the plans. The Waukesha County Board is expected to vote on the project this year, perhaps in April.
The proposed 88-bed, 360,000-square-foot hospital and 100,000-square-foot clinic would be built on 53 acres at the southeast corner of Interstate 94 and Highway 67 in the Pabst Farms development.
The medical complex would create more than 400 permanent new jobs, according to Aurora.
The proposed hospital has been criticized by some, including some members of the business community, who say it is not needed and would result in higher health care costs in Waukesha County
The Waukesha County Chamber of Commerce’s board of directors took an official stand against the proposed hospital.
Aurora officials say they should be allowed to build the hospital and the free market should determine if it is needed. Western Waukesha County is a growing area with few health care options, Aurora officials say.
However, critics, including Aurora competitor ProHealth Care of Waukesha, say that increased competition in health care, unlike other aspects of the economy, actually results in higher prices.
"We remain concerned about the proposal to build an entirely duplicative and unnecessary hospital in western Waukesha County," said ProHealth Care chief executive officer Ford Titus. "It will do nothing but drive up costs."
Aurora has pledged to hold price increases for the new hospital below the consumer price index and to set prices at levels consistent with other hospital rates in Waukesha County.
The Waukesha County proposal is just one of many new health care construction projects on tap in southeastern Wisconsin.
Columbia St. Mary’s plans to begin construction this spring on two major hospital projects. In May or June, a $100 million project will begin to expand Columbia St. Mary’s Ozaukee Campus in Mequon. The project will add about 75 beds to the campus, which now has about 105 beds. The expansion is scheduled for completion in 2007.
Columbia St. Mary’s also plans to begin construction this year on a new 350-bed hospital that will consolidate the Columbia and St. Mary’s hospitals into one on Milwaukee’s east side.
The Columbia hospital building will be sold, and part of St. Mary’s hospital will be renovated to be used as part of the new hospital. The cost and size of the new hospital, which will open in 2009, will be revealed when more details about the project are announced publicly later this year, said Leo Brideau, president and chief executive officer of Columbia St. Mary’s.
"We’ve got to do something," Brideau said. "It makes no sense to have two hospitals a mile-and-a-half from each other."
Froedtert Hospital this spring plans to begin construction on a $120 million expansion project, which will include a new 173,000-square-foot cancer center; 67,000 square feet of new clinical space for cardiovascular and neurosciences outpatients, expanding the emergency center and additional office space; and renovation of 8,000 square feet in the emergency department. The project includes 500 parking spaces underneath the cancer center and a parking garage attached to the cancer center by a skywalk. The size of the parking garage has not been determined yet, said Froedtert spokesperson Kathy Sieja. The project will be completed in 2007.
SynergyHealth Inc. is building a new hospital for St. Joseph’s Community Hospital at Highway 45 and Pleasant Valley Road. The hospital will move to the new 173,000-square-foot facility this year from West Bend.
Two miles south of new St. Joseph’s site, Aurora plans to build a new clinic at Highway 60 and Highway 45 in Jackson to replace another clinic on the east side of the village.
ProHealth Care recently opened a new 150,000-square-foot ambulatory center at Highway 83 and I-43. The new facility replaces the old Mukwonago clinic. Its features include hospital level outpatient services, a cancer center and a women’s health center.
Children’s Hospital of Wisconsin is building a new, $97 million, 270,000-square-foot building west of its current hospital for offices and research. The project will be completed this year.
In addition, Children’s Hospital and the Medical College of Wisconsin are planning to build a $132 million, 300,000-square-foot research facility.
January 21, 2005, Small Business Times, Milwaukee, WI