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Why It Matters to Have Private Health Coverage

I should not be astonished, but I am.

In 1910, Dr. William J. Mayo wrote his view on making patients a central reason for his organization to exist: “The best interest of the patient is the only interest to be considered, and in order that the sick may have the benefit of advancing knowledge, union of forces is necessary.”

But 107 years later, the healthcare landscape has changed, running opposite to Dr. Mayo’s credo.

A March 15 article in the Star Tribune revealed a healthcare system truth that some have suspected for years – that it’s a tier-system of care dependent on the type of health insurance card you carry in your wallet or purse. If you are fortunate to have private insurance coverage through your employer or have personally purchased it through a commercial insurance company, you should feel somewhat privileged. However, if you have Medicaid or Medicare coverage, please step to the back of the line.

Dr. John Noseworthy, CEO at the famed Mayo Clinic, was videotaped speaking to his staff last fall about giving preference to patients with private insurance over lower-paying public coverage (e.g. Medicaid and Medicare). “We’re asking…if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so…we can be financially strong at the end of the year to continue to advance, advance our mission…”.

It is important to note that, regardless of payer source, Mayo will always take patients when they’re unable to find medical expertise elsewhere. However, when given two patients who have equivalent medical conditions, the Mayo health system will “prioritize” the patient with private insurance – private plans pay Mayo (and all other providers) more than public coverages. Noseworthy continued, “If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on…so we’re looking for a really mild or modest change of a couple percentage points to shift that balance.”

Hospitals are not allowed to discriminate against patients seeking care in the emergency room. Outside the ER walls, however, providers can choose to accept (or decline) Medicaid and Medicare patients. Mayo recently indicated to Modern Healthcare that Medicare and Medicaid patients account for half of their services, but with more baby boomers becoming eligible for Medicare, coupled with Medicaid expansion, Mayo is looking to have higher-paying private insurance offset the shortfalls received from public health plans.

The ‘dirty little secret’ of establishing a pecking order of patients, based on payment sources, has not been widely known. In that sense, kudos to Mayo for their honesty, as it appears they are not attempting to sweep this fact under the rug. Yet, the Mayo acknowledgement that commercially-insured patients would get preferential consideration in certain situations should raise questions for those of us who are covered by private payers.

If the provider community establishes a pecking order between public and private payers, could special consideration also be given AMONG private payers? Think about it. If margins are so thin for world-reknown providers like Mayo, why wouldn’t other medical providers seek similarly-related practices with all sources of revenue?

For example, if insurer A reimburses hospitals at a higher rate over other private insurers within that particular market, would insurer A patients receive preferential consideration, much like what Mayo described? If so, are you better off purchasing health coverage at a higher premium from insurer A because their reimbursement rates will guarantee preferential service compared to other insurers within that market?

This raises questions about the potential practices initiated by the provider community. Having a particular insurance card provides a ticket of entry into our healthcare system. But does it also determine the level of care we ultimately receive?

What’s in your pocket or purse? In healthcare, it just might matter a great deal.

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‘Silently Harmed’ in Iowa – Bare Essentials

Silently-Harmed-IowaThe Silently Harmed white papers recently published by nonprofit, Heartland Health Research Institute, reveal a largely unknown problem in Iowa and nationwide. It is the number of patients seriously- and fatally-harmed in hospitals due to medical errors, also known as preventable adverse events (PAEs).

In addition to the state of Iowa, Silently Harmed provides estimated ranges of PAEs for a number of critical metrics in each of Iowa’s six neighboring states: Illinois, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin. The difference between patients seriously- or fatally-harmed in each of the seven ‘Heartland’ states – as estimated in Silently Harmed – is a reflection of the number of inpatient admissions reported for each state – a metric primarily driven by state population.

Let’s review the highlights from Silently Harmed in Iowa.

Digging in-slide 1 (2)In 2012, hospitals in the United States had 34.8 million admissions, while during that same year, Iowa hospitals had about one percent of that number, or 340,000 admissions. It is important to note that Silently Harmed did not provide estimates for outpatient settings, such as doctors’ offices, nursing homes, outpatient surgeries, etc.

The annual estimated number of patients seriously- and fatally-harmed in U.S. hospitals due to PAEs is nothing short of staggering. Because PAEs go largely underreported or unreported, the national estimations vary wildly – primarily because the referenced national studies use a variety of research assumptions and methods that reach disparate conclusions that may or may not relate to each individual state. The slide below provides low- and high-end estimates for patients seriously- and fatally-harmed within U.S. hospitals.

Digging Deep Down

Seriously Harmed
From national estimates, HHRI extrapolated that as few as 64,500 patients are harmed in Iowa hospitals due to PAEs, with a high-end of 112,200 patients. The mid-range estimate of 85,000 patients are harmed in Iowa hospitals due to medical errors – enough to fill BOTH Kinnick Stadium and the Hilton Coliseum. Assuming the mid-range estimate is true, one patient is harmed every six minutes, or one in every four hospital admissions. In just one week, over 1,630 patients are harmed.

Seriously Harmed in Iowa

Fatally Harmed
Extrapolating from national estimated fatalities, annual Iowa fatalities from PAEs are 960 at the low-end, with 4,300 fatalities at the high-end. The mid-range estimate of 2,440 fatalities would mean that one fatality occurs every four hours, or one in every 139 admissions. Put another way, almost seven patients die from PAEs for every vehicle death in Iowa. For every murder in Iowa, 57 die from medical errors.

Fatally Harmed in Iowa

Social Cost of Mistakes
According to the Robert Wood Johnson Foundation, poor quality of care costs employers between $1,900 – $2,250 per employee per year, or about one-third of the single-employer premium in Iowa. The social cost of medical mistakes is massive. Social cost is determined by the “value of a statistical life,” a term used by economists. The estimated social cost for injuries due to medical mistakes can range from $909 million to $1.6 billion annually – just in Iowa. For fatally-harmed patients, the social cost ranges from $5.3 billion to almost $24 billion annually.

Social Cost of Mistakes

The estimated numbers provided in this particular post, in addition to the specifics on how these numbers were determined, are found in our free white paper, Silently Harmed: Hospital Medical Errors in Iowa.

Since the release of the Silently Harmed white papers, a number of employers have inquired about how their role must evolve to influence patient safety practices in the hospitals that serve their communities. We will address the employer role regarding patient safety issues in an upcoming blog.

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Heartland Health Research Institute
‘Pivoting’ Forward

HHRI-215For those of you who are not familiar with my past, I have spent over 30 years in the employee benefits arena, specifically concentrating on employer-sponsored health coverage. A good portion of that time, from 1995 – 2011, I owned and operated a benefits consulting organization designed to educate and assist employers in making benefits decisions based on their workplace culture (and budget). In 1999, we began our annual “Iowa Employer Benefits Study©,” which is now entering its 18th year.

Due primarily to its impact on employer-sponsored health coverage, I developed a great deal of interest in learning more about the many aspects of our healthcare ‘system,’ – the good, the bad, and, well you know, the ugly. You might say that I fell into a ‘deep well’ of curiosity and continue my descent to the endless unknown. If there is one constant artifact that I can humbly share, at least in the healthcare realm, the more I learn, it seems THE LESS I KNOW!

Healthcare is a labyrinth of human behaviors at many levels and is extremely complex at any given level. In fact, when politicians, media and others talk about ‘healthcare,’ what level are they actually addressing? Are they referring to having access to various health services? Obtaining health insurance coverage? Physically interacting with medical providers? Maybe it’s our diet, or whether we engage in physical activities, such as exercise? One word can mean different things. And, so it is with ‘healthcare.’

Regardless of how we might personally feel about the Affordable Care Act (ACA), it is here to stay. Or at least, it has forced this country to develop new ‘dialogues’ about how our healthcare ‘system’ must look and behave in the future. This dialogue, as difficult and messy as it is, will hopefully provide promising results in the years ahead. Have no doubt, it will be a slow and arduous process.

With this in mind, I have gradually pivoted into healthcare-related research. With this latest pivot, Heartland Health Research Institute (HHRI), an organization we started in 2012, has now become a non-profit organization with the vision to advance the transparency of facts through objective research. In short, HHRI’s intent is to help transform healthcare into high-value care, specifically from the patient’s perspective regarding their confidence and trust in the healthcare system today and into the future.

Over the last number of years, I have identified a need for an independent organization that will strictly function in an objective and unbiased manner and not as an advocate or opponent of any position. HHRI is organized as a public benefit 501(c)(3) corporation that seeks grant-based awards from public and private foundations to conduct research to serve the public on health-related topics. To help fulfill our vision, HHRI desires to collaborate with other organizations to coordinate our efforts.

Topics addressed by HHRI in the future may include the following:

  • Community-Focused Health Projects
  • Healthcare Quality and Safety
  • Patient Engagement & Activation
  • End-of-Life Care
  • Employment-Based Health Benefits & the Value of Coverage
  • Population-based Health and Environmental Issues
  • Attitudes toward Healthcare Reform
  • Other Tangential Issues

So what is HHRI’s newest healthcare-related project? Last week, we unveiled a family of ‘Silently Harmed’ white papers for Iowa and each of its six neighboring states along with our new HHRI website. We look forward to taking this new pivot into the vast unknown!

To stay abreast of employee benefits and other tangential issues, we invite you to subscribe to our blog.