This is a guest blog from a MD friend

Hospital reimbursement is a mysterious beast. With Medicaid, Medicare and BCBS, the hospital fills out a report that details their expenses. These reimbursing entities then evaluate cost for the hospitals and arrive at a per diem rate for patients. That means that hospitals that spend the least will be reimbursed the least.

With a non-profit hospital, this is particularly important. For profit hospitals have investors that want to make a profit. That means they want expenses to be as low as possible so that they make more money. This usually translates to more efficient and better care. Mistakes are very costly. In the not-for-profit hospitals, the board is made up of friends of the CEO. In the case of local non-profit entities this includes doctor’s wives, vendors and socially prominent individuals who not only have limited business and or healthcare experience, but also have an ulterior motive. While the investor’s motive is to make money, the vendor’s motive is to agree with the CEO so that they can continue to sell their product to the hospital. The Doctors wife wants husband to get what he wants disregarding the benefit to the hospital. When it comes to critically evaluating proposals by the CEO, the board has a vested interest in going along. Look at the costs and reimbursements for hospitals in Mobile and it is evident that costs are highest in the non-profit hospitals. CEO’s salaries are generally higher in non-profits. Inefficiency is rewarded with higher reimbursement. Maybe we need a level playing field and need to make all hospitals for profit. I’d expect at least a 20% decrease in hospital charges. Remember, hospital charges are the lion’s share of healthcare expenses, not doctors or pharmaceutical companies.

Bea N. Counter