| |
| home about contact links |
| |
December 18, 2007Congress Gets Tough on CompetitionThe Australian blog Socialized Medicine has a great post today explaining why Congress is wrong to consider extending a moratorium on speciality hospitals. In the process, he also cites Manhattan Institute senior fellow and Harvard Business School professor Regina Herzlinger: Specialty hospitals provide the only real competition to traditional hospitals, and they offer a real opportunity to improve quality and cost control in the highly protective health care sector. However, Congress is once again considering measures to block or hinder specialty hospitals from effectively competing with traditional hospitals. During the current session of Congress, the House of Representatives has already included and enacted such restrictions in the Children's Health and Medicare Protection Act of 2007 (H.R. 3162). There is discussion of reviving these kinds of restrictions in draft Medicare legislation. Under Section 651 of H.R. 3162, Congress would impose a permanent ban on physician referrals of Medicare patients to new specialty hospitals in which they have an ownership interest; require existing hospitals to limit physician ownership to 40 percent; and limit individual physician ownership to 2 percent. It would also prohibit the addition of new inpatient beds and operating rooms in existing specialty hospitals that get Medicare reimbursement. This policy would essentially kill any new specialty hospitals, including those under construction. Moreover, it would fundamentally change the way that existing specialty hospitals are managed. This legislation, which is strongly supported by traditional hospitals, is the most recent in a series of attempts to terminate the growth of specialty hospitals. As Professor Regina Herzlinger, Nancy McPherson Professor of Business Administration at the Harvard Business School, has observed, this congressional attempt to suppress competition was not advanced in the interest of patient care: "... no one alleged that the specialty hospitals were bad for the consumers' health. No, instead, the general hospitals alleged that the specialty hospitals were bad for their health." This debate is a microcosm of how government regulation actually invites capture by the regulated industry; in the name of "protecting" traditional hospitals, Congress blocks access to the very kind of competition that would drive improvements in patient care and cost containment that would help make Medicare sustainable in the long run. It is certainly true that there are disparities in how Medicare reimburses different diagnostic categories, but the solution is to reform Medicare's payment structure, not grant traditional hospitals a de jure monopoly on medical services. For more how to encourage innovation in health care, check out this op-ed from Professor Herzlinger.
Posted by Paul Howard at December 18, 2007 12:06 PM CommentsPost a comment |
|
 | ||
| home spotlight commentary research events news about contact links archives | ||
