Health Management Associates and Soaking the Insured

The New York Times online reported today on the legal troubles of a large hospital chain that is now facing Justice Department investigation as well as numerous private lawsuits.  The article can be found at:  http://www.nytimes.com/2014/01/24/business/hospital-chain-said-to-scheme-to-inflate-bills.html?action=click&contentCollection=Business%20Day&region=Footer&module=MoreInSection&pgtype=Blogs

The for profit hospital chain is Health Management Associates, whose shareholders have just approved its acquisition by Community Health Systems.  This merger will create the country’s second largest hospital chain (by revenue), including over 200 hospitals.

“Every day the scorecards went up, where they could be seen by all of the hospital’s emergency room doctors.  Physicians hitting the target to admit at least half of the patients over 65 years old who entered the emergency department were color-coded green. The names of doctors who were close were yellow. Failing physicians were red.”

Techniques like this ensured many healthy hospital patients who created lucrative bills for Medicare and Medicaid, as well as private insurers.  Uninsured patients were naturally given short service, as their bills usually went unpaid.  This is just one example of the overtreatment epidemic that affects American medicine.  Patients who are well-insured are “soaked” with unnecessary tests and treatments, while uninsured patients are left to die.

This overtreatment/undertreatment combination has led to medical costs that are double those of other developed countries, all of whom have national health care systems with universal coverage.  At the same time, life expectancies are shorter than those of other developed countries, and infant mortality rates are higher.  This problem will not be solved until for profit (and similar “not for profit” ) systems are either highly regulated or abolished entirely.

In this case, the soaking was the primary responsibility of the former head of HMA, Gary D. Newsome, who left last year after four years of predatory management.  Numerous employees who complained about his practices were fired and have sued the hospital chain.  Here is his photograph, from the Times article.  Doesn’t he resemble George W. Bush?