If You Get Sick, Will You Have A Hospital?

by Richard Freeman

Printed in the American Almanac, May, 2000.

The following report is adapted from a June 18, 1999 EIR Economics Feature.

For the past 15 years, and for the past five years in particular, America's health-delivery infrastructure has been torn apart by the financier oligarchy's policies. As the worldwide financial disintegration enters a final eruptive phase, combined with existing lowered living standards and increased disease, the conditions have now been set for America's death rate to rise.

America's network of community and long-term care hospitals is being dismantled, brick by brick. At the hospitals which are still standing, services have been greatly reduced: Since 1980, the number of allowable days of inpatient care, per capita, has been cut by 50%. At many community hospitals, nurses are being fired. A large number of services that were previously provided on an inpatient basis at hospitals have been shifted to outpatient, ambulatory care, or emergency room bases; but then, emergency rooms are being closed.

Increasingly, an individual finds that even if he has the means to pay, there may not be a hospital in his vicinity to obtain medical care. This is true in both rural areas and densely populated urban areas.

And remarkably, this is happening in America, a nation which, during the late 1940s through the early 1970s, possessed one of the world's finest hospital systems.

Two policies, implemented by the London-centered financier oligarchy over the past 15 years, are responsible for this gutting of America's medical system:

• The policy of ``managed care'' now dominates the medical industry. The leading form of managed care is the health maintenance organization (HMO); also widespread, but less well-known, is the preferred provider organization (PPO). A majority of large HMOs are owned outright, or exist in the orbit of, insurance companies, such as Aetna Insurance. These HMOs apply concentration-camp accounting, siphoning and stealing profits out of the medical system at the expense of life. This is accomplished by chiselling, or reimbursing at less than the true medical cost--shaving payments for surgical operations, reducing the time allowed for hospital stays, and/or refusing to pay anything for some expensive life-saving operations. As a result, the medical providers, such as hospitals, nursing homes, and doctors, which are reimbursed by HMOs at less than the cost needed to exist, either triage their medical service or, failing that, close down.

• The effects of the Balanced Budget Act (BBA) of 1997. This additional element was superimposed upon the longer-term downward spiral by the banker-run Conservative Revolution crowd in Congress. The sponsors of the BBA were Senate Majority Leader Trent Lott (R-Miss.) and then-Speaker of the House Newt Gingrich (R-Ga.). Strong backing is also reported to have come from Vice President Al Gore.

  The BBA instituted deep budget cuts in programs that make substantial payments to hospitals: Medicare, the Federal program that provides medical assistance to the elderly and disabled; and Medicaid, the joint Federal-state medical assistance program for the poor. For the five-year period extending from fiscal year 1998 (which started Oct. 1, 1997) through fiscal year 2002, the BBA rammed through cuts in Medicare and Medicaid of $115.1 billion and $10.4 billion, respectively. For the following five fiscal years (fiscal years 2003-07), Medicare and Medicaid were axed by an additional $270.4 billion and $37.4 billion, respectively. Thus, over 10 years, the combined cuts in the funding for the two programs is to be $433.3 billion. Approximately 65% of that sum--nearly $300 billion--is money for payments by the elderly and poor, mostly to hospitals, and some to nursing homes.

Take-Down of Hospital Infrastructure

Community Hospitals

Looking at the 15 states with the highest rates of hospital shutdown in the nation (Table 1): In 1985, the United States had 5,732 operational community hospitals. By 1996, the latest year for which figures are available, the United States had only 5,134 hospitals, a loss of nearly 600 hospitals, or 10.4% of the total. In the 1985-96 interval, Massachusetts lost 21.4% of its hospitals; Texas, the nation's second-most populous state, and Michigan, the nation's eighth-most populous state, each lost 15% of their hospitals. These 15 states with the highest rate of hospital shutdown, contain 58% of the U.S. population; the hospital shutdowns occurred in the states with the highest population concentrations.

In 1985, the U.S. community hospitals possessed slightly more than 1 million beds. By 1996, they had only 862,400 hospital beds, a 13.8% loss. Six of the 15 states lost one-fifth or more of their beds.

The most extreme case of the loss of hospitals and hospital beds is the state of Massachusetts. In 1980, Massachusetts had 110 hospitals; today it has 77, a decline of 30%. Figure 1 shows the number of beds in Massachusetts. In 1980, Massachusetts community hospitals had 24,237 beds; by 1999, they had 14,599.

Table 1 shows that in 1985, the nation's community hospitals had a ratio of 4.19 beds for every 1,000 Americans; in 1996, this ratio was 3.25 beds for every 1,000 Americans. This decline of 22.4%. To get an idea of the risk this exposes the nation's population to, we can compare today's ratio of beds per 1,000 persons to the objective standard set by the Hill-Burton Act of 1946.

Hill-Burton--named after its sponsors, Sen. Lister Hill (D-Ala.) and Rep. Harold Burton (R-Oh.)--specified a survey of the nation's hospitals and a state-by-state census of hospitals and beds, on both a rural and urban basis, and it set an objective standard of between 4.5 and 5.5 of general-use hospital beds per 1,000 Americans. The act also set standards for the needed number of long-term care and psychiatric hospital beds. Because the Federal government authorized money for hospital construction, most communities brought their beds per 1,000 population ratio up to the Hill-Burton objective standards during the 1970s. But today, not one of the 15 states listed in Table 1 reaches the Hill-Burton level. Today, the national average of 3.25 hospital beds per 1,000 Americans is 28% below the lower range, and 41% below the upper range, of the Hill-Burton standard of 4.5 to 5.5 hospital beds for every 1,000 Americans.

The March of the HMOs

This method builds in a bias from the start: There is an incentive to keep the costs of treating the patient below the lump sum the HMO pays for covering that person. This principle of cost-cutting extends throughout the gamut of the HMO's activities: If it costs too much to send a patient to an expensive specialist--even though that is what is needed--discourage, or, in some cases, forbid, sending the patient to the specialist. If the patient can be moved, or forced out of the hospital earlier, by covering only part of the usual days required for a particular hospital stay, then do that.

This is the principle that some of the giant HMOs, such as Kaiser-Permanente and Aetna US Healthcare, have implemented (Aetna is one of America's biggest insurance companies). The concept of medicine has been turned upside-down. Instead of the goal being the well-being and survival of the patient, the goal is now the ability to build profits, by squeezing the patient out of the cash stream of the health industry. HMOs, with their cost-accounting practices, could offer lower costs for covering employees than the traditional health plans. For that reason, increasingly, employers began contracting with HMOs to cover their employees.

Table 2 shows that in 1980, only 9 million Americans were enrolled in HMO plans. Many of these HMOs were the old-fashioned type, which actually tried to provide reasonable health care. By 1985, there were 21 million Americans enrolled in HMOs, and by 1990, this figure rose to 33 million. By then, the leading HMOs were of the newer breed, which expanded at a rapid rate by simply under-cutting the cost of all other health plans. In 1997, the number of Americans enrolled in HMOs jumped to 68 million, double its 1990 level.

The HMO expansion of the past 15 years has set the standard for the health industry: all health plans, regardless of whether they are HMOs, must buckle under to the strict cost-accounting method, which callously reduces medical coverage. Those parts of the health industry that have resisted this current have usually failed and gone out of business.

During the 1990s, the HMOs have ``cherry-picked'' the best business, and, through their methods, profits could be enlarged by cutting down services, closing departments, and firing nurses. But, predictably, with each successive year, such cuts have become harder, and the ``easy'' profits have become harder to come by. According to a survey by Weiss Ratings, Inc., which evaluates HMOs and financial institutions, in 1997, there were 57% of all HMOs in financial difficulty. While some HMOs may be overstating their difficulties, the problem is, that if some HMOs were to fail, millions of Americans would be left without health coverage.

Reduction of Patient Days

This picture is presented in Figure 2, which shows the number of inpatient care-days per 1,000 of Americans--in other words, the average number of days citizens are in hospitals receiving inpatient treatment. In 1980, there were 1,217 inpatient care-days per 1,000 people; in 1996, this had plummeted to 604 inpatient care-days per 1,000 people. In other words, patients are permitted only half the amount of time today in hospitals as they were in 1980. The HMOs and insurance companies save a bundle on this.

Figure 3 shows the average length of inpatient stay, in days: a decline from 7.3 days in 1980, to 5.2 days in 1996. Thus, if one is fortunate enough to make it into a hospital as an inpatient, one is moved out more quickly, often with life-threatening haste.

The HMO-Conservative Revolution attempts to defend this policy by asserting that the occupancy rates of hospitals were down, and that this meant that fewer hospitals were needed. They argue that the improvements in medicine have outmoded the Hill-Burton standards and that therefore, such standards should no longer be adhered to.

There have, of course, been improvements in medicine and medical technology. Several medical procedures, which previously required invasive surgery, can now be carried out with non-invasive or less invasive procedures. This includes, for example, several types of operations for appendectomies and hernia, which no longer require deep incision operations, but can be performed on an outpatient basis. The patient can be discharged on the same day, and does not require a stay in the hospital. But in other cases, medical advances have increased the need for hospital stay. For example, today, hip replacements are easier to perform, and more people have them, whereas 30 years ago they were relatively rare. This has increased the need for hospital and long-term care stay for hip-replacement patients.

Improved medicine provides only part of the answer to why, since 1980, the number of care-days that patients have been permitted in hospitals has been slashed in half. If an HMO or insurance company will only give limited hospital coverage, then sure enough, the time a person spends in the hospital will fall, and this pushes down the occupancy rate. That is, if the coverage for hospital stays is reduced--or if patients are refused hospital admission--then the hospital occupancy rate will be lowered. Indeed, the occupancy rate is often a direct consequence of HMO cost-cutting policy. Yet, the same HMO will complain that there are too many beds.

The HMOs' track record makes clear, on a deeper level, what is really happening.

In their haste to push patients out the door, HMOs and insurance companies are responsible for deaths. Furthermore, HMO cost-accounting practices, by cutting payment allowances to hospitals, increase the pressure on hospitals to cut costs, and, for example, to fire competent RNs, replacing them with unlicensed technicians and aides who have very little training.

HMOs are focussed on what each doctor can bring in as profit, to the point of discouraging the treatment of the poor. In the March 24/31, 1999 issue of the Journal of the American Medical Association, Peter Cunningham et al. issued the findings of a study titled ``Managed Care and Physicians Provision of Charity Care.'' The report found that doctors whose incomes depend most heavily on managed care plans, such as HMOs, or who work in areas with a high level of HMO penetration, provide either none or only half the hours of uncompensated charity care for the nation's indigent, compared to physicians with no involvement with managed care. HMOs in some cases, actively discouraged doctors from treating the indigent.

According to a class-action suit brought by the Foundation for Taxpayer and Consumer Rights, which represents thousands of present and former members of the Kaiser-Permanente (which has over 9 million members), the HMO violated California's laws regarding patient care. The suit reported what Dr. John Vogt, Kaiser's Texas regional resources management director, instructed Kaiser managers in a 1995 seminar. Vogt said, ``We need to get from 300 [hospital days per 1,000 patients] to 180 days, and do it in less than two years.... We're basically on-line to getting [to] 180 days by 1996.''

And how do you cut the number of patient days in half that quickly? Vogt proposed that Kaiser dump its chest-pain protocol (which saves lives by early identification of heart attacks), because the protocol ``tripl[ed] our hospital days.''

Emergency Rooms and Nurses

Nurses are under the knife. Under the financier/HMO-generated atmosphere of cost-cutting, many hospitals have cut back on the number of nurses, substituting for them nurses aides or untrained ``technicians.'' Then, to cover for the nursing shortage, nurses are made to work mandatory overtime of up to 70 hours per week. A measure of this trend is the reduction of the number of registered nurses working at community hospitals, per 1,000 of the U.S. population. In 1993, there were 2.74 hospital-based registered nurses per 1,000 population; in 1997, there were 2.65. That is a decline of 3.3% in five years, which can already make a difference in the life or death of some patients. Were this ruinous trend to continue at the present reate, there would be a 10% to 15% reduction in hospital-based registered nurses per 1,000 of the population by the year 2005.

As dangerous as any one of these policies can be, it is their simultaneous occurrence--shutdown of hospitals and hospital beds, tossing of patients out of the hospital or denying them admission, reduction of hospital-based registered nurses, and so on--which is disassembling the integrated physical infrastructure of the U.S. hospital system and its attendant staff of doctors and nurses.

Concomitant with the cuts in services, America, especially in urban areas, has experienced a recrudescence of disease. In Harlem, New York, the tuberculosis incidence rate had fallen to 80 per 100,000 in the 1980s; it is now back up to 182 per 100,000, which is half of what it was in the 1950s, when TB was considered rampant. The rise of diseases has pushed the U.S. health system to below its break-even point. The poor, the elderly, and the very sick are experiencing this first.

So far, as the oligarchy and its followers in the HMO industry and the Conservative Revolution faction--including balanced budget supporter Al Gore--have contended, the death rate in America has not zoomed up as a result of the BBA cuts or the shutdown of hospitals, beds, and nurses during the past 15 years. But there is a lawful limit to the breakdown process.

The lunatic policies of Federal Reserve Board chairman Alan Greenspan have put the world on the path for a 1921-23 Weimar Germany-style hyperinflationary blow-out. When that hits, it will intersect the destruction of America's health system, its falling living standards, increased disease vectors, and the collapsed physical state of the economy. The death rate will not rise incrementally, but rather will explode, in full realization of the Auschwitz polices that have been established.

Having lost its health system, America will pay the consequences.