|WHAT WE’RE READING
Stuff we read this week that made us think.
New scrutiny on nonprofit hospitals’ tax-exempt status
The healthcare industry was abuzz this week with reactions to a new study published in JAMA, which showed that the most profitable hospitals spend the least on charity care. Researchers from Johns Hopkins evaluated charity care practices at over 2,500 nonprofit hospitals, finding that, cumulatively, hospitals spent 29 percent of their $47.9B in income on charity care in 2017. Digging into the relationship between spend and profitability, investigators found that the most profitable quartile of hospitals spent $11 of every $100 of profit on charity care, compared to $72 of every $100 of profit for hospitals in the third quartile. Hospitals in states with Medicaid expansion also spent less.
The study has sparked a new wave of criticism of not-for-profit hospitals’ charity care practices, including a scathing New York Times editorial, which makes an argument against hospital nonprofit status that will likely be quite compelling to many readers. The author notes the drop in charity care in the wake of coverage expansion after passage of the ACA, but more damning are questions raised about whether marketing-adjacent activities like community health fairs should count as charity spend, and whether taxpayers should have a say in how hospitals spend tax dollars directed to community benefit. Surely health system CEOs who run complex enterprises with billions in revenue should be well compensated—but data showing that average chief executive compensation in nonprofit hospitals increased by 93 percent from 2005 to 2015, while nurses got only a three percent raise over the decade, will not help public perception. Record profits, combined with coverage of aggressive collections practices, have already raised the attention of regulators, with Senate Finance Committee Chairman Chuck Grassley renewing his probe into hospital nonprofit status last year. Nonprofit health systems should expect even more pressure to come from state governments, which face increasing budget pressure as Medicaid costs continue to rise—and they would be wise to reevaluate charity care practices to demonstrate concrete and meaningful impact on community health.
A warning cry about primary care innovation
Just on the heels of our discussion of consumer segmentation this week (see above), a new thought piece appeared in our news feed, from the feminist blog Jezebel. Written by healthcare reporter Molly Osberg, the piece takes a critical view of the emerging trend of “direct primary care”, the membership-based approach to physician practice that’s become increasingly popular as a way to target specific patient populations. There’s One Medical and Forward for busy professionals, ChenMed and Iora for high-risk seniors in Medicare Advantage plans, Maven for prenatal care, and a raft of other mostly venture-backed startups. It’s concierge care for the “masses”—with membership fees that are either paid by employers (or MA insurers) or upper-middle income patients, typically at prices well below the “VIP” services of the early 2000s, which often charged thousands of dollars for on-demand, personal access to a doctor.
Osberg takes a dim view of this trend, worrying (as we pointed out above) that the temptation is to create a “caste system” in medicine, allowing the affluent to buy their way out of the dysfunctional, inefficient, and often highly variable healthcare system the rest of us must deal with. She also raises important questions about the health benefits claimed for some of the added perks (genetic testing, “energy healing”, nutritional supplements) offered by the new practices. It’s a well-written polemic, definitely worth a read if only to get a clearer picture of the perils of consumer segmentation in healthcare that loom ahead if “consumerism” is not balanced with health equity. We talk a lot about disruptors in our industry, and these new-style practices are darlings of the industry press and investors alike. But Osberg’s jeremiad is a helpful counterbalance to that enthusiasm. What countless doctors have told us over the years remains true: healthcare isn’t like other services, it’s not as simple as selling coffee or shipping books or streaming TV shows. Attention must be paid to every consumer segment—and innovators must focus on making care better for everyone, not just Silicon Valley’s legion of “tech bros”. A useful warning from a talented writer.
Are our brains wired for medical errors?
We all suffer from “left digit bias”. It’s why we’re much more likely to purchase an item priced at $7.99 rather than $8. A new study in NEJM demonstrates that doctors may have the same bias when recommending care. It turns out doctors are sensitive to the “left digit” of a patient’s age and are more likely to recommend bypass surgery for patients who are 79 years old than those just a few weeks past their 80th birthday. Physicians unintentionally “assign” patients to an age cohort, with patients “in their 70s” seeming much younger than those in their 80s—to the detriment of 80 year-olds. A New York Times piece expands on the ways common mental shortcuts can lead to medical errors. Like all of us, doctors “overreact” to recent events: if a patient recently experienced a side effect from a drug, doctors are much less likely to order it for the next patient, regardless of the evidence. Obstetricians are inclined to switch “delivery modes” (vaginal delivery versus C-section) based on the experience of recent patients, regardless of indication. Awareness of these biases, for both patients and providers, is the first step toward preventing errors. But the findings also highlight a possible area of focus for artificial intelligence in supporting clinical decision-making, by calling out instances in which human brains are wired to act irrationally against evidence.