VIDEO: The Promise of Hospital Cooperation

Covid-19 has shown that the health of each of us matters to all of us. But is a competitive hospital system the best way to deliver the care we all need? On January 27, the Lown Institute brought Jill Horwitz, professor of law and medicine at UCLA; Paul Levy, former CEO of Beth Israel-Deaconess Hospital; and David Seltz, executive director of the Massachusetts Health Policy Commission in conversation with Lown leaders Vikas Saini and Shannon Brownlee, to discuss how Covid-19 has changed the way hospitals work (or don’t work) together. Watch the full recording of the event below!

Covid-19 and hospital cooperation

During the pandemic, some regions did a better job of coordinating hospital care than others. In Massachusetts, for example, the state mandated that hospitals meet regularly to discuss their patient needs and transfer patients if necessary. This involved coordinating across hospital systems, regions, and across the entire continuum of care– not just hospitals but institutions that people come from and go back to, like nursing homes, prisons, and homeless shelters.

[Collaboration among Massachusetts hospitals] has been an absolutely remarkable achievement.”

David Seltz

Hospitals broke out of their silos and shared “resources, staff, everything from PPE to ventilators to PPE to critical care nurses, to meet the Covid needs of the people of the Commonwealth,” said David Seltz, who has been part of the effort of coordinating hospital care during the pandemic. “To me, it’s been an absolutely remarkable achievement,” he said.

The status quo for hospital cooperation

However, in non-emergency times, hospitals do not generally work together. Paul Levy described the Boston hospital market as a solar system, with each hospital as an independent body with its own orbit and inertia. “It’s appropriate to think of hospitals as corporate entities, driven by the bottom line at one level, but also full of doctors who have their own particular interests and career objectives,” said Levy.

“It’s appropriate to think of hospitals as corporate entities, driven by the bottom line at one level, but also full of doctors who have their own particular interests and career objectives.”

Paul Levy

Because there aren’t many outside forces regulating the services that hospitals can and cannot provide, the “every hospital for itself” model leads to a lot of unnecessary duplication of the highest-margin services, like cardiac surgeries and transplant programs. Although it is wildly inefficient to have two proton beam machines within ten miles of each other, the market doesn’t solve the problem because there are not incentives from payers to avoid duplication of these services.

Professor Jill Horwitz cautioned against generalizing about all nonprofits. “We tend to see nonprofit hospitals as the big academic medical centers that are very financially sound and savvy,” she said. But most nonprofit hospitals in the US do not make a profit or have very thin margins, which drives them to perform more complex services. Nonprofit hospitals generally don’t make money on basic community health needs like primary care, mental health, or emergency care, so they have to seek out better-paying services stay afloat financially. Seltz agreed, pointing out that there are many community hospitals that treat a disproportionate amount of patients with public insurance, and don’t have the same margins and market power as some large academic medical centers.

“We tend to see nonprofit hospitals as the big academic medical centers that are very financially sound and savvy. But when you look across the country, the average nonprofit medical hospital or acute care hospital operates in the red in a given year.”

Jill Horwitz

What would a truly coordinated hospital system look like?

Can we leverage this moment to improve hospital coordination after Covid-19? What would that look like? Seltz was optimistic about future changes in health care in Massachusetts, pointing out that the HPC has been asked to conduct an inventory of health resources in the state, an important first step toward improving health care value.

However, Horwitz noted that the reductions in regulatory hurdles that have taken place during Covid, if continued, could allow big players to get even bigger, which would only increase health care costs. And as much as universal coverage would help enormously to increase access to care, important questions like how many beds are “enough,” or how much we should pay hospitals for specific services still have to be figured out, even in a single-payer system.

How do we get there?

How would paying hospitals differently help create a coordinated system? Seltz mentioned Maryland’s global budget system, in which all payers are paid at the same rate and hospitals get a guaranteed annual budget beforehand. This system put them in a much stronger position during Covid because their payments were predictable. This type of payment model also takes away incentives to provide services that aren’t necessary and instead encourages hospitals to take on the community conditions that can lead to preventable hospitalizations.

“What if we attacked the issue of health equity in the same way we attacked Covid?”

David Seltz

There are some regulatory barriers that prevent capitation on a state level for most states, and there is also a lack of political will. Yet there is an impetus for change, especially as healthcare costs climb higher and higher. Our excess health care costs are not just eating into discretionary spending, but making it hard for families to meet basic human needs, said Horwitz. Additionally, doctors and hospitals that lost so much revenue from Covid-19 may be more willing to try moving away from fee-for-service, said Seltz.

The culture of hospital leadership is another barrier to change, because many hospital boards prioritize financial stability above all else. When Levy surveyed hospital boards in the 2000s, he found that they put patient safety and quality far down on their list of priorities. “The expectation of hospital boards right now is producing exactly what we have,” said Levy.

Will things go right back to “business as usual” after Covid? It’s certainly likely if few stakeholders make the issue known. “There isn’t a political constituency for integrating public health and rationalizing care,” said Levy. But Seltz challenged the idea that once Covid goes away it will be back to competition. “What if we attacked the issue of health equity in the same way we attacked Covid?” said Seltz. If we can take coordinated action on Covid, surely we can take the same actions when it comes to racism, which is being increasingly recognized as a public health crisis.