A Letter To the NY Times, Aug 13, 2009

The article: http://www.nytimes.com/2009/08/13/opinion/13gawande.html?ref=global-home

My letter:
Dear Editor:

Today's article by Gwande et al on "10 Steps To Better Health Care" is incomplete. It is not test volume that governs excessive costs but the hospital administrative policies behind it. Hospital costs are relatively fixed. A certain number people are needed for care and to keep the lights on. It is fairly constant and not dependent to a high degree on volume. This means if you cut down on certain services, that revenue stream is lost, launching a search for other sources of income. For example, if you lower the ER census, that income loss will need to be made up somewhere else. Real cost saving will only come from reduced administrative personnel and more efficient planning in a particular region. Without such planning, redundancy occurs with under utilized services. Presently the concept of competition among hospitals, maintaining "market share" predominates, instead of competing on improved service. Excessive costs are also dependent on deal making skills with various insurance companies. Instead of a rational budgeting process it requires a wing and a prayer to survive from one year to the next. It depends on negotiation expertise, rather than the quality of a particular hospital's care. Brand name institutions get better contracts leaving others with lowered payments. Medical economics has many deviations from a market place. It is time we realized that.