Healthcare reform poses benefits and risks to South Florida economy

The Obama administration's plans for healthcare reform could mean relief for almost 50 million uninsured Americans, a healthier workforce less likely to call in sick and emergency rooms no longer clogged with people who can't afford primary care.

But it could also mean this: the loss of billions of dollars to the South Florida economy, some hospitals consolidated or closed, and the disappearance of untold number of jobs in the lucrative healthcare field.

That's because if you want healthcare reform, you have to pay the trillion-dollar tab. One way to help do that is to save money by eliminating bloated spending on unnecessary hospital visits and tests. In few places are healthcare costs more bloated than South Florida, especially Miami.

On average, a senior citizen in Miami costs Medicare nearly two and a half times what a senior citizen in Minneapolis/St. Paul costs the government healthcare provider -- ''an inexplicable and unwarranted variation,'' according to Manuel Anton, chief operating officer at Mercy Hospital in Miami.

South Florida has more doctors referring more patients to more specialists and ordering up more high-tech imaging tests than other areas. As a result, employer-based health insurance is 20 percent more expensive here.

And yet, we're no healthier and we don't live any longer.

With so much at stake, you might expect South Florida's medical establishment to be aligned against reform. Not true. They acknowledge that the present system is wrong and needs to be changed.

''What's happening here now is not sustainable,'' said Brian Keeley, chief executive of Baptist Health South Florida, the largest nongovernment employer in the region.

''There is no question we're going to get hit,'' said Linda Quick, president of the South Florida Hospital and Healthcare Association.

Many patients are desperate for fast action. Cathy Price, a 59-year-old South Dade resident, lost coverage last month, when her husband's plastering business plummeted in the recession and they couldn't afford the premiums. ``It's not easy, I'll tell you. We've been taxpayers for a long time. I think something needs to be done.''

Individuals who can no longer afford health insurance aren't the only ones punished by the current system. High medical costs are a major reason companies don't come to the region, said Steven Ullmann, professor of healthcare economics at the University of Miami.

What's more, a reform providing universal coverage would by itself lower some costs, said Ullmann, because insured people are more likely to seek treatment when they first get sick -- before illnesses take on expensive complications.

And yet change will be painful and disorienting, especially in South Florida. Federal labor statistics show 218,000 healthcare employees work in Miami-Dade and Broward. They earned $9.8 billion in 2007. Much of that income is supported by Medicare, which paid $9.4 billion in the two counties in 2007. Eliminating some of that Medicare money will mean eliminating existing jobs.

OVERPRICED

Dartmouth researchers, who have been studying Medicare data for years, say many of those dollars come from patients getting unnecessary or overpriced treatment. In Miami, senior citizen lab and diagnostic tests are three times more expensive, per capita, than in Minnesota. A Fort Lauderdale senior's diagnostics cost twice as much.

In the last six months of life, when costs really skyrocket, the average South Florida senior spends at least twice as many days in intensive care as seniors in the rest of the country, and is examined by specialists at least twice as often.

To understand South Florida's healthcare gluttony, you have to look at the area's history and culture. There has been an abundance of hospitals and specialized physicians here, going back to the first days of Medicare, when the region was truly a retirement haven. Back then, the government health program paid for virtually anything.

Seniors no longer dominate areas like Miami Beach -- and Medicare has become much stricter about lengthy hospital stays -- but the large number of licensed beds and specialists remains. And therein lies part of the problem.

In most industries, having more choices means greater competition, which drives down cost. In healthcare, the reverse is true. Hospitals and medical offices compete for patients by buying state-of-the-art equipment. That machinery doesn't pay for itself unless it is used.

So the medical industry makes sure that equipment gets a workout.

Doctors tell the patient what he or she needs and then provide it, in effect dictating both supply and demand. Since a third party -- a private insurer or Medicare -- pays the bulk of the bill, patients rarely complain.

''Utilization goes up, even where it may not be necessarily needed,'' Ullmann said.

This is compounded by the high ratio of specialists -- seven out of every 10 doctors -- in the South Florida medical community. Cardiologists refer their patients to neurologists, who refer to gastroenterologists, who refer to urologists. Each performs a battery of tests.

Care provided by a specialist is usually far more expensive than treatment by a primary physician. A gastroenterologist sticking a camera in your intestine gets paid far more than the general practitioner listening to you gripe about your aches and pains.

In Europe, there are 70 primary care doctors for every 30 specialists -- a reversal of the United States ratio. That's one reason Europe spends half what the United Stats does on healthcare.

LEGAL PROTECTION

Tony Prieto, a primary care physician who heads the Broward County Medical Association, said cutting back on specialized tests will be difficult without legal reform. ''Doctors are ordering tests to protect their behinds,'' he said, ``because of the malpractice climate.''

Still another factor contributing to South Florida's unusually high healthcare costs: The region has more uninsured people than most urban areas. Almost one in three people under 65 in Miami-Dade lacks coverage. In Broward it's one in four. They tend to skip primary care and end up in emergency rooms -- where treatment is expensive -- and they usually leave without paying.

''Hospitals have to get those costs back somehow,'' Ullmann said. ``So they increase their rates for those who do have insurance, and do more in treating them.''

Then there is home healthcare. In Miami, it costs five times the national average, according to Dartmouth data. And durable medical equipment -- things like artificial limbs -- costs seven times the national average. Law enforcement officials have long identified both areas as filled with fraud.

''Fraud is a huge issue here,'' Ullmann said.

As reform moves along, all these high-cost areas will be targeted for reductions. If the feds succeed in reducing Medicare costs in South Florida to the national average -- admittedly a monumental task, experts say -- it could mean more than $4 billion removed from the local economy.

INDISCRIMINATE CUTS

Anton, the COO at Mercy, fears there could be indiscriminate, across-the-board cuts, ``which will obviously be a problem in this community. Most of the hospitals are already struggling financially.''

With such high Medicare costs, you might think hospitals are raking in a fortune. They're not. State records indicate Mercy Hospital lost $34 million in 2008 and its sister facility, Holy Cross in Fort Lauderdale, lost $25 million.

Anton said the two hospitals have been merging many back-room operations to create ''high efficiency'' and will be in a good position to survive, but he wondered if some smaller, stand-alone hospitals might be threatened by Medicare cuts.

Quick, head of the hospital association, said she considered hospital closings ''a worst-case scenario,'' but there could be ''some consolidation'' and perhaps reductions in services as hospitals determine their core business.

Keeley at Baptist is ready to embrace change. ''We have a very perceptive president, and I'm convinced change is going to be done in an intelligent way. . . . We're prepared to retool. If they say you need to bundle services'' -- treating an illness rather than charging for every test and pill -- ``then we are going to be the best bundler we can be.''

Bundling services could also mean reducing the amount of lab and diagnostic work, as well as reducing the frequency with which patients bounce between specialists.

Sandra Friedman, a senior in Aventura, is one who is ready for changes. ``There's all this overutilization. They give me rehab with two little electrodes to stimulate my muscles. It's silly. Doctors are taking a lot of money. Or they give me exercises to do but don't even touch me. But then I have a mole under the eye and they don't want to test it, because if it's not cancer, it's not covered.''

Whatever the cost, reform is necessary, said Quick. ``The excessive utilization here is indefensible.''

source