Sunday, June 15, 2008
News

Deadly credit

Three questions with Josh Clark

Ricardo A. Alves

By Josh Clark

1. Why are some hospitals using credit bureau info and how are they using it?

Some hospitals are using your credit information to determine whether you’re a good financial risk before performing medical procedures. They feed your credit history into a statistical model that essentially places you into one of two categories: good risk or bad risk.

    Back in the ’90s, Florida Hospital down in Orlando pioneered data mining in the health care industry in a joint venture with IBM. Essentially, data mining in this context is the analysis of information to find correlations in seemingly unrelated information. Grocery stores have used it for years to figure out the patterns behind spending habits. Mouse Town’s Florida Hospital began using the analysis to predict payment habits. The program so successfully identified deadbeat patients that it’s now using it to predict whether you really need those expensive CT and MRI scans.

  And it’s not just in Florida. Hospitals across the nation say data mining allows them to identify patients who should receive indigent care. This, in turn, reduces the added expense of having collection agencies chase down patients who don’t pay. But expense reduction can also be achieved preemptively by denying care to patients deemed bad risks. It’s this fine red line between benevolently identifying those who should be billed as indigents and denying treatment to them that has consumer advocate groups worried.

  The working poor and the uninsurable are the most affected. True, federal law mandates that health care facilities provide emergency treatment to anyone, regardless of ability to pay. But even in emergency settings, there’s treatment, and then there’s treatment.

  The same analytics that determine whether you should receive an Amex or Visa may also determine whether you should receive treatment for that stage IV glioblastoma multiforme brain tumor they didn’t catch when they decided you don’t have a credit rating that warrants an MRI.
 

2. Hasn’t health care always been like this?

Hell no. Hospitals and doctors’ practices weren’t always run like Blue Chip companies. You could, arguably, pay for your treatment with a few chickens or a bag of walnuts, depending on the size of your town. It’s not like all doctors performed house calls, carried black bags and wore bow ties, but their profession was arguably a lot more noble than it became in the ’80s.

  About that time, a record number of Baby Boomers graduated from college, unleashing a flood of “greed is good” Gordon Geckos. This talent pool needed jobs and were more educated than their predecessors. So a generation of greedy wunderkind entered the labor force just as big technology advances cranked up certain segments of the economy. Companies had to figure out ways to compete for the best and brightest. So they served up the employment status symbol of the time—the HMO, a plan originally dreamed up to keep health care costs low for individuals who were members.

In those gut-wrenching talks with parents who had paid their children’s college tuition, no grad could justify taking a job that didn’t offer an HMO. “You’ll need it when the ol’ lumbar gives out,” Willy Loman-like dads would warn (back then, it wasn’t unusual for some employees to grow old and retire having been on the payroll of only one employer).

Huge collective bargaining tools, HMOs could put the bitch-slap on entire health care operations. They purchased medical coverage in bulk and, whether they meant to or not, ended up dictating the policies and procedures of the health care industry thanks to hospital CEOs and shareholders who wanted medicine to be profitable. This was, as one observer put it, “the commodification of medicine.” One example is the fate of the teaching hospital.

  These hospitals, like Grady Memorial, where the vast majority of medical research is conducted, charged an additional fee to patients to cover added expenses. It wasn’t much, but this fee was picked up for the most part by the HMOs. It added up; the HMOs paid out about $5 billion in these fees to teaching hospitals. It was costing their members, which defeated the whole purpose of HMOs. So in the mid-’90s, some of them started refusing to reimburse patients for treatment at teaching hospitals, which then lost funding. Consequently, medical schools increasingly courted pharmaceutical companies to finance research. Meanwhile, you still have that damned glioblastoma multiforme tumor.

3. Will it continue to be like this?

It doesn’t look like data mining is going to go away any time soon. Since health care has become big business, market forces dictate health care. Hospitals are both service providers and creditors due to the expense of most procedures, even for the insured. So data mining is seen as an effective way to help hospitals watch their bottom line.

      Don’t look for this to change come January, either. Sen. Barack Obama’s health care platform calls for extending the government’s health coverage to everyone who wants it. It also calls for increasing federal subsidies for insurance. Sen. John McCain, who has experienced an overseas hospital stay, is interested in lowering insurance premiums by increasing competition among providers and offering tax credits to help offset insurance costs. While both plans could help provide coverage for the working poor and the uninsurable, as long as the health care community remains focused on profits, the highest quality health care will continue to go to those who can afford it—just as it does everywhere in the world.

Oddly enough, McCain’s vision of a more competitive marketplace in the health care industry could eventually lead to hospitals abandoning the practice of data mining. The Atlanta Business Chronicle recently reported that WellStar Health Systems doesn’t engage in evaluating its patients’ financial information, in part because it creates a bad image. If, as a result, more patients go to WellStar hospitals to be treated, you’ll hear the death knell of data mining. On the other hand, if there’s no incentive for hospitals to care for the poor, they will most likely market to the wealthy. It’s easy to forget, but market forces are, after all, dictated by consumers. SP