Economist Jon Skinner of Dartmouth presented this chart at MSU, comparing costs for Medicare patients in the last two years of life and showing Bozeman’s hospital doing a better job on controlling costs than others in the region and nationally.
Bozeman Health Deaconess Hospital came out looking pretty good when a national expert examined its costs for elderly Medicare patients in the last two years of life.
Jon Skinner, an economics professor from Dartmouth College, speaking at Montana State University, cited Bozeman’s hospital as one reason for optimism when it comes to getting a handle on America’s fast-growing health care costs.
The Affordable Care Act did a great job of expanding health insurance coverage to millions more Americans, Skinner said. But when it comes to the “affordable” part, the track record has been, he said, “not so much.”
Skinner gave the final talk wrapping up last week’s Health at a Crossroads conference. It was put on by MSU’s Initiative for Regulation and Applied Economic Analysis, which has been controversial because of its $5.7 million funding by the Charles Koch Foundation.
MSU economics professor Wendy Stock, co-director of the Koch-funded grant, welcomed about 50 people to the conference, saying that organizers worked hard to make sure a wide variety of viewpoints were presented, by both national and local speakers.
The keynote talk was given by James Capretta, a resident fellow and Milton Friedman chair with the American Enterprise Institute, a conservative think tank that’s generally skeptical of government regulation.
Other speakers had worked in the White House under presidents Barack Obama or George W. Bush. One speaker, Stephen Parente, also associated with the American Enterprise Institute, was recently nominated by the Trump administration to be an assistant secretary in the U.S. Department of Health and Human Services.
Skinner said some hospitals, “particularly Bozeman Deaconess,” are doing a good job of spending less and doing less for chronically ill patients in the last two years of life. Studies have found that spending in the last year of life accounts for about 25 percent of all spending on Medicare patients age 65 or older.
Medical care at Bozeman Health costs an average of $53,810 in 2014 for Medicare patients in their last two years. That was slightly less than the $58,063 at Billings Clinic and significantly less than the national average of $80,066.
Skinner cited as expensive examples the Hialeah Hospital in Miami, which costs Medicare $123,484 in patients’ last two years, and the Alhambra Hospital in California, which cost $187,626.
One reason Bozeman’s hospital was less expensive is that only 10 percent of the Medicare patients who died were in the intensive care unit, which tends to cost more. Nationally an average of 16.8 percent of patients died in hospital ICUs. Averages were higher at Billings Clinic (18.9 percent), Hialeah (25.5 percent) and Alhambra (28.6 percent).
Spending more doesn’t guarantee better care, Skinner said. Patients’ and families’ ratings of the expensive Miami hospital had some writing, “Worst hospital ever” and “Find another hospital.”
Another reason Bozeman’s costs were lower was that fewer physicians were involved with each patient — eight doctors on average, compared to 12 nationally and nearly 17 at the most expensive Alhambra hospital. The more doctors get involved, he said, the more difficult communications become.
But one problem faced in rural areas like Bozeman with only one hospital is that when hospitals have monopoly power, it often means higher costs.
Skinner offered his prescriptions for cutting America’s rising health care costs. First, he said, Medicare should be put on a budget.
“Medicare has no budget,” he said. “It’s the only health system in the world with no budget.”
And Skinner recommended that in towns with only one hospital and no competition, prices should be regulated by the government, capped at perhaps 125 percent of what Medicare pays, so private insurance isn’t charged 200 percent.
“Here’s my vote,” Skinner said, “for regulation.”
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