What the sale of DMC might mean

On Friday a for-profit hospital holding company (Vanguard Health Systems) agreed to purchase the Detroit Medical Center for $500 million and a promise of an $850 million capital infusion to the system’s eight hospitals.

I think this is significant for a number of reasons:

  1. If not the largest, it has to be one of the largest non-profit hospital systems ever to be sold to a for-profit body. DMC has been profitable for the past seven years–the system’s board of directors must have had limited options for raising capital dollars.
  2. DMC’s role in Detroit’s safety net for the un/underinsured is unmatched. Vanguard’s pledge to keep that role in tact is important–but rightly questioned given traditional views and past conduct of (some/many) for-profit hospitals.
  3. National hospital systems (both for-profit and non-profit) have been developing for the last twenty years; in order to compete and negotiate that trend will continue. As insurance companies and competing hospitals grow larger it will likely speed-up. Economies of scale are important.
  4. Investors are taking an optimistic outlook of health reform and its effect on hospitals.

Maybe most importantly, it could be the beginning of a trend toward more for-profit hospital care. The eight hospitals of DMC are few among the many, to predict a trend using one data point would be foolish. But it’s important to remember, especially during this difficult economic period, that many hospitals are not in a financial position that allows them the ability to raise capital responsibly. Selling to a corporation opens new avenues to raising badly needed dollars. In DMC’s case (it could be unique to Detroit; however I doubt it) that capital will be used for projects that update facilities the system’s board deems necessary to compete with other providers (not to mention a much-needed investment in urban Detroit). 

There’s a reason hospitals have been granted non-profit status; that said, few hospitals are able to remain open if not run like today’s (responsible) corporation. Selling to a for-profit organization may be necessary; however, it surely raises concerns over the provision of much-needed unprofitable hospital service lines. And for that reason, some feel a cause for concern.

ER care not so spendy, not so overutilized

Dispelling myths about ER care are Slate’s Zachary Meisel and Jesse Pines:

While the past decade has seen dramatic increases in the use of emergency care and ER crowding, ER care is but a tiny portion of the U.S. health care pie: less than 3 percent. The claim that unnecessary visits are clogging the emergency care system is also untrue: Just 12 percent of ER visits are not urgent. People also tend to think ER visits cost far more than primary care, but even this is disputable. In fact, the marginal cost of treating less acute patients in the ER is lower than paying off-hours primary care doctors, as ERs are already open 24/7 to handle life-threatening emergencies. And while we’re at it, let’s dispel one other myth: Despite the belief that the uninsured and undocumented flood ERs, most emergency room patients are insured U.S. citizens.

Keep it simple stupid

The Heath Brothers:

Researchers Eldar Shafir and Donald Redelmeier helped prove this point in an article inThe Journal of the American Medical Association. They gave doctors the medical history of a 67-year-old man who’d been suffering chronic hip pain from osteoarthritis. He’d been given drugs to treat his pain, but they had been ineffective, so there was only one viable option: hip-replacement surgery, which would involve a long and painful recovery. Then a final check with the pharmacy uncovered one medication that hadn’t been tried. Would the doctors like to give the drug a shot? Forty-seven percent of doctors chose to try the medication in a final attempt to keep the patient from going under the knife.

Another group of doctors saw the same facts, except they were told that the pharmacy had discovered two medications that hadn’t been tried. If you were the patient with the bum hip, you’d be thrilled–two nonsurgical options are better than one. But when the doctors were presented with two nonsurgical options, only 28% chose to try either one.

What happened here is decision paralysis. More options, even good ones, can freeze us, leading us to stick with the “default” plan, which in this case was slicing open someone’s hip. This clearly is not rational behavior, but it is human behavior. Similar tests with different groups have revealed consistent results.

In (maybe?) arguably one of the most complex industries (healthcare), keeping strategy simple allows/fosters doing/decision-making.

@tgoetz: “The Paradox of Technology in Healthcare”

Usually technology makes doing business cheaper. It’s the opposite in healthcare. Thomas Goetz explains why. An excerpt:

In the last century, medical technologies ably did their part to extend the life expectancy of the average American to nearly 80 years. It’s time to reassess how we deploy technology in healthcare, and put the digital revolution to work not just for our entertainment, but for our health, too.

Interestingly, as he points out, it’s consumer technology bringing scale to healthcare. 

Truly great healthcare people

Rick Reilly:

Suddenly, the huge gray machine whirs like a giant Transformer, turning sideways, first this side, then that, as though it’s trying to decide how to eat him. Then it zaps his throat and neck lymph nodes, ravaging them. It gives him a radish-red rash that’s covering his face, chest and back. I know. He shows me. He shows me many things I don’t want to see. He’s doing it because he wants people to know exactly what it’s like. Wants to take the fear and mystery out of it for people.

I find it exceedingly intriguing to read how people describe healthcare, treatment, disease, etc. It’s amazing how easy it is, experiencing the day-to-day, to separate from how healthcare makes people feel and what it does to them. Even with patient stories unfolding daily, accounts like this bring perspective. 

I think the truly great healthcare people are the ones who don’t forget that there’s a story, with a patient at the center of their own plot, in every healthcare interaction.

Low ceilings in the OR = good.

One of many (lots and lots?) insights garnered from research that says building architecture affects mood (and other stuff):

Because her earlier work had indicated that elevated ceilings make people feel physically less constrained, the investigator posits that higher ceilings encourage people to think more freely, which may lead them to make more abstract connections. The sense of confinement prompted by low ceilings, on the other hand, may inspire a more detailed, statistical outlook—which might be preferable under some circumstances. “It very much depends on what kind of task you’re doing,” Meyers-Levy explains. “If you’re in the operating room, maybe a low ceiling is better. You want the surgeon getting the details right.”

From Emily Anthes’s “How Room Designs Affect Your Work and Mood” in Scientific American in print here.