Healthcare faces cost, staffing dilemmas

A way to cope with the rising cost of healthcare must be found soon or hospitals and their patients will face a tough road, hospital leaders said Thursday.

The crisis has made healthcare a top priority for state and national reform, said Barbara Bronson Gray, the moderator of a panel that included the presidents of St. John's Regional Medical Center, Los Robles Hospital & Medical Center and Community Memorial Hospital.

The group was addressing a corporate leadership breakfast at California Lutheran University in Thousand Oaks.

In 2005, the U.S. spent $2 trillion on healthcare, according to the Centers for Medicare and Medicaid Services. That's $6,697 per person and 16 percent of the nation's gross domestic product.

Health spending rose 6.9 percent in 2005.

Even as spending rose, about half of California's hospitals were losing money, said Gary Wilde, president of Community Memorial Hospital in Ventura.

That's because providing healthcare is an expensive proposition for hospitals, which are required to treat anyone who walks through the emergency room doors. About 25 percent of the patients who visit the emergency room at St. John's Regional Medical Center in Oxnard don't have any way to pay, said President T. Michael Murray.

At the same time, government-funded insurance, such as Medicare or the state's Medi-Cal, falls short of hospitals' costs, the panel members said.

When that happens, hospitals have to shift the burden of expenses onto private payers, Wilde said.

Part of Gov. Arnold Schwarzenegger's proposed healthcare reform would increase the amount hospitals and doctors receive through Medi-Cal.

In 2004, about 44.4 percent of insurance was public, such as Medicare, and about 55.6 percent was private, according to a report from the Kaiser Family Foundation.

In 2005, the average yearly premium for a single worker was $4,024, with the worker paying $610 and the employer paying $3,414. The premium for a family was $10,990.

Health insurance premiums have outpaced both inflation and workers' earnings.

Meanwhile, the causes behind rising expenses are not going away.

Scrambling for staff

There is the constant and growing challenge of finding enough specialists and nurses to meet demand.

As California raises its required ratio of nurses to patients — it's 1:5 this year and will increase to 1:4 in 2008 — that demand becomes even greater.

Add in the rising number of patients suffering from the ill effects of smoking and obesity, as well as the aging population, and the challenge of having enough nurses becomes that much harder.

At the same time, it is increasingly difficult to keep doctors in the state. California is a prohibitively expensive state to practice in, and new doctors are leaving, Murray said.

Hospitals are trying to combat these problems by recruiting out of state, supporting local healthcare education programs and training and promoting current employees, such as a medical assistant who wishes to become a nurse.

Wilde noted that the biggest healthcare concern for the future is what will happen to Medicare funding as baby boomers stop contributing to the fund and start taking from it.

Right now, about 40 percent of the taxes going into Medicare come from baby boomers, he said.

By 2010, all of the interest and taxes coming into Medicare will equal what is going out, he said. By 2018, Medicare is expected to be bankrupt under the existing system.

"That's really the moose head on the table," Wilde said.

It demands reforms that would require either reducing benefits or increasing taxes, perhaps even requiring retirees who can afford it to pay into the Medicare fund.

Responsibility for cost

Moving some of the cost burden onto the individual is already occurring in private insurance. If individuals pay more, they will try to keep those costs down, the argument goes.

When people buy a car, they do their research and figure out what gets them the most for their money. It's not that way in healthcare — where the doctor does the prescribing — the patient perhaps pays a little but the majority of the bill is on an insurer, Wilde said.

"That gap — that disconnect — violates all those standards of supply and demand," he said.

Right now, a single employee carries about 16 percent of the healthcare premium burden. A worker with family coverage pays for about 26 percent.

There also is a need for better education. People need to know how to best navigate the healthcare system to keep costs down, Los Robles Hospital President Jim Sherman said.

If someone avoids going to the doctor with a sore throat and later has to go to the emergency room to be treated for pneumonia, their bills will be much higher than if they had caught it early, he said.

"We have to get the public to access the healthcare system at the right entry point," he said.

The panelists noted that reform is a high priority, and they expect change in the coming years.

Under the governor's plan, all Californians would be required to have insurance, with subsidies available for those making less than 250 percent of the poverty level. The plan would require employers with 10 or more employees to offer insurance or pay into a state fund.

It is one of several reform proposals expected in California this year. Another expected to resurface is Sen. Shelia Kuehl's bill, which would have created a single state insurance program.

It reached the governor last year, but he vetoed it.

However things shake out, panelists said the dialogue has to take place.

"There's at last a recognition that we have a serious problem," Murray said.