Public hospitals need a level playing field

It makes no sense for a public hospital to be paid a private fee for one private patient who occupies a privately designated room and not for another, even though they may each have had the same procedure and occupy identical rooms writes Dr. Gerard O’Callaghan, Chief Executive Officer, South Infirmary-Victoria University Hospital, Cork.

I welcome the recent introduction of the Health (Amendment) Bill 2013 by the Minister for Health which includes a proposal to charge private patients occupying public beds with the private inpatient fee. Whilst this is the first step in the process towards the planned money follows the patient system, and ultimately towards universal health insurance, it is something that, taken on its own merits, needed to be done.

Gerard O'Callaghan
Dr. Gerard O'Callaghan

The current public hospital system whereby a private patient has to occupy a designated private or semi-private bed if the hospital is to be paid the private inpatient fee is outdated and is not in the patient’s or the hospital’s best interest. The number of beds designated private or semi-private in a public hospital is largely based on historical reasoning and, in most cases, does not reflect the needs of modern medical practice. For example, bed designation was introduced at a time when day case procedures were not the norm and because of this a very low proportion of beds are designated as private day beds in most hospitals. As we all know the number of procedures being performed as day cases has increased exponentially over the last twenty years and the number of privately designated day beds has not kept pace with this. One obvious reason for this is that, because of the high income generating potential of day beds in comparison with inpatient beds, the Department of Health have been unwilling to give approval to increasing their number because of the adverse cost effect on the insurance companies. Whilst this is understandable up to a point it must be remembered that it is resulting in a major loss of income for public hospitals as well as providing a disincentive for them to perform more medical or surgical procedures as day cases. Another issue arises in relation to day procedures being carried out in side rooms. As these are not designated as private areas no payment is made to the public hospital while private hospitals are paid a separate side room fee for each procedure.

The number of beds designated private or semi-private in a public hospital is largely based on historical reasoning and in most cases does not reflect the needs of modern medical practice.

In relation to inpatient beds similar anomalies exist in public hospitals. It makes no sense for a public hospital to be paid a private fee for one private patient who occupies a privately designated room and not for another even though they may each have had the same procedure and occupy identical rooms.

An anomaly also exists in relation to the difference in the private fees paid to public and private hospitals. Public hospitals are only paid an overnight fee for the private room while private hospitals are paid a sum that is based on the economic cost of treating the patient. This is clearly unfair. The introduction of the money follows the patient system will hopefully address this.

The current system has resulted in many perverse incentives in the public hospital system. For example, there is no incentive to reduce the average length of stay of a private patient. For every day that the average length of stay of a private patient is reduced the public hospital loses over €1,000. This is not the case for private hospitals where there is a financial incentive to reduce the average length of stay for a patient and to increase patient throughput. One would think that this should lead to private hospitals being more efficient but this would not appear to be the case. Academic evidence internationally would appear to indicate that, in the vast majority of cases, public not for profit hospitals are more efficient than private hospitals. This would support the argument that private hospitals need to look more closely at their cost base.

Another ridiculous situation is where an inpatient is acutely medically discharged but is either not in a position to go home or is awaiting long-term care. In this case as the patient is no longer covered by insurance the hospital has no option but to move the patient to an undesignated room so that another acute private patient can be moved into the vacated designated private room. As well as being upsetting for the patient the amount of staff time being wasted on this exercise makes no sense. However, in the current difficult financial situation this exercise has to carried out in order to maximise income generation.

Public hospitals are only paid an overnight fee for the private room while private hospitals are paid a sum that is based on the economic cost of treating the patient.

With the current system too much time is being spent by hospital employees in all disciplines in trying to ensure that private patients are admitted into private beds. Similarly health insurance companies are using much of their manpower in following up with hospitals and patients toensure that their clients occupy private beds. The manpower saving would be enormous for both hospitals and insurance companies if the proposed legislation is enacted.

Not surprisingly the health insurers and the private hospitals have reacted negatively to the proposed legislation. The health insurers have claimed that the changes proposed would result in a 30% increase in premium payments for customers. These figures have not been substantiated and until they are I don’t believe that such an increase will occur. The private hospitals have argued that the changes would result in job losses and reduced choice for the patient.  Like all of us the private hospitals will have accept that we are all in a changing environment and that they like public hospitals will need to make changes, examine their cost base and drive efficiencies.

While the proposed legislation is welcome as a first step in addressing some of the current anomalies that exist, public hospitals will not be on a level playing field with the private hospitals until we have a fairer, more equitable and more transparent system in place where payments are made in respect of episodes of care as is proposed under the money follows the patient system.