Maryland Experiments With Capping Hospital Spending

The Centers for Medicare and Medicaid recently offered a waiver to Maryland in order to try to pursue their hospital payment model as a possible scenario for the rest of the nation.  It is based upon their current model which has been in place since the 70’s. Reportedly in Maryland, hospital prices are the same regardless of insurance status. This makes sense and is how our office prices its services (click here to see Internal Medicine of Southwest Florida prices). The price is the same regardless of insurance status with the exception of Medicare. Medicare sets its prices and we don’t have any say in that program.   The problem I see with setting an entire state’s hospital prices is that health care is a cottage industry. Local patient populations, local overhead costs vary and so having a price for an entire state is not efficient nor necessarily going to be market-based, but the concept of a fair and similar price for the overall buyers is the proper way  to conduct business. It allows honest market disclosure and the same opportunity to access the system, as long as the buyer is agreeable to paying.

I view hospitals like the power grid, bridges, and roads- necessary infrastructure.  Hospitals are a horse and buggy industry due to the movement of better outpatient capabilities ,but they will never be completely obsolete. I think following more of a utility model of payment for hospitals makes sense.  In our present utility industry we have both regulated and private utility services. There is no region in this nation that doesn’t have reliable power. Even in the catacombs of my low population home state of North Dakota, every farm has power and heat. The utility model made that possible and it is still followed.  This is why considering a different paying model for their maintenance and services makes sense. Maryland apparently has been ahead of the curve by 4 decades with their concept. Fee for service is still the best way to pay for things in health care. The reason is it maximizes productivity. All other convoluted models, such as the recent Accountability Care Organization model, result in far too much regulatory modeling with low efficiency and low output delivery of services.