In 1983, I was the pharmacy director at a 124 bed hospital in Gainesville, GA. The for-profit hospital was owned by Hospital Corporation of America (HCA) and they assigned me to be the pharmacy representative on a national committee to predict what the hospital of 2000 would look like. The group was composed of members from hospitals across the United States and had one representative from each department in the typical hospital. With the recent news of Newton Medical Center looking for an equity partner, I thought back to some of the predictions from thirty-one years ago. I can only remember six of their key points, but there were several more.
At the top of the list was that county hospitals simply could not survive due to the high cost of keeping current with health care standards of care and also decreasing reimbursements. Medicare had just started a reimbursement system called DRGs (Diagnosis Related Groups) and the cutting in revenue had begun. The cost of a CT scanner was initially $250,000 then, and they were predicting skyrocketing expense to update all the technology in the hospital. Today, we see the struggles of our Newton Medical Center but as we look around, we can see that many other county hospitals have become affiliated and/or managed by a bigger hospital group or hospital chain. And some hospitals are very basic services. Or their doors are shut, permanently.
Second, the big hospitals will become bigger, while the smaller ones would become basic emergency rooms and stabilization facilities until the patient could be transferred. Once again, those that were bigger had better reimbursements and could afford to update their technologies. Today many patients are referred to a location that has the needed equipment.
Third, solo physician office practices simply cannot survive; they will merge into multi-physician practices with multiple specialties under one roof. There are still a few solo office practices around, but not many. Last month I talked to a physician with a solo office practice in Southwest Georgia and he said that the health insurance premiums were getting so high he could not afford to keep his doors open. And then he talked about all the cuts in reimbursements that is affecting his practice.
Fourth, there will be five major drug companies by the year 2000. The smaller drug companies will merge with the bigger drug companies, which will help offer more medications for several disease states rather than just a few. This will also help research and development for new medications. Today, it costs over $1 billion to get a new medication on the market. The FDA has very strict guidelines for all three phases of a drug study, and compliance is very expensive.
Fifth, the major drug companies will buy the generic drug companies because that’s where the profit is. In 1983, this was not well received since generics were in their infancy. Today, probably 80% of the prescriptions filled are for generic medications. And many big brand-name companies have purchased a generic supplier or gone into the generic business themselves.
Finally, rather than order from dozens of manufacturers, “prime vendors” will be set-up to provide all of your health care needs. In my pharmacy department, I had to order from 36 different manufacturers each month. HCA partnered with a company in the TriCities area of Tennessee to try out the concept. It worked. We were able to get next day delivery of all our medication needs, and did not have excess stock on the shelves, thus saving significant money.
The one prediction our group did not make was how government and insurance companies would control health care. Although DRGs were the start of cost containment, I don’t think we saw the impact of cost control for the future.
For 2014, my hat’s off to the leadership of Newton Medical Center for continuing to provide excellent health care locally. The Administration, medical staff, hospital staff, Auxiliary, and the Board of Directors have worked diligently to keep the ship floating. Unfortunately, the financial problems of health care have overtaken many hospitals, and Newton Medical is no exception. I’ve had two outpatient surgeries, had several radiological procedures and recently completed 12 weeks of Physical Therapy in their great department. Best Wishes for the right equity partner and a successful 2015.
Steve Aldridge is certified geriatric pharmacist and serves as the Clinical Manager for the Omnicare pharmacies in GA,AL and MS.