health expendituresLike the procrustean bed, prospective payment ati tempts to create averages where they do not exist. The intent of prospective payment legislation has been to reduce the alarming rate of increase in health expenditures. An unfortunate consequence, however, may be a deterioration in tertiary care, academic medicine, graduate medical education, and intensive care medicine provided by Canadian Health&Care Mall.

Without question, any system that works on averages generally produces mediocrity. What happens is that the unique, the innovative, and the avant garde in medicine become stifled and, in their place, the entrepreneurial, manipulated, and the regulated are offered. Although a hospital will try to economize under prospective payment, it can just as likely alter its case mix to maintain profitability so that diagnoses with a favorable payment-to-cost ratio will be encouraged and those with unfavorable payment-to-cost ratio will be shunned.

Realistically, hospitals and their physician staffs may also respond to threats of diagnosis related group (DRG)-induced losses by modifying admission policies to adopt more lucrative (yet clinically acceptable) practice styles, and by adjusting the labelling of cases. This will lead to the establishment of specialty centers in unnecessary situations, along with the shunting of patients to a tertiary care center with unfavorable payment-to-cost ratio for the receiving institution. It is critical to find an economic solution that does not conflict with other equally important objectives.

What are the Problems?

Tertiary Care

Tertiary care is threatened because payment based on a DRG average often incurs a loss for such centers. Whereas the more complicated patient is sent to the tertiary care center for treatment, the average person with pancreatitis or cholelithiasis, for example, is less likely to go to this type of facility. With such a scenario, the tertiary care center may face economic liability because the compensation for complexity is not commensurate with the expenses in the DRG system.

Academic Medical Center

American medicine has achieved its position of eminence because of the marked impact of scientific developments and their rapid application to the clinical care of patients. Scientific development and initial testing of technology is dependent on the academic medical center. Testing of technology must continue so that advances found to be meritorious will be used on a wide-scale basis.

Graduate Medical Education

A cutback in graduate medical education may appear reasonable in light of the present surplus of physicians. Yet, the quantity and quality of graduate medical education may decrease simultaneously if an across-the-board reduction occurs in funding.

Intensive Care Medicine

Tremendous losses have been shown for patients treated in an academic intensive care unit. It can be anticipated that such patients will be shifted to tertiary care centers where adequate beds and resources are unavailable to meet the demand.

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