As Congress struggles to rein in health care costs as part of its sweeping reform efforts, hospitals in New York City and other urban areas that provide some of the most expensive care are among the primary targets.
The issue pits hospitals in more rural states like Iowa and Minnesota, where spending tends to be lower, against those in areas like New York and Los Angeles, and revolves around a question that has bedeviled the medical establishment for decades: How much money do hospitals need to provide adequate care for patients, especially poor people who have not had regular access to health care.
A provision in the House health care bill, included over the objections of hospitals from New York and other cities, would order a neutral group, the Institute of Medicine, to conduct a two-year study of regional variations in Medicare spending. The bill requires the institute to recommend changes that would reward “quality and value,” and those changes would take effect automatically unless Congress objected by May 31, 2012.
Proponents say the institute’s findings could prove crucial to efforts to slow out-of-control medical costs. They argue that through greater efficiency, Medicare spending could be cut by 15 to 30 percent, and cite researchers at Dartmouth Medical School, who contend that Medicare could save $1.42 trillion by 2023, and eliminate a looming deficit, by reducing the annual growth in per patient spending to 2.4 percent from the national average of 3.5 percent.
The recommendation that New York hospitals fear most is that Medicare should reduce payments to areas where costs grow fastest and increase payments to those that are best at controlling them. They argue that some of the most-efficient hospitals are in affluent and rural areas that do not face the same challenges, including higher poverty and cost of living, as New York.
“This line of inquiry is destructive to urban centers,” said Dr. Kenneth L. Davis, chief executive at Mount Sinai Medical Center in New York. “Unless we deal with the problems of poverty in underserved areas, health care will be expensive in urban areas.”