Policy watch

N U M S E R 38

POLICY WATCH From the University of Alabama at Birmingham Medical Center

EDITORS

Max Michael, MD Cooper Green Hospital

William F. Bridgers, MD The Eutaw Group

EDITORIAL STAFF

Dvora Konstant Sharney King University of Alabama at Birmingham

CONTRIBUTING EDITORS

Dennis P. Andrulis, PhD, MPH National Public Health and Hospital Institute

Ronald G. Blankenbaker , MD Erlanger Medical Center

Rachel Block Vermont Health Care Authority

Eli Capilouto, DMD, SoD University of Alabama at Birmingham School of Public Health

W. Dale Dauphinee, MD, FRCP(c) McGiU University

G.E. Alan Dover, Phi) , MT Mercer University

Emily Fr iedman Health Policy Analyst Chicago, Illinois

Lawrence W. Green, DrPH University of British Columbia

Mary E. Guy, Phi) University of Alabama at Birmingham

Rober t L. Kane, MD University of Minnesota School of Public Health

Marion Ein Lewin, MA Institute of Medicine

Alice Mercer, PhD University of Tennessee

C. Kirk Osteriand, MD Royal Victoria Hospital

George Pickett , MD, MPH Lake Success, New York

James D. Wright, PhD Tulane University

To Be Something Else or Not to Be: That Is the Question

[McKay NL, Coventry J. Rural hospital closures: determinants of conversion to an alternative health care facility. Med Care 1991; 31: 130-40.]

F or several years prognostica- tors have been forecasting that hospital closures will

become commonplace and will result in a significant reduction in the total number of acute-care institutions in the United States. Although such predictions have yet to come true on a major scale, a slow erosion in the number of acute-care rural hospitals has been occurring for some time.

Despite the fact that these re- ports represent a d iminished number of acute-care beds, it does not necessarily mean the end of any health services for those facilities. Rather, many communities and those who have owned and operated these institutions have decided to provide other health care treatment and programs. In fact, the American Hospital Association reported that almost one third of the 345 acute-care hospitals that closed between 1986 and 1990 continued to offer nonacute health care Of some kind. The reasons tha t these facilities may live another day for other purposes are potentially important . The authors contend that issues related to social responsibility, related access circumstances, and financial via- b i l i ty are fo remos t in these decisions.

The characteristics that deter- mine whether and under what circumstances a rural hospital closes permanently or converts to

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an alternative health care facility were the objectives of this study. Forty-five rural hospitals in Tex- as that had closed between 1985 and 1991 were studied. Owner- ship status was a key characteris- tic: the primary objective of for- profit institutions was assumed related to "maximizing owner's wealth," thus emphasizing return on investment and positive cash flow in the model; nonprofit or government-owned institutions were assumed to balance financial viability factors (e.g., cash flows, positive margins) with %o- cial value" for the community. The financial factors considered community characteristics such as unemployment rates, growth in per capita income, and number of health care facilities. Social value was related to providing services for paying and nonpay- ing patients, and, in that context, the costs to paying patients for subsidizing those who cannot afford to pay (i.e., cost shifting).

The investigators' data sources were complemented by a ques- tionnaire, that was disseminated to the mayors of all rural communities where hospitals had closed. On it were questions about the current status or use of the for- mer hospital and the existence of other services in the area.

The results section described the characteristics of communities where hospitals had closed: a small county population base, high u n e m p l o y m e n t (greater than 9%), declining real per capita income, and the availability of other health care services. Proba- bility of conversion was related to

Requests for reprints should be addressed to Policy Watch, University of Alabama at Birmingham, 405 DREB, UAB Station, Birmingham, Alabama 35294-0012.

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nongovernment ownership, lower unemployment rate, a decrease in per capita income, and the availability of other health care services. The authors suggest that programs that offer financial as- sistance to rural areas may encourage modification of planned or recently executed closures. Al- ternatively, regulatory or other actions could encourage flexibili- ty in the composition of service.

This investigation, though lim- ited in scope, provides some re- flection on what is happening to hospitals in rural areas. The con- clusion that other facilities seem to be available assuages some concern that the community may be left without any providers. Unfortunately, questions related to identifying and matching community need, access, and the de- cision to convert to alternative services are left unanswered. With the correlation of public ownership and greater likelihood of permanent facility closings, di- minished care for those who can least afford to pay looms some- what ominously.--DPA

A Missing Link in Reform

[Adler NE, Boyce WT, Chesney MA, Folkman S, Syme SL. Socioeconomic inequalities in health. No easy solution. JAMA 1993; 269: 3140-5.]

~ xpectations are high for a plan to ensure universal ac-

t_ cess to care; pencils are being ground to nubbins over fren- zied fiscal calculations. Yet, there is a chilly wind blowing over the heated debates of health reform. At the margins of the debate is a growing chorus of doubt about what to expect from universal access; concern that the expecta- tions of the public are pumped up for unrealistic improvements in health as a result of a new national investment in health services.

The impact of socioeconomic

status (SES) on health is almost totally ignored in the current reform discussions. In this review, Adler and colleagues explore the associations between SES and health, relationships that have been well known for over a centu- ry. Many studies show that higher income, education, and occupa- tional status are each associated with lower morbidity and mortality when compared to lower SES groups. What appears to have been missed is the linear relationship between SES and health.

Studies in the United States and Great Britain show increasing mortality with decreases in occu- pational status and years in school at all levels; indeed, this linear relationship is even observed within neighborhoods. Similarly, racial differences in health status are in large part accounted for by differences in SES.

Perhaps the most intriguing information in this article is the ab- sence of a strong relationship between heal th insurance and health status. The SES-health gradient persists in countries with long histories of universal access to health care, raising doubts about the potential for improving health through universal health insurance alone. Moreover, these SES differences are found in a broad range of diseases from the treatable to the palliative. Appar- ently, medical care alone will have little impact on health status, es- pecially for those at the bottom of the SES ladder.

So now we understand that health insurance does not equal access to care and access to care does not necessarily equal improvements in health status. Oth- er important factors in the SES- hea l th g rad ien t are hea l th behaviors (smoking, diet, and ex- ercise) and risk factors (cholester- ol, obesity, and blood pressure). Each shows a linear relationship with SES and should be addressed in the continuum of poli-

cy initiatives designed to improve the health of the nation's citizens. Other risk factors that are often overlooked include job-related stress, environmental exposure, and SES-related stress.

Well, what is a country to do with this sobering information? For all the painful gnashing of teeth over plans for health reform, universal access and insurance reform are by far the easiest targets in the complex and rich matrix of health status and society. Physi- cians can address many of the SES-health- related interactions in their practices. For the policy- maker it is imperative to keep an "eye on the prize," not to pack up the tents after universal access is achieved. If improved health is a goal of the health care system, then the next issues to address are those related to SES.--MM

While Another Linkage Is Found

[Franks P, Clancy CM, Gold MR. Health insurance and mortality. Evidence from a national cohort. JAMA 1993; 270: 737-41.]

I f the goal of health care reform is to improve the nation's health while it tries to improve

the health of the system, the pre- vious review,"A Missing Link in Reform," makes an overlooked point of seminal importance: the effect of socioeconomic status (SES) upon morbidity and mortality supports the contention that devoting equal time to improving education and increasing income would have a greater salu- tary effect than would simply increasing financial access to care. As the authors point out, income distribution is a powerful deter- minant, and the prescription is self-evident.

Nevertheless, the agenda for now is health care reform. It is re- inforcing to learn that there is indeed a relationship between the

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lack of health insurance and sub- sequent mortality, as shown by the recent repor t of Franks, Clancy, and Gold. They carried out a longitudinal analysis, track- ing two groups of adultsmthose privately insured and the unin- suredMwho were part of the First National Health and Nutrition Examina t ion Survey of 1971 through 1975 and who were fol- lowed prospectively until 1987.

They found that 9.6% of the privately insured and 18.4% of the uninsured had died by the end of their observation period. Adjust- ing for SES and other variables still left a hazard ratio of 1.25 for those lacking insurance. Stated another way, the lack of insurance is associated with higher mortality independent of all other risks.

Consider again the question posed in the review preceding this one: What is a country to do? First, level the playing field by en- suring universal access to care through a mandatory insurance. Second, take the steps necessary to translate financial access into a place at the bountiful table of health services for all people. Third, tool up to address the ineq- uities in health status, morbidity, and premature mortality that are so clearly related to SES. Obvi- ously, true reform initiatives are multifaceted and are only com- mencing. There is still a long jour- ney ahead.DWFB

Mortality b la HCFA

[Burns R, Nichols LO, Graney MJ, Applegate WB. Mortality in a public and private hospital compared: the severity of antecedent disorders in Medicare patients. Am J Public Health 1993; 83: 966-71.]

T he annual release of the Medicare mortality figures is a feeding frenzy for re-

porters and a nightmare for hospital administrators and Boards.

Trying to explain an extremely complex processmillness, hospi- talization, and dea thmtha t has been distilled to a rarified number is nothing short of impossi- ble. Reporters will dwell on high mortality statistics, and hospitals can tout their success at combating the grim reaper. For the public hospital struggling to maintain credibility and a rea- sonable market share of Medic- aid and Medicare recipients, the annual release is often another albatross.

Burns and colleagues have compared mortality at two university teaching hospitals in the same city using the Health Care F i n a n c i n g A d m i n i s t r a t i o n (HCFA) model with the addition of severity-of-illness measures. The conditions studied--pulmo- nary disease, sepsis, cancer, and acute heart disease--were those in which the public hospital "was near or had exceeded the upper limits of the predicted mortality rates."

In general, the patients from the two hospitals were compara- ble in comorbid diagnoses, although the patients admitted to the public hospital had more pre- vious hospitalizations and total comorbid diagnoses, and were more often admitted through the emergency room. Patients who died in the two hospitals had very d i f fe rent character is t ics: the public hospital pat ients were more severely ill at admission, had a more severe course, and were more frequently admitted from a long-term-care facility. Adjusting the original HCFA mortality model for severity of illness did not alter the perfor, mance characteristics of the private hospital, but significantly improved them for the public hospital.

For many public hospitals, the HCFA mortality data have simply made life more difficult in an already stressed system. Pleas for

recognition that the patient admitted to the public hospital is generally sicker and less well con- nected to a social network, both of which profoundly impact mortality, have been largely ignored. To assail quality based on the currently promulgated data is a disservice to the public providers struggling to provide competent services to an ever-growing population of vulnerable persons.m MM

Playing Jeopardy With Drug Costs: We Have an Answer But What Is the Question

[United States Government Accounting Office. Prescription drug price review, Government Accounting Office, February 17, 1993; GAO/HRD-93-51.]

I n t h e current debates over health care costs, one of the prime suspects is drug costs.

Recent s tudies from Canada show that drug manufacturers charge less for many drugs in Canada as compared to drugs sold in the United States. This GAO Report details the impact of Canada 's P a t e n t e d Medicine Prices Review Board Canada es- tablished in 1987. The Canadian Board deals with patented medi- cines only and is charged with en- suring that prices of patent medi- cines are not expensive. If a price is excessive, the Board can order a price reduction but cannot en- force the order.

In 1991, the price of 70% of new drugs complied with the Board's guidelines. Over three fourths of the outliers lowered prices or lim- ited planned future increases. For existing drugs, 85% showed initial compliance and virtually all others fell within guidelines by the next pricing period. Most pricing actions have been accom- plished without punitive steps to date. GAO's analyses found that U.S. drug prices are on average

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one third higher than those under the Canadian Board purview.

Unfortunately, "real spending" on drugs has not been influ- enced by the Board, because it has no control over utilization. For example, in some of Canada's provinces, drug costs for the el- derly have increased by up to 20% per year, notwithstanding the patented drug controls. Clearly, other strategies are needed if to-

tal spending on drugs is to be controlled, because utilization is the result of many factors. The factors being studied in Canada and elsewhere include: degree of access to full drug coverage, the number of doctors prescribing to any one patient, and the age of physicians, to mention a few. These factors will require new approaches and are now the sub- ject of new efforts.

The moral is: Controls on patent drug costs are only one com- ponent of the spending equation, and a review board is no magic bullet. The problem is that it is not the answer to the question of utilization. If U.S. officials want to decrease total drug spending, a more comprehensive policy is needed, even if patented drug costs are controlled. Canada has proven that .--WDD

P O L I C Y S P E A K

,'It is worth noting the irony that the courts and elected officialdom continue to wrestle with the right to die at one end of life and with the right to life and/or abortion at the beginning but they have paid much less attention to rights during that much longer span of life in between. These political energies expended or not expended ratify the law of the squeaky wheel. Advocates for both the

terminally ill and the unborn have been much more vocal and effective than those championing the cause for those from one day old to 65 years old who are merely potentially or actually ill."

wBridgers WF: Health care reform. The dilemma and a pathway for the health care system. St. Louis: G W

Manning, 1992: 85.

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