_-- Public Policy Network - Posting to PUBPOL-L --_ To Group Members: My latest article is enclosed for your use. I appreciate any comments or criticisms. Thank you Stephen Miles Sacks ************************************************************************ MARKET PENETRATION TRUMPS EDIFICE COMPLEX - POSTMODERN MEDICINE AND SYSTEM RESTRUCTURING MAKE CERTIFICATE OF NEED LICENSING OF HEALTH FACILITIES PASSÉ (Article length: 1200 words) ©1996, Stephen Miles Sacks, PhD, National Policy Research PO Box 381, Ardmore, PA 19003, USA Telephone and Fax: 610-658-2332 E-mail: [log in to unmask] Permission to reproduce this article in part or in whole is freely granted provided the author’s copyright notice is included. On December 19, 1996, the legal authority for Pennsylvania’s Certificate of Need licensing expired. "Good riddance" to an outmoded approach. Now the entire health system in the Region can undergo a much needed restructuring through market forces. Facilities licensing approaches are passé and counter-productive to the ideal of providing high quality health care to all economic groupings. For the emerging health systems and new technologies are better suited to dynamic service delivery methods - featuring early diagnosis, rapid introduction of new kinds of treatment, health education, rehabilitation, and preventive medicine. The rationale of the certificate of need approach is the large dollar value of rejected applications for duplicate expensive facilities in the same locale - on the scale of hundreds of millions of dollars in Pennsylvania alone in recent years. However in actual practice, the long-term effect in containing costs has been only fair to poor and because the license approach limits productivity and protects the market for those who al-ready have it and keeps innovative and more efficient newcomers from the scene. New medical methods are well-suited to dispersal to hosts of smaller units in outlying communities. The developments are ideally suited to meet the needs of the Region’s middle income population groupings that are continually migrating from the dense urban areas - where most of the large research medical schools and service centers are located. The ridiculous irony is that the patients’ who are the most reluctant to travel from the hinterlands to urban facilities such as Temple University’s Hospital in North Philadelphia or the University of Pennsylvania’s Hospital in West Philadelphia are by their actions sayings "I would rather die first." Yet, the best health and medical services should be made available to everyone without regard to locale or income grouping. The new markets extend to the hinterlands beyond the suburbs. And in order to penetrate them, every one of the six existing medical research and medical schools in Philadelphia is acquiring community hospitals and medical offices in the areas. The acquisition and merger boom is unparalleled since the hospitals construction and bond financing booms of the 1970’s. The "edifice complex" is trumped by market penetration. All six of Philadelphia’s medical schools have formed their own health systems to market health insurance as well as to compete against each other and against the expanding power of the major health insurance managed care organizations - such as US Healthcare/Aetna and Independence Blue Cross. That is a good thing because the stand-alone health insurance and managed care organizations are a bane to progress. They just add a hefty fat layer of administration and high paying executive salaries to the health bill. Having competition among provider centered health systems makes much more sense for the sake of quality as well as for containing costs. So it is that the rivalry among the medical schools and managed care organizations is fierce. The University of Pennsylvania (Penn) and Temple University Health Systems are being challenged by the Allegheny University Health System - a newcomer from Pittsburgh to the Philadelphia area. In addition to several hospitals, the Allegheny System also acquired two medical schools in Philadelphia, namely, the Hahneman University and the Medical College of Pennsylvania (the latter includes the Eastern Pennsylvania Psychiatric Hos-pital that was formerly the Commonwealth of Pennsylvania’s citadel of psychiatric re-search and training. Also, the Pennsylvania College of Osteopathic Medicine was acquired by the Graduate (Hospital) Health System, while the Jefferson University Medical School and Hospital has not yet publicly announced its merger intentions. Still, there is the threat of outside medical institutions coming to the Philadelphia Region to penetrate the market such as the Hershey Medical Center, Sloan-Kettering from New York and Johns Hopkins from Baltimore. Biomedical breakthroughs in genetic identification of causes of diseases and physical disabilities as well as the development of vaccines and ways to regenerate tissue and nerves are just beginning to provide the promise of new thresholds of health and quality of life. There is no certificate of need that can accurately direct where or in what form the new breakthroughs will emerge, and having certificate of need licensing can only retard the breakthroughs to longer life. Since biomedical advances are very costly and carry intellectual property rights, the market-place and investors are the best determiner of who and what organizations become the foremost health care providers in the future. Where market failure exists, public administration should to contract for designated services to fill the gap. And overcoming market failure is a role that can be efficiently done through public payments to the medical school research centers and their health systems, for they are the most knowledgeable of the needs of patients they serve. Further, the burden for paying for the costs of upgrading existing facilities and building new ones as well as the costs of all the modern electronic and mechanical equipment and furniture should be borne by the general tax base and not the patients’ medical bills. Public financing for health/medical facility modernization does not have to be direct but can be done by public guarantees of loans through private lending in-stitutions or bonds floated in the market place. Special trust funds for research and technological modernization should be established by public and private sources. In such a system, the costs of securing capital, conducting research, and professional training is not be recovered through patients’ fees for service. Such expenses greatly in-flate the costs of care and cause patients to bear the burden at the time when the burden the pay them is the greatest. Similarly, the costs of research and training should be re-moved from patients’ fees and funded separately. The financing of major capital investments, research and training should come from the combination of many sources, including: the general tax base, public and private foundations, and proceeds from civil lawsuits against firms whose products cause health problems or environmental damage. Also, the costs of providing services to those who do not have health insurance and cannot pay their medical bills should be borne by the general tax base and not patients’ fees. Finally, the common practice of blaming health and medical providers for escalating costs for giving the public what it demands is illogical and irrational. Public criticisms that America’s health and medical care bill is heading upwards of 20 percent of the gross domestic product is a counter-productive argument. Instead consider the prospect of having upwards of 40 percent of a nation’s economic activities for promot-ing health and the quality of life. Such a degree can greatly spur the domestic economy because it drives upward in a multiplier effect the entire range of economic activities throughout the nation among the multiplicity of suppliers and support service organizations. Longer life through postmodern medicine can thus become America's new basic industry, the keystone of the domestic economy, creating better paying skilled jobs for the multitudes. I for one think it is a desirable goal. ### ****************************************************************************** Biographical Note: Dr. Sacks has been one of Pennsylvania’s top health systems planners and strategists. During the 1970’s in duly appointed positions in the Governor’s Office, the Department of Public Welfare, the House of Representatives, and the Attorney General. He researched and published several seminal studies of hospital costs, organized state-wide cost containment programs, and authored land-mark state regulatory and planning legislation for health care. - Author of numerous bills and legislation in health and welfare including professional licensing acts. He advocated the maintenance of the regional Health Systems Agency to be the sole body for Philadelphia region’s health planning and certificate of need deliberations. And he has spoken widely on the subjects and took numerous administrative as well as legal actions to ensure the viability of the Health Systems Agency (HSA). During the 1990’s he intervened with the Clinton Administration to reverse its decision to move the US Department of Human Service’s (HHS) Regional Office from Philadelphia to Baltimore that would have left Philadelphia’s key health and medical establishment without a high ranking local HHS officials. His positions included: ° Manager of the Governor's Comprehensive Health Care Program, Executive Office of the Governor. ° Consultant to the Attorney General for Health, Environmental, & Science Policies ° Assistant to the Speaker of the House of Representatives, authored health and welfare legislation ° Counsel to the Committees on Health and Welfare and Consumer Protection, House of Representatives ° Director, Pennsylvania Hospital Cost Project ° Senior Program Consultant for Mental Health, Eastern Pennsylvania Psychiatric Institute ° Supervisor of Social Services ° Assistant Director of Medicare Audits, Blue Cross fiscal intermediary in Southeastern Pennsylvania covering virtually all the major and teaching hospitals and nursing homes Dr. Sacks earned his BS, MPA and PhD degrees at Temple University. He taught political science, small business management, and intellectual heritage at Temple and he was formerly the Director of Temple’s Small Business Development Center and Entrepreneurship Institute. He is presently a science and technology programs consultant and resides in Ardmore, Pennsylvania. ### ************************************************************************** _------- -------_ Public Policy Network - PUBPOL-L http://www.hhh.umn.edu/Archives/PUBPOL/ Commands to: [log in to unmask] Subscribe: SUB PUBPOL-L "Your Name" _ Unsubscribe: UNSUB PUBPOL-L _ ------- -------