By Harold M. Koenig, MD
Vice Admiral (Ret.) Harold M. Koenig is former Navy surgeon general and currently serves as chief medical officer of AwarePoint, which develops RTLS systems.
For several decades America has been alarmed about rapidly rising health care costs that have been increasing at triple the overall rate of inflation. Hospital care is the biggest single component of health care costs. This rate of health care inflation is unsustainable and hospitals must do something about it. Some suggestions are made at the end of this post, but first a quick review of how we got here.
Approaching the second decade of the new century economic headwinds brought a financial slow down, recession, rising unemployment, financial institution failure and even threats of sovereign default. Retrospectively the reasons for much of this are clear. For decades we bought too much on credit, then sold the credit as bundled derivatives to other nations. Interest is now due, payable and growing on this debt.
America’s housing bubble deservedly receives much of the blame for these economic problems, but there is plenty to spread around. Traditional lending standards had been relaxed so much that just about anyone could get credit. The diligence was not done to determine if borrowers would realistically ever be able to pay back their loans.
Warnings were sounded by traditionalists, but the cacophony from those enjoying new homes, autos, electronic gadgets and nice vacations drowned them out. Many people believed we were in a new economy that would continue to only grow and never contract. Recessions were thought to be a historical relic.
At the same time demographics were as always, destiny. The baby-boom generation was rapidly approaching retirement, and promises for pensions and healthcare benefits exceeded the investments to finance them. Government at all levels and private enterprises were faced with the reality that keeping these promises was a conundrum.
The 2010 census showed that of the 310 million people in the USA 15% lacked financed health care. That is equivalent to the population of Spain. This was an issue of national shame and international embarrassment.
In January of 2009 the new administration and congress put getting financed health care for all in this country at the top of their legislative agenda and passed the Patient Protection and Affordable Care Act (PPACA). It is now going through the inevitable court challenges and its legality will ultimately be determined in the Supreme Court, probably in 2013, but implementation has already started. Built into PPACA is a requirement that the government start collecting money to pay for benefits before they are provided. PPACA isn't like buying something on credit; it's more like the long-gone consumer "lay-away" plans. So, when benefits under PPACA become available there should be money to pay for them.
PPACA was made affordable so enabling legislation could be passed by identifying areas where costs could be reduced. Medicare is a large part of healthcare costs, so $500 billion (that's a half-trillion) was removed from its budget over the next decade. The biggest part of Medicare spending is for hospital care so huge reductions in hospital reimbursement are coming. Medicare now provides over half of most private sector hospital's revenue. Medicare is first payer for military retirees receiving care under Tricare for Life, so Medicare reimbursements to the Military Health System will also decrease. Health care costs in Veterans Administration hospitals have been increasing, so though not receiving reimbursement from Medicare, they will also be under pressure to reduce costs.
Federal hospitals have only one way to cope with the coming decrease in financial resources, become more efficient. The sooner they start the better off they will be. Real Time Location Systems (RTLS) are a new technology that can help hospitals become more efficient, safer and reduce costs.
Here are some links explaining how RTLS can help:
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