A Tale of Two Cities Highlights Healthcare Reform Failure

Last Updated Jan 25, 2010 5:58 PM EST

As healthcare reform languishes in Washington, the needs of the country's uninsured continue to burden the healthcare system. In Minneapolis, for example, the Hennepin County Medical Center (HCMC)-the leading safety-net hospital in the region--is in such dire financial shape that it has asked neighboring counties to start pitching in to help cover the cost of indigent care.

Hennepin County reimburses HCMC for about 75 percent of the cost of treating uninsured county residents. But in the wake of Minnesota Gov. Tim Pawlenty's recent decision to end a program that subsidizes healthcare for the working poor, HCMC is facing a substantial reduction in funding. Even though the county recently hiked taxes and will give part of the proceeds to the hospital, it expects to lose $25 million this year.

Many of the indigent patients who seek care at HCMC come from neighboring areas. So the hospital's administration sent a letter to the board chairs of six nearby counties, requesting that they contribute amounts commensurate with the numbers of their residents that HCMC cares for. Their response: it's the state's responsibility.

While the local authorities point their fingers at the state, Pawlenty and the Minnesota legislature are undoubtedly hoping for more federal aid to help pull the state out of its recession-fueled budget woes. Meanwhile, Congress dithers over whether it is politically possible to provide anything more than token gestures to cut the ranks of the uninsured.

In New York City, money is also at the root of a conflict between UnitedHealth Group and Continuum Health Partners, a consortium of five hospitals, including Beth Israel Medical Center and St. Luke's-Roosevelt Medical Center. Aside from the usual tussle over rates, United wants Continuum to accept a provision that would allow United to pay a hospital half-price for any hospitalization that isn't reported to it within 24 hours of the patient's admission. United, which has extracted the same concession from other hospitals across the country, claims that the prompt notification is required to ensure quality and cut costs.

The negotiations with Continuum seem to have reached an impasse. In recent weeks, United has sent letters to tens of thousands of patients, warning them that they might not be covered in the future if they seek treatment from Continuum hospitals and physicians. While this is a common tactic in hospital-insurer standoffs, Continuum has obtained a court injunction to prevent United from cutting patient access to its services until the legal issues have been arbitrated.

The biggest issue appears to be rates. United claims that Continuum is seeking a 40 percent increase in payments. Continuum does not deny that it wants a big raise, but it claims that the sticking point in the negotiations is the notification requirement. The hospitals view the possibility of losing half of their reimbursement for a simple clerical error as a draconian punishment.

The contrast between Continuum's predicament and that of the Hennepin County Medical Center, however, is much more extreme than any potential loss Continuum might incur from the United policy. In a country that is increasingly divided between healthcare haves and have-nots, unfortunately, we will see many more such incongruous events.

  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.