{"id":663545,"date":"2018-12-28T07:00:43","date_gmt":"2018-12-28T14:00:43","guid":{"rendered":"https:\/\/nmpolitics.net\/index\/?p=663545"},"modified":"2019-01-09T13:45:49","modified_gmt":"2019-01-09T20:45:49","slug":"opportunity-costs-weighing-a-joint-venture-between-childrens-hospitals","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2018\/12\/opportunity-costs-weighing-a-joint-venture-between-childrens-hospitals\/","title":{"rendered":"Opportunity costs: Weighing a joint venture between children\u2019s hospitals"},"content":{"rendered":"<div id=\"attachment_663549\"  class=\"wp-caption module image alignnone\" style=\"max-width: 771px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-663549\" src=\"https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/art_therapy-771x492.jpg\" alt=\"Maya Salviotti\" width=\"771\" height=\"492\" srcset=\"https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/art_therapy-771x492.jpg 771w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/art_therapy-336x214.jpg 336w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/art_therapy-768x490.jpg 768w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/art_therapy-1170x747.jpg 1170w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/art_therapy.jpg 1200w\" sizes=\"auto, (max-width: 771px) 100vw, 771px\" \/><p class=\"wp-media-credit\">Jett Loe \/ UNM Health Sciences Center<\/p><p class=\"wp-caption-text\">Two-year-old Maya Salviotti works with pediatric oncology resident artist Angus Macpherson at the UNM Children\u2019s Hospital.<\/p><\/div>\n<p>Mike Chicarelli strode the halls of the children\u2019s pavilion at the University of New Mexico Hospital, fist-bumping nurses and proudly pointing out the hospital\u2019s kid-friendly touches: the surgery waiting room with seats shaped like hot air balloons, the intake counter designed like a 1950s soda fountain.<\/p>\n<p>The former emergency nurse, now chief operating officer of UNM Hospitals, was showing off what $234 million could buy a decade ago in infrastructure and technology. But all the bells and whistles haven\u2019t been enough for UNM to hold onto its top pediatric specialists.<\/p>\n<p>Competition between UNM and Presbyterian Hospital \u2013 the two largest providers of pediatric specialty care in the state \u2013 has made it hard for either to sustain programs in cardiology, neurology and other areas of children\u2019s medicine.<\/p>\n<aside class=\"module align-left half type-aside\">\n<h3>About this article<\/h3>\n<p>This article comes from\u00a0<a href=\"http:\/\/searchlightnm.com\/\" target=\"_blank\" rel=\"noopener\">Searchlight New Mexico<\/a>, a nonprofit, nonpartisan news organization dedicated to investigative journalism. Read its Raising New Mexico series\u00a0<a href=\"https:\/\/nmpolitics.net\/index\/series\/raising-new-mexico\/\" target=\"_blank\" rel=\"noopener\">by clicking here<\/a>. Support its work\u00a0<a href=\"https:\/\/www.newsmatch.org\/organizations\/searchlight-new-mexico\" target=\"_blank\" rel=\"noopener\">by clicking here<\/a>.<\/p>\n<\/aside>\n<p>The hospitals are now discussing a possible joint venture \u2013 a single children\u2019s hospital, unified under common governance or housed under the same roof \u2013 that would help New Mexico retain hard-to-recruit pediatric specialists, improve care coordination and raise the bar on patient outcomes.<\/p>\n<p>Health-care professionals argue that this would make good medical sense. But what about financial sense?<\/p>\n<p>It depends whose wallet you\u2019re talking about.<\/p>\n<p>When it comes to new infrastructure, \u201chospitals are extremely, extremely expensive to build,\u201d Chicarelli said. \u201cWhat architects generally use as a rough order of magnitude is between $1.5 million and $2 million per bed.\u201d<\/p>\n<p>UNM\u2019s children\u2019s pavilion has 152 beds; Presbyterian\u2019s Children\u2019s Center has 106.<\/p>\n<p>If the two unite, they\u2019ll effectively create a monopoly in children\u2019s specialty medicine \u2013 one that could have unintended economic consequences for some New Mexican families. The price of improved access to specialists in a rural, Medicaid-dependent state may be more expensive care for those who rely on private insurance.<\/p>\n<p>A recent study from the National Bureau of Economic Research showed that hospitals negotiate higher prices when they face less competition. The study, which focused on general medicine, found that hospitals with regional monopoly power charge an average of 15 percent more than those in areas with four or more hospitals.<!--more--><\/p>\n<p>Because Medicaid payments to providers are fixed and \u201ccapitated\u201d \u2013 meaning providers are paid a flat rate per person, not per service rendered \u2013 hospitals often negotiate inflated prices with private insurers to recoup the uncovered cost of care to low-income patients. Those costs are passed on to consumers of private health insurance.<\/p>\n<p>In New Mexico, one third of children are covered by their parents\u2019 employer-sponsored health plans or insurance purchased in the private market.<\/p>\n<p>The costs to families of children with special needs are already high. Many are forced to travel out of state due to longstanding competition between Presbyterian and UNM; insurance companies have restricted their networks to one or the other hospital system, and neither institution serves the volume of patients required to retain a staff of specialists.<\/p>\n<p>A task force, convened by the Legislature in the past session made 10 recommendations to improve the situation. The top suggestion was to create a \u201csingle, unified Children\u2019s Hospital incorporating all pediatric specialties available in New Mexico,\u201d starting with a joint complex care clinic that would give parents one-stop access to specialists.<\/p>\n<p>Jason Mitchell, Presbyterian\u2019s chief medical officer, said his organization supports a feasibility study for \u201ca true children\u2019s hospital that is built for children, designed for children, staffed for children.\u201d<\/p>\n<p>Chicarelli made clear in his tour that UNM\u2019s Children\u2019s Hospital already fits the bill. And in a Twitter post last month, UNM repeated a favorite claim: that it\u2019s proud to host New Mexico\u2019s \u201conly Children\u2019s Hospital.\u201d But it added a qualifier, saying the hospital looks forward \u201cto collaborating with other healthcare providers to continue to improve access to care for kids.\u201d<\/p>\n<div id=\"attachment_663550\"  class=\"wp-caption module image alignnone\" style=\"max-width: 771px;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-large wp-image-663550\" src=\"https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/hospital_exterior-771x498.jpg\" alt=\"UNM Children\u2019s Hospital\" width=\"771\" height=\"498\" srcset=\"https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/hospital_exterior-771x498.jpg 771w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/hospital_exterior-336x217.jpg 336w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/hospital_exterior-768x496.jpg 768w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/hospital_exterior-1170x756.jpg 1170w, https:\/\/nmpolitics.net\/index\/wp-content\/uploads\/2018\/12\/hospital_exterior.jpg 1200w\" sizes=\"auto, (max-width: 771px) 100vw, 771px\" \/><p class=\"wp-media-credit\">Jett Loe \/ UNM Health Sciences Center<\/p><p class=\"wp-caption-text\">UNM Children\u2019s Hospital in Albuquerque.<\/p><\/div>\n<h3>Consolidating services may not mean cheaper care<\/h3>\n<p>Academic journals are littered with case studies of failed hospital mergers. The marriages in the 1990s of prominent health care networks \u2013 University of California San Francisco and Stanford, New York City\u2019s Mount Sinai and New York University medical centers \u2013 both ended in messy divorces.<\/p>\n<p>In the merger of the New York hospitals, opposition by NYU faculty provoked turmoil and mistrust, according to research published in the Journal of Academic Medicine. In California, disputes over funding flows frustrated the hospitals\u2019 merger, according to a study by Harvard\u2019s School of Public Health.<\/p>\n<p>And this is important: It isn\u2019t easy to mesh the culture of an academic institution like UNM with that of a community hospital like Presbyterian, according to Kate Becker, chief executive of UNM Hospitals.<\/p>\n<p>Such hospitals have different missions and ways of working, she said. Whereas surgeons at a community hospital see and treat patients exclusively, doctors in an academic setting double as instructors.<\/p>\n<p>But it can work, as hospitals in Indianapolis have proved. Back in the 1990s, Methodist Hospital joined forces with Indiana University Hospitals to form what is now called Indiana University Health.<\/p>\n<p>Like Presbyterian and UNM, the two were located about two miles apart. And the mission of the merger was akin to what New Mexico practitioners say they want for this state: to improve access to and retention of specialists, maintain clinical volumes and improve the stability of specialty care programs.<\/p>\n<p>New Mexico has the right conditions for a unified children\u2019s hospital \u201cif everyone can recognize that there will have to be some tradeoffs,\u201d said Mark Wietecha, president and CEO of the Washington, D.C.-based Children\u2019s Hospital Association, which represents 220 pediatric hospitals nationwide.<\/p>\n<p>Health care providers argue that when children\u2019s health is on the line, considerations about access, quality and safety should come first.<\/p>\n<p>For physicians, \u201cthe data suggests that the more procedures you do, and the more experience you have in a given clinical program, the better the outcomes,\u201d said Wietecha. \u201cCertainly, it\u2019s safer. For a community, getting to scale is important.\u201d<\/p>\n<p>But as Kaiser Health News editor-in-chief Elisabeth Rosenthal argued in <em>An American Sickness<\/em>, her 2018 book on the health care industry, the economies of scale achieved by combining administrative functions when hospitals merge don\u2019t always translate to lower prices.<\/p>\n<p>\u201cWith their market power, big providers can simply demand more.\u201d<\/p>\n<p><em>An earlier version of this story misidentified Mark Wietecha as the executive director of the Children&#8217;s Hospital Association. He is the president and CEO of the organization.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Health-care professionals argue that consolidation between two Albuquerque hospitals would make good medical sense. But what about financial sense? It depends whose wallet you\u2019re talking about.<\/p>\n","protected":false},"author":1,"featured_media":663549,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[234,117,3276],"class_list":["post-663545","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-children","tag-health-care","tag-unm"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/663545","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=663545"}],"version-history":[{"count":5,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/663545\/revisions"}],"predecessor-version":[{"id":666879,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/663545\/revisions\/666879"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media\/663549"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=663545"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=663545"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=663545"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}