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How Hospitals’ Profit Orientation Led to Covid-19 Unpreparedness

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How Hospitals’ Profit Orientation Led to Covid-19 Unpreparedness

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The Wall Street Journal has a new story, Why Did Covid Overwhelm Hospitals? A Yearslong Drive for Efficiency, which is simultaneously enlightening and frustrating. On the one hand, this extensively researched piece confirms what many observers have strongly suspected, that major hospitals’ fixation with efficiency meant they had no slack when Covid-19 struck. And the article gives a key insight: the critical shortages most often weren’t beds but medical personnel, above all emergency room nurses, whose pay levels rapidly escalated as medical systems desperately tried to hire anyone who was free (which included nurses rolling off contracts).

On the other, the Journal’s reporters tacitly accept the neoliberal point of view that efficiency, which in a private sector context means lowering costs and increasing profits, is a reasonable prime directive for hospitals (and by implication organizations generally…as opposed to safety and service quality. If humans were optimized for efficiency, we wouldn’t have two kidneys, for instance, since it’s possible to live with only one. Excess capacity is pro survival, but like all insurance, it comes at a near-term cost.

The article also attempts to paint this bottom-line-driven approach as not all that bad by focusing the story around the Banner Health, which is nominally a not for profit, and per the story, did an adequate job of Covid-19 improvisation. The article does describe how the well-funded Banner’s quest for emergency staffing hurt smaller, poorer hospitals in the state.

The story does manage to work in, but underplay how these nominal not for profits in fact have strong imperatives to lower costs. Large medical systems, like universities, have been colonized by MBAs or MBA indoctrinated executives and senior managers who expect to be paid at private sector levels. Peter Fine, the CEO of Banner, made $25.5 million in 2017 and $10.5 million in 2018. One key tell:

Over the past five years, Banner Health has reported a combined $941 million in operating income and another $1.09 billion from its investments, according to Banner financial disclosures.

Banner is more in the investment business than the patient business. This resembles the behavior of the well-endowed universities like Harvard, which are increasingly hedge funds with education affiliates. One of the justifications for a lavishly paid CEO and senior administrators is all the fundraising they do.

As the story notes:

In recent years, hospitals have shifted resources to outpatient settings for a growing number of lucrative, high-volume procedures such as knee replacements, bolstering staff outside hospitals where the sickest patients get care….

The upshot is fewer hospitals, with less capacity for intensive services…

Even large nonprofit hospitals, which receive federal and local tax breaks and treat two of every three patients in the U.S., according to federal data, have adopted similar financial models.

“They are not the ‘Little Sisters of the Poor’ charitable institutions that hospitals once were back in the 19th century,” said Martin Gaynor, an economics professor at Carnegie Mellon University who studies the health industry. “These are big businesses.”

Admittedly, hospitals weren’t seeking to reduce their number of beds and move more patients to outpatient services in a vacuum. Recall, for instance, how many accounts of New York’s Covid-19 train wreck stressed how Andrew Cuomo not only pushed, but also took credit for, the reduction in hospital bed over the years. This goes back to the acceptance of neoliberal objectives for the provisions of public or ought-to-be public services. Yet the US has wound up with perversions like just-in-time practices in hospitals while the US simultaneously has the most bloated health care system in the world.

Now to the story.

The state’s governor in late March ordered hospitals to be ready within a month to increase their available beds by as much as 50%, which Banner and other hospitals did. But they didn’t also ensure there would be enough skilled nurses to handle the possible crush of sick patients…

In June, as patients poured in from Northern Arizona, Banner halted transfers to Banner-University Medical Center Phoenix, one of its premier facilities, according to a spokeswoman. It shifted patients to Banner’s other area hospitals to manage the strain on its hospitals, including its staff….

Banner pulled staff from its ambulatory centers to help its ICUs. Lacking needed qualification, they were often paired with ICU-certified nurses. “We put them through very quick training programs to upskill their capabilities,” Mr. Fine said. It eventually trained and reassigned 700 employees.

It also hired 898 nurses and 113 respiratory therapists on short-term contracts.

By shuffling patients across its hospitals and hiring more staff, Banner ultimately denied only 13 transfer requests from the state and accepted 870 patients through the state-coordinated transfer center, a spokeswoman said.

The Journal isn’t in a position to opine, but double-teaming ICU nurses with newbies isn’t going to double capacity. The ICU nurses if anything will be mildly distracted in trying to manage what amount to assistants who may not yet know where everything is the facility. This sounds like 1 + 1 = 1.4

Back to the article:

Less financially strong hospitals, which tend to be public or rural, were more vulnerable. Well-funded hospitals across the country soaked up much of the available supply of traveling nurses, leaving the rest priced out of the market….

By mid-June, the staff at Valleywise Health, a large public hospital in Phoenix, was worn down from pulling extra shifts. Sherry Stotler, the chief nursing officer, tried to hire 20 to 30 traveling nurses. “We needed to let people take time off,” she said.

She was able to hire only six….

Valleywise, usually the hospital of last resort in the Phoenix region, began to turn down transfer requests from rural hospitals that wanted to send their sick patients to a better-equipped urban hospital.

The situation was also chaotic at Yuma Regional Medical Center, a three-hour drive southwest of Phoenix on the Mexican border. The hospital had struggled to recruit to its remote location even before the pandemic…

Yuma Regional pulled nurses from its operating rooms, canceling surgery to free up staff. But on peak days in June, it was transferring as many as 11 or 12 patients a day on helicopters and airplanes, because it didn’t have enough nurses…

Staff from other parts of the hospital were brought in to care for less-critical patients, but despite the reinforcements, nurses in the emergency room were stretched too thin for the number of critically ill who needed their help, [emergency room nurse] Ms. [Yasmin] Salazar said.

She couldn’t leave one dangerously sick patient to help when an emergency code sounded in the room next door. “I couldn’t go,” she said. “We all had a critical patient.”

Yuma Regional’s ICU also filled up. Typically, an intensive-care nurse is assigned to one or two patients. That increased to three to four patients for each nurse as the surge took off, said Gail Galate, one of Yuma Regional’s intensive-care nurses who works overnight in the hospital.

The article describes how the state stepped in to hire traveling nurses for hospitals that could not afford them, but this was after the crisis had started to wane.

Some Wall Street Journal readers didn’t buy the “This was an emergency, of course things were a mess” presumption. Many were not impressed with the whinging about nurses’ pay. For instance:

andrew shaw

A hospital that is run purely by market forces ends up full of traveling nurses who chase the highest salary and staff that constantly needs to be retrained. Meanwhile, the hospital could hire dozens of nurses for what it pays their CEO

Peggy O’Neil

If the CEO could spend one day with an RN, he would be humbled. I did the job for 37+ years and it takes everything out of you.

Traveling nurses operate @ 50-60% competency as they are not familiar with the systems of a particular hospital.

As someone else mentioned, the CEO’s salary could cover the salaries of many nurses.

Patients today are sicker as they cannot be hospitalized unless they meet insurance/M-Care criteria. Admission criteria in the past was much more lax.

Proper staffing is critical and it is constantly challenged by the ‘bean
counters’ who know nothing about patient care.

There are many RN’s in the country, but most will not work under these conditions.

And one made an important observation. Even though public health is managed at the state and local level, there’s not reason not to have a better national overlay:

Gary McCale

Much of the failure resulted from a shameful lack of preparation–specifically the failure to bring hospitals into a national Incident Command System. ICS is the backbone of U.S. wildfire response; it enables the rapid deployment and redeployment of critical resources in emergency conditions at a national and even international level. In fact, many hospitals and EMS systems use ICS for local tactical situations. But there is no reason in the world to not bring the medical system into ICS like the wildfire community has. Even with the incredibly intense, expansive fires on the Western seaboard you do not see governors hollering “I need ten thousand fire engines” like Cuomo was screaming about needing ventilators early in the pandemic (which need, by the way, never materialized at the scale he was screaming for). Taking that narrow facet, under ICS, a national pool of ventilators could have been established with courier aircraft to deliver them and teams to train/operate them.

Needless to say, a lot of people in positions of authority are falling back on the “whocouldannode?” excuse, when experts have been warning of a pandemic for at least 20 years and the countries hit by SARS overall had much better responses. The default of our putative leaders, of trying to shift blame, guarantees we won’t learn from our bad experience.

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