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Demise of private health care would limit medical innovation

Forum: Guest column

By Jim Geddes, M.D.

Dr. Jim Geddes
The debate over health care is occurring across the nation, but it also has significant implications here at the University of Colorado. Elimination of the private health care industry would diminish the quality and productivity of our Anschutz Medical Campus, along with other medically related research at CU.

Recently, as new regents, Joe Neguse and I were given a tour of the Anschutz Medical Campus by University of Colorado Denver Provost Rod Nairn and others. We were taken to the top floor of the old Army hospital to view the campus from its roof. As we stepped from the elevator, we stood before the Eisenhower Suite. We were offered a tour of the room where former President Dwight Eisenhower recovered from a major heart attack in 1955, during his first term. I was struck by the small size and austerity of his quarters. As I noted the utter absence of medical equipment associated with a modern hospital room, it occurred to me that in 1955 we had little to offer our ailing president other than R&R, oxygen and a little foxglove.

Over the ensuing 50 years, we have made spectacular headway in our battle against heart disease and most other illnesses. Our brilliant researchers and innovative physicians, nurses, allied professionals and the biotechnical/pharmacological industries have advanced medicine at a dizzying pace, substantially lengthening our lives and diminishing all manner of human misery.

Although our government has made an important contribution to this effort, primarily in support of basic research, by far the greatest share of the financing for new efficacious and safe medical products and technologies has been provided by revenue from the sale of these advancements to medical consumers.

Developing a new drug or technology is a financially risky business, because most attempts fail. Without the potential for substantial profit for their few successes, businesses and other investors will have no interest in continuing these efforts. If the "development" phase of the process ceases, basic research activities also will dry up.

A demise of the private health care sector resulting from a government takeover via a single-payer system would largely eliminate the financing of continued medical innovation in this country. There are plans within President Obama's current health care reform bill before the House of Representatives to regulate medical innovation and actually diminish medical progress. Even if this were not the case, central government decision making will often fail to correctly choose which potential innovation to support and which to abandon. Such "Central Committee" approaches have consistently failed to lead to successful production in socialist governments. We also have noted the frequent refusal of the Canadian and British government health care systems to provide their patients new, relatively expensive, state-of-the-art health care products and technologies. If we adopt such a system in our country, our university's medical research labs would eventually stand largely empty.

University of Colorado Hospital performs quite well, providing state-of-the-art care to a most complex patient segment. Furthermore, the hospital is financially successful.

UC Denver officials tell me about 30 percent of the hospital's patients are privately insured, which conservative estimates show equates to 60 percent of the hospital's patient-generated revenue (based on other payer-mix models). There is a similar contribution to the professional fee receipts of the University Physicians Inc. (UPI) pool by these privately insured patients.

As a number of estimates show, Medicare and Medicaid pay only a fraction of the true direct cost of caring for their hospitalized patients (80 percent to 85 percent for Medicare and substantially less for Medicaid). Hospitals that have too great a percentage of Medicare and Medicaid patients are unable to fully offset their losses on these patients by simply overcharging their privately insured patients. Hospitals facing this dilemma today must often close their doors. If University of Colorado Hospital loses its private patient component, it also would struggle to balance its revenues and costs and likely will be forced to cut services and quality. Today, our Medicare and Medicaid patients receive the same high-quality hospital care as our privately insured patients - only because they are being cared for side by side with "private" patients who are bearing a disproportionately high share of the hospital's expenses.

Our School of Medicine and our other fine professional schools are substantially supported by these same "private" patients. Our Anschutz clinicians play a critical role in the education of our health care students. The lion's share of their personal income originates from revenue from private patient care.

After an evaluation of historical and current government-run health care systems, it is apparent that these systems have been unable to remedy the many unintended adverse consequences of government intervention. Perhaps we will avoid this mistake - preserving our vastly successful medical system.

As we gazed at our extensive and sparkling new medical campus, I felt significant concern for its future, and for the future of U.S. health care.

Dr. Jim Geddes is a practicing surgeon and a member of University of Colorado Board of Regents. The views expressed are his and do not represent those of the Board of Regents.

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