By Lachin Hatemi M.D.
Lexington Medical Center began with a simple and distinctly local mission: to provide healthcare for the people of Lexington County.
Its origins were not those of an ordinary private healthcare corporation. In 1966, Lexington County voters approved a referendum to create a community hospital, and the Hulon family donated more than 22 acres of land for the hospital’s site. When Lexington County Hospital opened its doors on January 6, 1971, it had 125 beds and approximately 250 employees.
From those modest beginnings, the institution grew into what is now a large, sophisticated healthcare system. Lexington Medical Center describes itself today as a locally owned, independent hospital, and its network has expanded dramatically over the decades.
That transformation is a remarkable success story.
But it also raises an important public question:
When a community builds, supports and helps establish a healthcare institution, what obligations does that institution retain to the community when it eventually becomes financially and operationally independent?
From Public Roots to Private Independence
For much of its history, Lexington Medical Center operated within a structure that had important ties to local government. That relationship provided the hospital with certain governmental characteristics while also imposing obligations that would eventually become increasingly important.
One of those obligations involved participation in the state’s retirement system and the associated pension costs.
As Lexington Medical Center grew, hospital leadership sought greater independence and greater flexibility in managing the institution. The hospital’s leadership made the case for separating the organization from its previous governmental structure and allowing it to operate independently.
Lexington County ultimately granted that independence a few years ago.
From the hospital’s perspective, the change offered obvious advantages. Independence meant greater flexibility in making financial and operational decisions. It also meant that the hospital could pursue expansion, investment and strategic initiatives without operating under the same governmental constraints.
There was another potentially significant financial consequence.
By leaving the state retirement system, the hospital could avoid future pension-related obligations associated with that system.
That should have been a consequential financial development.
And it raises a question that deserves considerably more attention:
What happened to the savings?
The Promise of Independence
The argument for independence can be compelling.
Reduce unnecessary governmental restrictions. Eliminate expensive obligations. Give management greater flexibility. Allow the institution to invest more aggressively in facilities, technology, physicians and patient services.
In theory, everyone could win.
The hospital becomes financially stronger. Patients receive better care. Employees benefit from a stronger institution. And the community ultimately receives the benefits of a more efficient healthcare organization.
But there is a critical difference between saving money and reducing the cost of healthcare.
Those two things are not necessarily the same.
A hospital can become financially stronger without becoming less expensive for patients.
And that distinction becomes particularly important when examining the prices paid by commercial insurers.
Following the Money Through the Transparency Files
The federal government’s healthcare price-transparency rules have created an unprecedented opportunity to examine the financial relationships between hospitals and insurance companies.
Insurance companies are required to publish enormous machine-readable files containing negotiated rates between insurers and healthcare providers. BlueCross BlueShield of South Carolina publishes these files in JSON format and says the files contain in-network negotiated rates as well as other pricing information.
Lexington Medical Center also publishes its own machine-readable files containing standard charges and negotiated rates with third-party payors. The hospital acknowledges that the data are complicated and explains that a patient’s actual financial responsibility depends on the patient’s insurance contract and coverage.
These files are difficult for an ordinary consumer to interpret. They were designed primarily to be processed by computers rather than read by human beings.
But buried inside those enormous datasets is potentially valuable information.
They allow researchers, journalists, regulators and members of the public to begin asking questions that previously were almost impossible to answer:
What does a particular insurer pay Lexington Medical Center for a particular procedure?
How does that amount compare with what other hospitals receive?
How much higher or lower are Lexington Medical Center’s negotiated rates than those of competing hospitals?
And, perhaps most importantly:
Does the community that helped build this institution receive any measurable benefit from its extraordinary financial growth and negotiating power?
BlueCross and Lexington Medical Center
A preliminary examination of publicly available pricing data raises questions about the rates negotiated between BlueCross BlueShield of South Carolina and Lexington Medical Center.
Third-party analyses of Lexington Medical Center’s published pricing data show thousands of negotiated rates for BlueCross plans. One such analysis, based on the hospital’s CMS-required standard-charge files, lists thousands of BlueCross-negotiated procedure rates at Lexington Medical Center.
They determine how much money flows from insurance companies to hospitals. They influence insurance premiums and employer healthcare costs. And over time, they can affect the overall cost of healthcare in a community.
That makes these numbers worthy of serious public scrutiny.
Is Lexington Medical Center Among South Carolina’s Most Expensive Hospitals?
This is perhaps the most important question raised by the data.
A preliminary third-party analysis of Lexington Medical Center’s negotiated rates has found rates that are above market medians for almost all services. For example, one analysis of 1,352 common procedures reported Lexington Medical Center’s rates are almost always the most expensive.
The challenge is turning millions—or potentially billions—of lines of machine-readable data into information ordinary citizens can understand. Our Data shows Lexington Medical Ceters is the most expensive hospital in South Carolina.
A Community Institution Worth Watching
Lexington Medical Center’s remarkable growth should not be ignored or dismissed.
The hospital has expanded enormously from its original 125-bed community hospital. Its own history documents decades of expansion, including community medical centers, physician practices, specialized services and other healthcare operations.
But growth creates a new responsibility.
The larger and more financially powerful an institution becomes, the more important transparency becomes.
And Lexington Medical Center is not simply another business operating in Lexington County.
Its roots are different.
The community helped create it.
Local voters approved the original hospital referendum. Land was donated for the hospital. Public resources supported its development. For decades, the institution maintained a close relationship with the local government.
Eventually, the hospital was granted independence.
But independence should not mean immunity from public scrutiny.
The Question Is Accountability
The central issue is not whether Lexington Medical Center should be profitable.
Hospitals need financial strength. They must purchase equipment, recruit physicians, maintain facilities, employ thousands of people and prepare for the enormous costs associated with modern medicine.
The question is more fundamental:
Who ultimately benefits from that financial strength?
If independence from government produced substantial savings, how were those savings used?
If the hospital’s negotiating power produces higher reimbursement rates, how does that affect patients and employers in Lexington County?
If healthcare prices are significantly higher than those at comparable hospitals, why?
And if Lexington Medical Center’s financial position is exceptionally strong, should the community have greater visibility into how that money is generated and spent?
These are not unreasonable questions.
They are questions that should be asked of any large institution with deep historical ties to the community it serves.
Time for a Deeper Look
The answer does not require political slogans or accusations.
It requires data.
The publicly available transparency files provide an extraordinary starting point. BlueCross BlueShield of South Carolina acknowledges that its machine-readable files are intended to make negotiated pricing available for researchers and regulators.
Those files should be analyzed systematically.
Compare Lexington Medical Center with hospitals in neighboring counties.
Compare identical CPT and HCPCS codes.
Compare the rates paid by different insurers.
Examine inpatient and outpatient services separately.
Look at the most frequently performed procedures.
Examine the relationship between negotiated rates, hospital charges and actual patient responsibility.
Then ask the questions that the numbers raise.
Perhaps the analysis will demonstrate that Lexington Medical Center’s prices are justified by higher quality, better outcomes, greater investment or other legitimate factors.
Perhaps it will reveal that some prices are substantially higher than those of comparable hospitals without an obvious explanation.
Either way, the public deserves to know.
Lexington Medical Center’s history began with a community hospital built to serve local families.
Its future should continue to be measured against that original mission.
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