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COVID-19 demands a reckoning with hospitals’ fee-for-service business model

May 11, 2020
Doctor wears a mask in a hospital room with three empty hospital beds.A health care system that prioritizes volume over routine care is “structurally incapable” of responding to the challenges presented by COVID-19, writes Rochester historian and health policy expert Mical Raz in a Washington Post op-ed. (Getty Images photo)

American hospitals have to operate at near-maximum capacity when it comes to patients and procedures—just to remain financially viable.

Now, many hospitals are facing a budget crisis, revealing “the extent to which their business model is structured to reward high-cost surgeries over the very type of routine care that COVID-19 is demanding,” argues physician and historian Mical Raz, the Charles E. and Dale L. Phelps Professor in Public Policy and Health at the University of Rochester.

The pandemic has made clear that a health care system that prioritizes volume—specifically of procedures—“is structurally incapable of sustainably responding and adapting to such an unprecedented challenge,” Raz writes in a Washington Post op-ed, published in the newspaper’s Made by History section.

Financial considerations slowed the decision by many hospitals to postpone elective medical interventions. Raz notes:

In mid-March, a month and a half after the first diagnosis of COVID-19 in the United States, Surgeon General Jerome M. Adams urged specialists to reschedule elective procedures when possible and medically safe. Such a pause promised to free up operating rooms and post-surgical units for COVID-19 patients and to direct limited resources, including personal protective equipment (PPE), to front-line providers.

Yet, initially, this suggestion provoked backlash from powerful groups that represent hospitals and medical colleges, because the revenue from such procedures is critical for their financial survival.

As the country opens back up and procedures are scheduled, she concludes that “it is important to consider the often invisible structures of our health-care system, and how we might restructure them to create a more adaptive system less based on volume and the political battles of the 20th century.”

Raz, an expert in public policy and health, is the author of What’s Wrong with the Poor? Psychiatry, Race and the War on Poverty (University of North Carolina Press, 2013) and The Lobotomy Letters: The Making of American Psychosurgery (University of Rochester, 2013). Her third book, Abusive Policies: How the American Child Welfare System Lost Its Way (UNC Press), is forthcoming.

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Category: Voices & Opinion

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