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Articles / 2009

An Interview with CMH Healthcare System, Part I by Tim Pompey

The Breeze
10/07/2009

Michael Ellingson, Vice President, Marketing & Development, Gary Wilde, President & CEO, and David Glyer, Vice President, Finance, sat down with the Breeze to discuss issues related to the current healthcare debate

With· the debate over health care reaching critical mass in Washington, The Breeze thought it might be helpful to talk with some health care professionals from Community Memorial Health System (which operates Community Memorial Hospital and Ojai Valley Community Hospital) about some of the health related issues being bandied about in Congress. Gary Wilde, President & CEO, Michael Ellingson, Vice President of Marketing & Development, and David Glyer, Vice President, Finance, agreed to answer some important questions and (hopefully) bring some clarification to the debate.

T: Why, in your opinion, are overall health care costs rising so rapidly?

G: There are several answers to that question. 1) Technology continues to advance more ways of treating commonly known illnesses: drugs, surgical techniques, robotics, etc. In addition, with the availability of these advancements, companies are now aggressively marketing these products on T.V. and radio, creating increased consumer demand. 2) Our aging population, baby boomers approaching the age of 65 or older, creates more demand for treatments. It’s been shown that these baby boomers require treatments five times more frequently than any other population. 3) There has been an increase in federal and state regulations. For example, the State of California now requires a certain nurse to patient ratio (which is a good thing overall), but it's added significant salary dollars to healthcare and exacerbated an already existing shortage of nurses. Another example includes CMH, since we have been required by the State to replace this hospital. Because of this significant increase in regulations co ensure quality care, hospitals have had to invest significant dollars to cover these costs. 4) The costs related to Medicare. The government pays approximately 50% of all health care costs, mostly through programs like Medicare, but it does not pay the full cost. In fact, they only pay in the 80% range. The burden must therefore be shifted to those who can afford to pay. This means those who pay premiums for health insurance pay for 120% of their actual health care costs. We call this cost shifting. 5) The costs of covering those who are uninsured. If a patient can't pay, we are required by law to treat them. So we must account in our overall health care costs for covering the uninsured

D: There's another factor in this debate as well. A typical insurance policy insulates beneficiaries, because they typically pay only a small fraction of the cost themselves. As such, patients demand cutting edge treatment and technology and buy health care services without concern for costs. In addition, the costs for defensive medicine, malpractice, are significant.

T: Can you clarify the concerns facing Congress and the President in terms of health care as a national issue?

G: I can give you a number of issues. 1) One of these is certainly Medicare. The Medicare program has a trust fund. Right now, baby boomers, the ones about to retire, account for about 45% of taxes being paid into this trust fund. When these boomers retire, the amount of taxes going into the fund will go down at the same time demand for Medicare will increase. Right now it's estimated that Medicare will go bankrupt in 2016 or sooner. 2) Also, the cost of health care has gone up as a total percentage of the gross domestic product. In 1965, health care was costing consumers about 5.4% of their annual income. That figure is now approaching 17%. If we as consumers are spending this much for health care, this means less to put back into the economy. 3) There are a growing number of individuals who are uninsured. Right now it's estimated at 47 million, of which 13 million are illegal immigrants. In addition, a third of these 47 million are individuals who don't buy insurance but could afford to. This puts an additional burden on the rising cost of health care. 4) There is a national concern regarding the quality of health care. The current perception is that it could be much better.

D: Speaking from a financial perspective, there’s also concern that the huge profits in the health care industry could be better used for patient care.


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