Snodgrass wanted to
build a hospital. He spoke to Lapius directly, because he knew I didn’t
have the money to invest.
“What do you say, Simon,
will you come in with us?”
“With who?”
“We have a group of
about 20 doctors. We can get the financing from the bank. The plans
are drawn. Would you like to see them?”
“No.”
“Simon, that’s not like
you. You know we could use another hospital around here.”
“Sure you do. Sure
we do.”
"So look at the
plans. Join us.”
“No.”
“Why not?”
“You are wasting my
time.”
Snodgrass was
hurt. Lapius had never spoken to him that abruptly before. “You are
not consistent, Simon. Why would it be a waste of time?”
“Because they won’t let
you build a hospital.”
“Who won’t?”
“They.”
“Who is they?”
“How do I know who
‘they’ are? All I know,” Lapius said emphatically, “is that you can’t
build it. It’s against the law.”
“Against the law?”
“Whatever law says that
you have to have a certificate of need to build a hospital.”
“So we’ll get a
certificate of need. Surely a formality.”
“That’s what you
think. It is a very difficult thing to obtain.”
“We can prove there is a
need.”
“But no one asks you to
prove that. The state government will tell you whether or not there is a
need. They don’t want you to compete with the present hospital.”
“Why not? The
competition will do them good.”
“The government* and the
insurers. Medicare and Blue Cross don’t want competition. They don’t
want empty hospital beds. They don’t want you to build a hospital near
the present hospital because with empty beds the per diem cost per patient goes
up. They are afraid that your hospital will take only paying patients and
leave the other hospital with welfare patients.”**
“Can’t we promise to
take all patients who apply?”
“Sure. But they
won’t believe you.”
“Can’t they pass a law
that says that all hospitals have to take all patients that apply? That
hospitals can’t discriminate on the basis of a means test.”
“There are those that
say such a law would be unconstitutional.”
“But preventing us from
building a hospital also seems to be unconstitutional. That smacks of
restraint of trade.”
“Of course it does.”
“We can fight that.”
“Sure if you are willing
to spend $20,000 or more in legal fees. After all, a chicken farmer upset
the NRA under Roosevelt.”
“Well then, maybe we
should fight that in the courts. Would you join us then?”
“I’ll contribute $1,000
for the lawyer. Now get the rest from your partners. But short of a
law suit, you’ll never get the certificate of Need.”
“Why should the
community be robbed of extra medical services, Simon. The whole thing is
unfair. We are short of beds, every patient lying on stretchers in the
halls knows that.”
“Yes but there aren’t
enough of them to create a stir.”
“Do you mean to tell me,
Simon, that the government is subsidizing a monopoly in health?”
“Yes.”
“That’s
outrageous. Why are they doing this? The community knows it needs
more services.”
“Because the community
isn’t paying the bill. The government is.”
“But it costs them more
to administrate the system than it would to allow competitive health
institutions to exist, even if some of them lose money. I can’t believe
an unreasonable system such as this would be sanctioned by the
government. Surely there must be a way out of this.”
“There is, Snodgrass,
there is.”
“Good old Lapius, I knew
you were only pulling my leg. I knew you had something up your
sleeve. How can we get around it? What’s the gimmick?”
“The three mile
limit. Buy one of the surplus hospital ships that are in mothballs.
Modernize it and anchor it three miles at sea. We can have hydrofoil
ferry service to and from the ship, and helicopters for emergencies.”
“Lapius, a brilliant
idea,” Snodgrass gasped in admiration.
“Only it won’t work,” I
interjected, annoyed at having been ignored for so long.
“Ah yes, Harry is
right,” Lapius said, robbing me of my moment of glory. “It won’t
work. The government wants to extend the coastal limits to 12 miles.”
“And there is talk of
200 miles,” I added.
“That wouldn’t be too
bad,” Snodgrass said thoughtfully. He was undeterred. “We could anchor
the hospital to an oil drilling tower.”
*In 1946 the Hill-Burton** Act was passed that provided
for the construction of hospitals, and provided to some extent for a number of
them for the indigent, uncompensated beds. After Medicare and Medicaid were
encated the Government trying to contain costs felt that with fewer available
beds there would be fewer hospital admissions and costs would be reduced.
**The Hospital Survey and Construction Act, also known as the Hill-Burton
Act, is a United States federal law passed in 1946.
This act responded to the first of Truman’s
proposals and was designed to provide federal grants and guaranteed loans to
improve the physical plant of the nation’s hospital system. Money was designated
to the states to achieve 4.5 beds per 1,000 people. The states allocated the
available money to their various municipalities, but the law provided for a
rotation mechanism, so that an area that received funding moved to the bottom
of the list for further funding.
As is always the case, these federal
dollars came with strings attached. Facilities that received Hill-Burton
funding had to adhere to several requirements. They were not allowed to
discriminate based on race, color, national origin, or creed – except for the
proviso that allowed for discrimination so long as separate,
equal facilities were located in the same area. The U.S. Supreme Court
struck down this segregation in 1963. Facilities that received funding were
also required to provide a ‘reasonable volume’ of free care each year for those
residents in the facility’s area who needed care but could not afford to pay.
Hospitals were initially required to provide uncompensated care for 20 years
after receiving funding. The federal money was also only provided in cases
where the state and local municipality were willing and able to match the
federal grant or loan, so that the federal portion only accounted for one third
of the total construction or renovation cost. The states and localities were
also required to prove the economic viability of the facility in question. This
excluded the poorest municipalities from the Hill-Burton program; the majority
of funding went to middle class areas. It also served to prop up hospitals that
were economically unviable, retarding the development wrought by market forces.
Once Medicare and Medicaid were enacted, participation in those programs was
added to the list of requirements for access to Hill-Burton funding.
The reality, however, did not nearly
meet the written requirement of the law. For the first 20 years of the act’s
existence, there was no regulation in place to define what constituted a
"reasonable volume" or to ensure that hospitals were providing any
free care at all. This did not improve until the early 1970s, when lawyers
representing poor people began suing hospitals for not abiding by the law.
Hill-Burton was set to expire in June 1973, but it was extended for one year in
the last hour. In 1975, the Act was amended and became Title XVI of the Public Health Security Act. The most
significant changes at this point were the addition of some regulatory
mechanisms (defining what constitutes the inability to pay) and the move from a
20-year commitment to a requirement to provide free care in perpetuity. Still,
it was not until 1979 that compliance levels were defined.