N“Crisis” is an overused word in our headline-driven culture. But it is difficult to find an employer or other participant in the health care system who does not use that word when asked about industry conditions. The Kansas City region, like all other areas, is facing a looming health care crisis caused largely by the same intractable issues:

Balanced Budget Act Among several market dislocations caused by this federal act is a significant reduction in Medicare payments to the States. Hospitals have had to pass through some of these reductions in their payments, adding to the existing increases in commercial health insurance rates.

Dramatic Rise in Health Care Costs After a decade of relatively modest increases in health care costs and premiums, large employers this year saw annual increases of 10-15% and many small employers are confronting increases significantly over 20%.

Medical Malpractice Regional physicians experienced increases in insurance rates averaging 40% this past summer. While policy deductibles were increased, restrictions tightened and several insurers left the market.

Medicare Reimbursements There has been a unilateral 5.4% reduction in physician fees this past year, coming at the same time physicians’ expenses are rising. As a result, many physicians are no longer accepting new Medicare patients, decreasing seniors’ access to health care.

Medicaid Cuts 2/3 of the states, including Missouri and Kansas, are experiencing increased Medicaid expenditures at the same time tax collections are decreasing. In response several states are cutting their Medicaid rolls. Charity Care/Bad Debts Last year, 57% of the $128 million in Jackson County’s uncompensated care was provided by hospitals that do not receive the city or county “safety net” reimbursements. These costs must be passed on to those who do pay the hospitals for care. This trend can only get worse if the unemployment rolls rise. Nursing Shortages The nation is confronting a serious shortage of nurses; among Missouri hospitals this shortage runs from 6 to 16%. This problem has led to the closing of beds and ERs, higher labor costs, delays in scheduling elective surgery, and an increase of in-hospital injuries.

Physician Specialty Shortages Over the last decade, the ramp-up of managed care has encouraged the training of primary care physicians instead of specialists. It is now exceedingly difficult to meet Kansas City’s needs in such specialty areas as neurosurgery, anesthesiology, cardiology, interventional radiology and obstetrics.

KC Physician Fees Local physician salaries are 10-30% lower than in the smaller cities in the surrounding six state area, resulting in outmigrations and significant difficulties in recruiting new physicians to Kansas City. ER Diversions Reductions in the number of staffed ICU beds, shortages of specialty physicians and nurses, and the difficulty of obtaining malpractice insurance has led to a spate of trauma centers being placed on diversion. Free-Standing Physician-Owned Centers Facilities focusing on a wide variety of services, including oncology, ambulatory surgery, orthopedics and imaging, have opened recently. In addition to their potential for encouraging over-utilization, these facilities tend to drain the more profitable sources of revenue from community-supported hospitals.

Aging Population The nation’s over-65 will balloon as the baby boomers enter this age group, further straining the system as seniors have 4 to 5 times greater demand for hospital and medical services. It is too soon to tell whether this pressure is cyclical and will abate, or whether the relative stability of the past decade was an aberration. Clearly, however, a growing majority of participants believe that these problems are insoluble, pushing the country along a path leading inevitably to federal intervention and the institution of a single payor system. What is even more striking is the diminishing view, so prevalent among employers and providers in the 90’s, that this would be a bad policy leading to bad health care!

William L. Bruning is President, of the Mid-America Coalition on Health Care. He may be reached at 816-753-0654 or by email at bbruning@machc.org.