UNCERTAINTY OF HOSPITAL COSTS GIVEN

CAPE GIRARDEAU -- "Hospitals are not very efficient."

When O.D. Niswonger, recently retired administrator at Southeast Missouri Hospital, said that Friday in a speech at Drury Lodge, he was not referring to inefficient health care, but to costs involved in a hospital's day-to-day operation.

"Hospitals are not like most businesses," Niswonger told a crowd at the Cape Girardeau Chamber of Commerce's monthly Friday Coffee. "We have to be prepared for the unexpected."

Niswonger said hospitals don't know how many patients they will see in a single day.

"We don't know how many people will come into the emergency room, but we have to have personnel on duty at all times," he said. "The operation is not like a manufacturing plant, which knows what its quota is and hires accordingly."

Employment is one of many factors in a hospital's costs, said Niswonger. "Labor costs account for about 50 percent of our operational costs. We have to maintain staff 24 hours a day, seven days a week.

"In addition to labor costs, hospitals have higher construction costs," said Niswonger. "Any new structures have to be earthquake proof, and, in other areas of the hospital, we have to have the perfect environment."

Niswonger cited other factors that contribute to higher health costs: inflation, which has a higher impact on hospitals because of improved technology; malpractice insurance, which has increased from less than $3,000 a year in 1969 to more than $400,000 today; and Medicare and Medicaid programs, which have not kept pace with increasing health costs.

"We hear occasional remarks that health costs in Cape Girardeau are too high, and that they are less in the St. Louis area," said Niswonger. "That just isn't the case in overall costs."

He cited a recent survey of the top 25 diagnoses.

"Sixteen of the 22 diagnoses which were comparable in the two areas were less costly in Cape Girardeau," he said. "The overall survey reflected 13.7 percent higher costs for the 22 diagnoses in the St. Louis area."

Malpractice insurance and the Medicare-Medicaid program have been big factors in increasing health costs over the past two decades, said Niswonger.

"In 1969 our malpractice insurance cost was just under the $3,000 mark, at $2,964. A year later the costs jumped to $88,000 and haven't stopped rising since. By 1977 we were paying $133,000, and this year we're looking at more than $400,000."

The real cost culprit has been the Medicare-Medicaid program, he said.

"When that program was initiated in 1966, it was designed to provide medical care for everyone. Hospitals would receive costs plus 2 percent. Although we thought the program should have paid our costs plus 5 percent, we did make money that year."

In 1969 the 2 percent over costs was abandoned.

"Now hospitals are lucky if they receive 62 percent of their costs, losing 38 percent on Medicare patients," he said. "Guess who is making up that 38 percent: hospitals started looking to people who could pay, and health costs were increasing annually."

"More than 100 (104) hospitals closed in 1988," he said. "The American Hospital Association predicts that 1,300 more hospitals will close by the new century (2000).

"As we move into the 1990s, we're faced with a problem of what to do about health care," said Niswonger. "We have the best health care in the world, but providers are struggling to deliver it."

Niswonger listed some approaches to the problem.

"There's the National Health Service model of England, where the government owns the hospitals and pays physicians a salary. And, in Canada, the Canadian Health System assures everyone of health care."

Niswonger identified some of the problems with these systems.

"One hospital in Canada St. Michaels of Toronto has a waiting list of 150 to 200 people for open heart surgery," he said. "There are many other waiting lines for other illnesses.

"In my opinion, The United States has the best health care in the world," said Niswonger. "I don't think that people here will ever vote for a health tax. When people are sick, they want the best care as soon as possible, and they are willing to pay for it within their capability. I think we can maintain a better balance by keeping the people involved with their own care."

He said government should provide help, but should tell Medicare recipients what they can expect from the government, and let the recipient be responsible for the difference.

"Health care is a national issue, and we will get what we are willing to support," he said.

Harry Rust, chairman of the chamber board, announced that an "open" board meeting would be held at 3 p.m. March 19 at the Show Me Center. Following the meeting, at 5 p.m., the "Business After Hours" program will be held.

Maurice ("Moe") Sandfort announced that the annual Business Conference sponsored by the chamber and Southeast Missouri State University College of Business Administration will be April 2. Michael J. Roarty, executive vice president of Anheuser-Busch Co. Inc., will speak.