COMPETITION RAISES MEDICARE COSTS

The proliferation of for-profit hospitals across the country has been tolerated -- and, in many cases, strongly supported by insurers and government agencies -- because of the accompanying cost reductions that were supposed to result from stiff competition.

Now a study published in the respected New England Journal of Medicine shows that for-profit hospitals actually drive up the costs for Medicare patients. Medicare spending in communities with not-for-profit hospitals, like Cape Girardeau, grew, but at a slower pace.

In 1980, the study showed, Medicare spending per person was $452 higher in for-profit than in not-for-profit hospitals. By 1995, the gap had grown to $732.

One way for-profit hospitals increase Medicare reimbursements is by aggressively referring patients to nursing homes, rehab center and home-health agencies the hospitals own.