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Countless hospitals have been and still are being built in the wrong places for the wrong reasons. Under the Hill-Burton Act of 1946, any hamlet could raise hospital of matching 20 to funds 30 to get beds — itself and a too tiny many did. These are not only uneco nomic but bad for medicine, says New Orleans Surgeon Alton Ochsner: no hospital with fewer than 100 beds is medically viable, and he suggests that none should have more than 600.
A basic trouble with today's hospitals is that, like today's doctors, they have been geared to crisis care. In fact, says Palo Alto's grand old man, Dr. Russel V. Lee (father of Philip and other M.D. Lees), 30% of the patients in a hospital at any one time should not be there. Either they have been admitted for what are really diagnostic procedures, to gain insurance coverage, or they are past the acute stage of their illness and should be in some sort of convalescent or other extended-care facility, in which the costs would be 40% or 50% less.
Singing the Blues
When the idea of voluntary health insurance for the U.S. germinated in the 1930s, the actuaries insisted that whatever was covered must be quantifiable, so that it could be priced. They hit upon hospitalization as a tangible item, and Blue Cross was born. But definitions of hospital costs are so complex that ever since, while it has expanded into 45 states, Blue Cross has been involved in haggles with state insurance departments over rates.
What Blue Cross will reimburse varies from state to state, and within states, according to what plan the subscribing group has chosen. Some Blue Cross plans in the West cover in-hospital doctors' bills, a function generally reserved in the East for Blue Shield. Whatever its limitations, Blue Cross was such a success that commercial insurance companies soon tried to emulate it.
The trouble with all the early coverage, by both "the Blues" and the commercials, was that it was not health insurance, although it was widely misrepresented as such. It was, and to a great extent remains, sickness insurance. Far from putting a premium on preventive medicine and the maintenance of good health, it puts a premium on sickness. Until recently, most Blue Cross plans covered no care outside a hospital, and specifically excluded diagnostic procedures. The result has been connivance to defraud the insurers. Often if a woman needs a diagnostic pelvic examination that might better—but need not necessarily—be done in a hospital, her doctor enters some meaningless diagnosis such as leucorrhea or dysmenorrhea (which practically every woman has now and then) and plunks her in the hospital for two days. The insurance pays virtually all the hospital bill and, if the family has coverage of the Blue Shield type, the doctor's bill as well. To Mark Berke, director of San Francisco's Mount Zion Hospital, the system "puts a premium on being a horizontal rather than a vertical patient." Says Surgeon General Stewart: "For episodic care of the middle-income class, the Blues do a reasonably good job. But there simply aren't enough benefits —for