To help struggling hospitals, replace Georgia’s malpractice system

Wayne Oliver
Wayne Oliver

A panel of health care and political leaders appointed by Gov. Nathan Deal kicked off its work this summer to address the ongoing crisis in rural medical care. Its focus: the very survival of hospitals outside metropolitan communities through the state.

The Rural Hospitalization Stabilization Committee is holding hearings to identify potential solutions to keep open the doors of these struggling hospitals – from Eastman to Royston, from Byron to Hiawassee, among many others.

Four rural Georgia hospitals have closed in the past two years. They include Lower Oconee Community Hospital, which suspended operations for a second time in late June – sending emergency patients 30 minutes away for care.

Under the Affordable Care Act (Obamacare), the federal government is about to cut a little-known government subsidy to hospitals that covers uncompensated care and Medicaid shortfalls.

Reductions under the Medicare and Medicaid Disproportionate Share Hospital (DSH) programs will reach $17.6 billion across the country by 2020. In Georgia, cuts to hospitals could total an estimated $390 million from 2016 to 2020, thereby putting many rural facilities in grave peril.

While some continue to urge the governor to expand the state’s Medicaid rolls as a solution to the hospitals’ financial challenges, there is a healthier avenue to create revenue to sustain these hospitals.

Under the proposed Patients’ Compensation System (PCS) before the General Assembly, state taxpayers could save $6.9 billion over the next decade. That state revenue could be reinvested in rural hospitals that are barely surviving and others losing these federal grants.

Under PCS, which the Legislature is expected to consider again in January 2015, no doctor or hospital would ever be sued again. As a result, health insurers (private and public plans) as well as individuals would see billions in health care savings, as doctors would no longer feel the threat of litigation and would reduce the practice of defensive medicine (doing unnecessary tests and treatments to avoid lawsuits).

The health care economics firm BioScience Valuation issued a recent report on what the PCS solution would mean for Georgia taxpayers. The economists at BioScience Valuation found savings to Medicaid at $3.1 billion and an additional $3.8 billion in savings for the state employee benefit plan over 10 years. Those funds could then be used to help ailing rural hospitals that formerly received DSH payments.

Under the PCS plan, patients who are medically injured would no longer take their cases to court. Instead, they would file claims with an administrative panel of experts who would determine if a patient had been injured by a medical treatment or procedure.

With litigation eliminated, health insurance costs are expected to drop for all of us – those with private health plans and those with government plans including Medicaid, Medicare and the state employees’ insurance program.

Since most rural hospitals serve a large population of patients on Medicaid or Medicare, the PCS solution is particularly appealing as it will provide this huge cost savings to Georgia taxpayers and big revenue that could be redirected to essential rural hospitals.

Our governor has repeatedly said that the state cannot afford to expand its Medicaid program to save these hospitals. The PCS solution may be the best way to not only reduce health care costs for all of us – bringing quick access to justice for patients who have been harmed – but also to provide a financial route to saving our state’s hospitals on the critical list.

Wayne Oliver is executive director of Patients for Fair Compensation, a nonprofit working in several states to replace the malpractice system with a no-blame, administrative system that reduces the practice of defensive medicine, increases access to justice and allows for more patient safety.