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Medicare Patient Care: Balancing Costs and Benefits

If you're over 65, taking a vacation and worried about the rising costs of Medicare, it may be better to visit the balmy beaches of Honolulu than the steamy white sands of Miami. It will cost the federal government $5,186 more fund a Medicare procedure in Miami than it will cost to perform the identical procedure in Honolulu. This discrepancy, along with the expected rise in the cost of Medicare in general, is why the federal government plans to institute a "value-based purchasing" plan for one of the nation's largest public healthcare systems. Questions surrounding this plan center on cost v. quality of care and the potential for increased physician negligence.

The cost of Medicare is expected to increase an average of 6.9 percent per year between now and 2019, with hospital services also expected to grow 6.1 percent during that time. Annual Medicare spending already tops $500 billion, and is only expected to increase as the population ages. Although it seems that the existence of a large, aging population is largely out of the control of the federal government, there are steps that can be taken to ensure that Medicare dollars will be well spent in the future.

In July, the government will start monitoring the efficiency of the nation's hospitals, accumulating a database of hospitals which service Medicare patients, sorted by their cost-to-benefit ratios. In October 2012, the government will begin to reward hospitals that offer excellent care yet keep costs down, and will penalize hospitals that overspend when compared to their peers nationwide.

This cost comparison makes some in the medical profession nervous. Many professionals at teaching hospitals, for example, worry that their facilities will lose funding because their patients' situations often are more complicated, and thus more costly. Inner-city hospitals, which often provide care for the uninsured, have the same concern. In addition, legitimate concerns about physician negligence arise when physicians are incentivized to cut costs and potentially cut corners

However, some experts maintain that there are already funding incentives for hospitals to increase and maintain a high quality of care. Raymond Gibbons, a cardiologist with the Mayo Clinic, also explains that more care is not necessarily better. For example, coronary artery stenting is an invasive surgery that may not do more for a patient than a much less invasive-and less expensive-therapy treatment.

Most people would agree that there needs to be a better balance between the effectiveness of a hospital's care and its cost. Expensive but minimally effective treatments are what the new reforms would like to eliminate with the new Medicare value-based system. This way, patients will ideally continue to receive high quality care, but at a lower cost.

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