Select Specialty Hospital may be a poster child for Medicare reimbursement run amock. New York Times, February 10, 2010, p. A1.

            Rocco and Robert Ortenzio earned $200 million dollars from the operation since 1996.They seem to have perfected the art of profiting from Medicare, a Federal program that costs us $450 billion dollars a year. According to the Times’ investigative report (relied upon for this blog posting), Select profits from housing the acutely or terminally ill for almost exactly the number of days to maximize revenue while keeping patient care expenses as low as possible. Hello, you people who oppose U.S. health care reform. Pay attention!

            Medicare reimbursement peaks at 25 days of care. Select’s patients remain with them on average for a day less than that. Quite a coincidence, isn’t it? Select overruled a family and doctor requesting a patient’s discharge because time-in-hospital had not reached what some of their facilities call the “magic day,” day number 25. Earlier release would require they forego $3,800 in revenue.

            Medicare pays by diagnosis, not treatment. Therefore, hospitals have an incentive to economize on the number of doctors, the staff training, and the equipment – items for which they are not directly paid. Select has no staff physicians, and no doctors on its board of directors. Medicare inspection reports (obtained from FOIA requests) also revealed that Select’s hospitals had insufficient staff and high turnover. No surprise.

            Saving at the expense of patients’ health is perfectly legal. What’s shocking is not the morality of the conduct. It’s that our national health care reimbursement system encourages it and rewards it so highly. The only downside for long-term care enterprises is that when someone dies due to cost cutting, they sometimes have to settle with the family.

            In one example, a nurse turned off a heart monitor because she got tired of listening to it. The patient died, she was fired, and Select settled the wrongful death suit for $195,000.00. I suspect that court damages are a small budget item compared to the economies of hiring the fewest and cheapest employees possible.

            Medicare cannot effectively punish institutions that are regularly negligent or fail to meet minimal standards. There is no system of fines or reduced payments. Therefore, a cheap, negligent long term care company can rent part of existing hospitals, invoice when someone is wheeled down the hall, and pretty much rake in Medicare money with impunity.