The cost of health insurance will double in the next five
years, experts predict, if health-care costs keep rising as they have been. By
2008, a family policy in West Virginia could cost $18,000, and one in three
could be uninsured.
Why is this happening?
As part of our ongoing examination of the cost of health
insurance, this installment in the Everybody at Risk series focuses on one of
the drivers of health-care costs: the state's skyrocketing hospital spending
and the agency that was created to control it.
A state agency charged with keeping medical costs under control
has given hospitals virtually every construction dollar they've asked for in
the past decade, according to a Sunday Gazette-Mail analysis.
The state Health Care Authority is supposed to determine if
proposed new construction or renovations are necessary, in order to prevent
expensive duplication of services. But since 1990, the authority rejected less
than 4 percent of the money requested by hospitals for construction and
equipment. It approved more than $1 billion in spending.
Meanwhile, the authority has experienced a surge in new
requests for hospital construction — almost $700 million this year, up from
$186 million only four years ago.
Hospital officials say they have to spend the additional money
to keep up with the latest technology and replace aging buildings. But some
question whether all this spending is leading to higher medical bills, which
make health insurance more expensive for everyone.
"When you spend $50 [million] or $60 million in a community to
expand services, the community has to pay for it," said Greg Smith, chief
executive of Mountain State Blue Cross Blue Shield, the state's largest health
insurer. "We've got to find some way to get control of capital expenditures in
'It's hard for the ordinary consumer'
Capital projects are only one part of a hospital's expenses,
but they make up a part that state regulators could control. Salaries for
hospital staff might eat up more of a hospital's budget, but with a shortage of
The Legislature created the Health Care Authority in 1983 to
control health care costs, mainly by preventing duplication of services between
hospitals in the same area.
Competition might drive down the cost of clothing or food, but
competition in health care actually can increase costs, Smith
example — two neighboring hospitals buy the same piece of expensive equipment,
but there are only enough patients to justify one. The patients in that
community now have to pay for two pieces of equipment.
So the Legislature created a Certificate of Need (CON) process,
where hospitals have to prove that their proposed new spending is necessary and
does not duplicate other services. Hospital officials must file a CON request
and prove their case to the Health Care Authority.
The process itself is expensive and difficult, and might deter
hospitals and others from attempting unnecessary projects in the first place,
"They generally will not go through the time and expense it
takes to apply until they determine they fulfill the standards," she
Once an application is made, the authority almost never rejects
"If a hospital can prove that it can be paid for, that's really
the major standard for approval," Smith
just pass it on to the private sector, and have them pay for it."
Hospitals often hire experts and lawyers to justify the need
for a project. Most of the time, no one from the community attends to represent
patients when hearings are held.
One exception is physician-turned-lawyer Richard Lindsay, who
is fighting a request by Charleston Area Medical Center for a $30 million
computer system. Lindsay said that, even with his experience as a malpractice
lawyer, he has trouble fighting a CON request.
"It's hard for the ordinary consumer, or for me, frankly, to
know what to do," Lindsay
which have done this work for 20 years."
Older equipment, facilities
At one point this year, four hospitals within 50 miles of one
another asked the Health Care Authority for permission to build new buildings
worth $400 million.
Stonewall Jackson Memorial in Weston dropped its proposal for a
Morgantown received permission to build a $75 million addition.
And the major hospitals in Clarksburg and Fairmont want brand-
ambulance drive of one another, and cost more than $300 million.
The HCA tried to convince those two hospitals to merge, but