Critical list?

New Mexico Business Journal, Sept, 2000 by Shawn Shepherd

The state's healthcare system, once one of the country's most efficient, is in trouble--possibly because it was so efficient.

Physician, heal thyself" may mean more in New Mexico than it ever has before. Making headlines across the state is the state of healthcare. And it seems that the industry needs more than a shot in the arm to recover.

Recent news items drawing attention to New Mexico's healthcare industry have included the ending of Medicare HMO programs at St. Joseph Healthcare and Qualmed, and limitations on the program to only serve Albuquerque by Lovelace Health Systems and Presbyterian Healthcare Services. Across the state, Medicare Choice beneficiaries are having their coverage disrupted. A nursing shortage is reported, with 350 unfilled openings in Albuquerque alone. Still another shortage noted by the press is in physicians. While the data are anecdotal, it still seems to be presenting an accurate picture: medical practitioners are leaving New Mexico for better business elsewhere.

"The mood is terrible," said Harvey J. White, M.D., chairman of the board of Albuquerque's new Heart Hospital and past president of Southwest Cardiology Associates, "I went our of the hospital the other day to find a colleague standing alone under a tree and he told me directly, 'I'm warn out and angered.' I'm very worried about the health of the [healthcare] community."

More than the individuals in the system seem to be in pain. The entire healthcare sector is in crisis, say the experts. And that is bad for business in New Mexico.

The New Mexico: Quality for Life report issued by the state Economic Development Department highlights quality of life as one of the chief considerations in preparing for the new economy. And healthcare followed the crime rate as the second most important quality of life factor for companies selecting plant sites and investors seeking to develop industrial parks, notes the document. Unfortunately, New Mexico's numbers could give firms cause for pause, rather than encouragement, to invest here.

The Corporation for Enterprise Development's New Mexico report card, issued in 1999 to provide comparative data on virtually all factors in economic development, ranked the state at nearly the bottom on every healthcare measure. New Mexico's infant mortality rate ranked the healthiest of the healthcare measures at 21st in the nation. The state ranks 42nd for uninsured low-income children, 49th in employer health coverage, 47th for a population of working poor, and 42nd for health professional shortage areas. The problem is more acute in the rural parts of the state than in the metropolitan areas.

How did New Mexico get here? As little as two decades ago, the state was recognized as one of the most efficient in the nation in terms of care delivery. And insiders say that is part of what is contributing to today's crisis. New Mexico was handling its healthcare needs too efficiently when Medicare rates were established a decade ago and the growth of the payout system has not kept pace with increasing costs.

"This is indeed a very stressed time for physicians in New Mexico and healthcare in general," said cardiologist White. "The principal issue revolves around a limited amount of financial resources that contribute to the medical economy. Here in New Mexico we have a highly penetrated managed care market and the benchmark for reimbursement is Medicare from 8 to 10 years ago, meaning that today the reimbursement rates are fractional compared to other states."

Having experience across the nation--New Jersey, Massachusetts, Colorado, Ohio, Oklahoma and Louisiana--Art Dunn has come to Albuquerque as the acting CEO of beleaguered St. Joseph Healthcare, and his assessment is a dark one. "This is probably the worst healthcare system I've come across [in the nation]. The gap is that we were both a rural and highly efficient system and the first thing you have to do when there are challenges is clamp back on those areas that are inefficient, but there's a point where you can't get more efficient and I think we've reached that."

The Medicare reimbursement rates in New Mexico are among the lowest in the nation, and the annual adjustments have been based on cost of living increases at an average of two percent per year in the last decade. In the same time frame, the cost of providing medical service--including personnel, pharmaceuticals and technology--has increased from six to ten percent. With each year, the gap has widened.

"Cheap healthcare really ends up meaning no healthcare," said Dunn. "The analogy has to be comparing healthcare to education. You need both and you need to provide resources to both. You wouldn't want to have an uneducated community and you wouldn't want to have no healthcare, either."

For Trudy Land, president and CEO of the Heart Hospital of New Mexico, a newcomer in the competitive healthcare market, solving the payout problem is No. 1. "We have to have an increased Medicare reimbursement rate and that would help to keep providers in the community and that would enhance the quality of care and provide the services that we need for the citizens of New Mexico," she said.