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Federal payment rates driving Avera consolidation

This a conceptual drawing showing the possible layout of an Avera Queen of Peace campus west of Cabela's along Interstate 90 in Mitchell. (Courtesy of Avera Queen of Peace)

Tom Clark, regional president and CEO of Avera Queen of Peace in Mitchell, is often amazed by the cost of health care.

“I don’t think there is much debate that the way we deliver care and the way we pay for care has to change,” Clark said in an interview this week with The Daily Republic. “The model just cannot sustain itself over time.”

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Medicare, a federal health care program for people 65 or older, now pays for approximately 45 percent of all the care given by Avera Queen of Peace, Clark said. Medicaid, a federal-state program that helps pay for health care for the needy, aged, blind and disabled, and for low-income families with children, accounts for another 10 to 12 percent.

That’s a problem for Clark and Avera Queen of Peace.

“The government does not pay enough to cover our costs,” he said. “That means any money we make we have to make off the other 45 percent.”

As a result, Avera Queen of Peace must transform itself by cutting costs and adjusting how it serves patients so, at the very least, it can break even on the money it receives from Medicare and Medicaid, Clark said.

“We have to redesign how we do our work,” he said.

In 2010, $2.6 trillion was spent on health care in the United States, a 4 percent increase from 2009 and an 88 percent increase from 2000, according to a report by the Centers for Disease Control and Prevention.

Regardless of whether the Affordable Care Act, also known as Obamacare, is the right or wrong approach to controlling the increasing cost of health care and reforming the industry, the current system needs to change, Clark said.

In an effort to make itself more efficient and costeffective, Avera Queen of Peace has developed plans for a decades-long consolidation of all of the organization’s Mitchell services on a single campus west of Cabela’s along Interstate 90.

The shift in focus from treatment to prevention, Clark said, has led many local doctors to join Avera Medical Group. By connecting doctors, nurses and other staff under one umbrella, Avera Queen of Peace hopes to more effectively manage all aspects of its patients’ health care and keep more of them out of the hospital, which is the most expensive form of care.

The rise in the cost of health care can be partly attributed to the way providers like Avera Queen of Peace have charged patients for procedures, Clark said.

“The model has always been set up as, the more I do, the more I can charge,” he said.

Going forward, that model needs to change to focus on the value of a procedure, rather than the volume of procedures that can be done.

“The focus is going to be on keeping people well, instead of treating them when they’re sick,” he said.

Whether, at some point, all patients will pay for their treatment with Medicare or another form of government health care, Clark couldn’t say.

“I don’t know,” he said. “I don’t know if anybody knows.”

Clark wouldn’t judge the merits of a single-payer system, similar to those used in Canada and some European nations, but doubted whether such a system could ever be used in the U.S.

“I don’t know if, in this country, the public would ultimately accept that kind of a model,” he said.

Clark predicts the government will ultimately take on a bigger role in paying the cost of individual health care, but can’t imagine a scenario in which the private component is eliminated altogether.

“But, that’s just one man’s opinion,” he said.

Courtesy of Avera Queen of Peace

This is a conceptual drawing showing the possible layout of an Avera Queen of Peace campus west of Cabela’s along Interstate 90 in Mitchell.