Thinking Long Term

I was in a meeting yesterday discussing the intricacies of hospital rate regulation. In Maryland we have a rate comparison tool called the Reasonableness of Charges calculation. This tool measures hospitals charges and identifies high cost hospitals. The discussion centered around how we bring costs at high cost hospitals down to the state or peer group average.

There are two proposals out there. One, is to use arbitrary fixed percentages above or below the peer group and rearrange money from there. Second, is to use the standard deviation of the hospital charges and identify hospitals as a percentage of that standard deviation.

As we were discussing this, I thought to myself.  Using a standard deviation is great because there is a mathematical basis for it and therefore it is more reasonable and fair.  However, I began to think, using a standard deviation means that there will always be hospitals that are identified as high cost no matter how spread out the data is.  This wasn't going to happen the first year, but 5 years down the road this is a strong possibility.  

When people are making policy decisions, it's really difficult for them to think years down the road.  Whether they are talking about hospital rates or they are talking about a $700 billion bank bailout.  Sometimes what seems like a good option now, can ultimately fall back and hit you in the face.