ORIGINALLY WRITTEN MICHAEL RYAN
The business of providing health care becomes more complicated every year. At Hillsboro Community Medical Center, many of our resources go toward making sure we are in compliance with regulations of various agencies and third-party payers.
This article is being reprinted and modified with the permission of Wesley Medical Center in Wichita. They were thinking about the complexities faced by hospitals and developed this entertaining analogy that I would like to share with you.
The Funnel Cake Analogy
While buying a funnel cake at a fair recently, I couldn’t help but notice the simplicity of the transaction. The purchase was made in cash, I didn’t have to fill out any forms, and no one scrutinized me to determine if I really needed a funnel cake.
The $4 cost of the funnel cake, however, seemed like more of a bargain for the owner of the funnel cake shop than for me. I thought about going into the funnel cake business myself. Profits must be extraordinary, and there can’t be much regulation of the industry.
All this led me to think: What if funnel cake shops were operated like hospitals? There would be quite a few changes for everyone involved.
As the owner of a funnel cake shop, here’s what I could expect:
n Some of my customers would be in FMOs-Funnel-cake Maintenance Organizations. They could get a funnel cake only if they got permission from the funnel cake plan in advance. After they had eaten the funnel cake, the FMO might retroactively determine the customer wasn’t really very hungry and not pay me for the funnel cake.
n There would be Capitated Funnel Plans. Under the CFPs, I would agree to provide as many funnel cakes as needed to a given population for one set price. Then a really voracious funnel cake eater could put me out of business.
n Plenty of regulatory agencies (more than 33 of them) would oversee the funnel-cake industry, including KFFC (Kansas Foundation for Funnel Cakes) and HCFA (Health Cakes Funnel Administration). Their regulations would be thousands of pages long, and if I misinterpreted one policy I could go to jail.
n I wouldn’t be allowed to ask the customer to pay for the funnel cake until after he or she had eaten it and left the shop.
n The regulators would require me to have a Funnel Committee, a Batter Committee, a Powdered Sugar Committee and many other committees that had no apparent purpose.
Record keeping
n I would be required to keep a written record every time someone bought a funnel cake. I would have to log how long the customer was there, what he or she talked about, whether he or she liked the cake and much more. About 3-5 percent of my employees’ time would go to maintaining these records instead of taking care of customers. I would have to keep these documents forever.
n Since funnel cakes are popular with senior citizens, the government would administer a special funnel cake plan for them. The plan would pay me only what it cost to make the funnel cake-and many times less.
However, because of problems with their computer system, I won’t know if they paid me correctly until more than two years after I’ve provided the funnel cake. If they have paid me incorrectly, adjustments will have to be made then.
n With funnel cake technology constantly evolving, the new equipment would increase my costs, but I wouldn’t be allowed to raise my prices.
n In case someone got the urge for a funnel cake in the middle of the night, my shop would have to be open 24 hours per day, seven days per week, even if there was a shortage of funnel cake chefs.
n If one of my thousands of customers didn’t like his or her funnel cake, frosting, napkin, etc., he or she would go to the lawyer and media shops, and together they would tell everyone I made bad funnel cakes.
n Some of my chefs might become discouraged by the regulations, long hours and record keeping, and they would quit. Then they would open a small, specialized funnel cake shop that wouldn’t have to follow all the same regulations. They could only sell expensive funnel cakes and send customers who couldn’t afford to pay for funnel cakes to my shop, where I would give them funnel cakes for free.
n Then if I got discouraged, lost all my money and closed my shop, the community might suffer from a shortage of funnel cakes because there wouldn’t be a shop close enough to serve the need.
If all this were true, why would anyone want to go into the funnel cake business?
I guess because as long as there are people, there will be a need for funnel cakes. And some of us would care about providing people with good ones.
Bon appetit!
Michael Ryan is the administrator and CEO of Hillsboro Community Medical Center.
