Wednesday, October 7, 2009

How to evaluate the VHS deal?

If voters reject the proposed sale of the VHS to local physicians, the doctors will have the right to purchase Menifee Valley Medical Center (MVMC) for $29 million. Some might argue that the voters have an incentive to approve the sale while doctors are better with its defeat.
One statistical indicator is the cost per hospital bed. MVMC has 84 beds, which computes to $345,200 per bed. The VHS Web site says Hemet Valley Medical Center has 343 beds, but even Dr. William Cherry, VHS president admitted there is seldom enough nurses to fill all the beds.
Nevertheless $162 million for 427 beds is $379, 400 per bed, a better deal for voters. But the fewer beds HVMC has the higher the per bed price, thus doctors would do better with just MVMC.
Of course, the $162 million price is the Press Enterprise estimate and includes the $55 million of unsubstantiated claims. If that is deleted from the costs, the price per bed is only $250, 600.
So how one evaluates the sale, depends upon how many beds one assumes for HVMC and how reliable and accurate is the estimate of PHH claims totaling $55 million.

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