By Melvin J. Howard
Reforming health care in the US will be a major task and it won’t be easy. The US health care system is complicated. So when I here comparisons to other countries and using their models to fix ours I just want to yell. Our system is unique and it comes with a unique price tag of over 2 Trillion Dollars. Whatever way we go it must be solved uniquely by Americans with industry knowledge. This week I am featuring some of the players and stakeholders in the reform effort. One is a economist, One has a MBA in health care the other a MD through all bring up valid concerns. I will also over the coming weeks submit several proposals that has a chance to become a working model. What is clear we need to fix this problem there is no getting around it.
Will Healthcare Save the Country from Recession?
Posted by: Michael Mandel on January 04
I wrote this story in Businessweek September 2006. The headline reads “What’s Really Propping Up the Economy: Health care has added 1.7 million jobs since 2001. The rest of the private sector? None.” Well, here we are back to the same point again. The healthcare and social assistance sector added 37,000 jobs in December. By contrast, the rest of the private sector lost about 50,000 jobs. Over the past two months, health care and social assistance have added 66K jobs, and the rest of the private sector 8K.
In fact, I believe that the continued growth of health care employment will be the reason that the U.S. economy skirts official recession. With a baseline job growth of 30-40K per month, funded in large part by government spending, healthcare may be enough to keep the economy afloat.
In fact, healthcare is this generation’s version of keynesian economic policy. Both Republicans and Democrats are willing to “borrow-and-spend” to fund healthcare (though Bush was able to sustain his opposition to expanding the State Children’s Health Insurance Program). In fiscal year 2008, Bush’s budget calls for spending roughly $750 billion on various health-related programs, up almost $40 billion from the previous year). That’s a river of money.
You can argue about whether we should be spending more or less, about whether there should be a single payer or more competition, about whether the money is well spent or badly spent…but it’s there, and it’s paying for lots of jobs.
MARCH 08, 2007
Why a Health Care MBA? - Health Care's Role in the American Economy
The health care industry promises to be a major force in the American economy over the course of my career. Already comprising 16% of the GDP, health care is expected to balloon to 25% of the GDP by 2030. Late last year, Business Week had an excellent article entitled "What's Really Propping Up the Economy" that I recently re-read. It articulates well what the health-care industry currently provides and promises to provide in the future to the American economy.
The article states that, since 2001, the health-care sector has added 1.7million jobs to the American economy, while the rest of the private sector (aside from construction and real-estate adding 940K jobs) has lost 1.2million jobs. The article claims that the US unemployment rate is 4.7% (at the time of the article's publication), significantly below European counterparts at 8.2% and 8.9% (Germany and France). But without the addition of health care jobs, the US employment rate would be 1 to 2 percentage points higher. If current trends continue, 30-40% of all new jobs created over the next 25 years will be in health care. The other promising sector of the past decade, the information technology segment, has turned into "one of the greatest job-growth disappointments of all time", losing over 1.1million jobs in the past five years.
The health care sector is fortunate to be perceived as incredibly valuable to society, and thus governmental spending provides about half of all health care dollars (ranging from Medicare paying for hospital costs or the NIH funding promising new academic research ventures). The total expenditure is already over $2 trillion and growing. These monies are propping up economies and local job markets all across the United States as communities erect new or different provider facilities or promote economic development by incentivizing biotech or research facilities to headquarter nearby. Private industries, from hospital networks like HCA to insurance companies like Humana, to pharmaceutical companies like Merck, also provide tremendous investment into the system, and already are becoming dominant forces in the US economy both through their monetary outlay, their massive workforce, and their impact upon almost every American citizen.
PROBLEMS OF THIS GROWTH AND INVESTMENT
Sounds promising right? While "propping up" the economy and seeing tremendous growth opportunities, an economy that relies heavily on sector does not make an efficient system. Heavy governmental spending (predominantly through support of Medicare and Medicare Part D - which are increasingly seen as a right of citizens as the government has "promised" payment to seniors for their health expenditures) is straining the federal government. Federal outlays have totaled $600 billion in 2005, roughly one quarter of the entire federal budget, causing some to fear that the American government is increasingly reliant upon borrowing from foreign investors (like China) to support growing health care investments and costs.
American corporations and businesses also are feeling the burden, as an increasing segment of their budget goes to providing health care for their employees, leading some to cite an outflow of jobs from the American economy for locations that provide governmental health care. As most consumers know, the costs of receiving health care are also increasing well-beyond inflation rates. This is caused by a deficient system that attempts to "pass the buck" to the next person: Pharmaceutical companies attempt to recoup R&D expenses (already sunk costs) by charging the American consumer more (other countries negotiate prices with the pharma companies to keep their prices down); the healthy are financing the care of the sick; the working funding the retired; the insured covering the uninsured, etc.
There are also incredible inefficiencies at all levels of health care that, in any competitive market, would be quickly worked out. However, with many different segments within the industry not playing traditional market roles (the consumer/patient is not the payer/insurance companies; the government is a provider - VA, a payer - Medicare/Medicaid, and an innovator - NIH funding of research), these inefficiencies are not resolved as segments again "pass the buck" of responsibility.
WHY A HEALTH CARE MBA?
No matter what the future is of the economy, whether the health care sector is allowed to grow unrestrained or the government places a cap on spending, health care will remain incredibly important to Americans. Therefore, the industry needs knowledgeable leaders of tomorrow to help navigate future challenges. These leaders must understand every segment, how they interact, what they think, future trends, and historical context. This knowledge can only be gained from a comprehensive knowledge of the health care industry, and the Health Care MBA from Owen School of Management at Vanderbilt provides that. I have personally learned tremendous amounts of sectors of the industry I would never had examined before coming to Owen. I have shared this knowledge during conversations with major business leaders and future employers, and I know that I will look back upon this education as being the most singular important of my career.
| Posted by Tyler Richardson on March 8, 2007 |
SUNDAY, DECEMBER 14, 2008
Doubling Down Westby G. Fisher, MD, FACC is a board certified internist, cardiologist, and cardiac electrophysiologist (doctor specializing in heart rhythm disorders) practicing atNorthShore University HealthSystem, Evanston, IL and is an Associate Professor of Medicine at the Feinberg School of Medicine, Northwestern University, Evanston, IL.
Barack Obama is placing a heavy bet on health care as the nation’s economic savior.
I wish him well as he goes “all in.”
But his "prescription for change" contains potions that are not a safe bet for our economy. And yet we are told, we have to change, immediately:
“It’s not something that we can sort of put off because we’re in an emergency,” he said. “This is part of the emergency.”
I nearly had to slap myself when I realized he was saying what I said they'd say:
“Now we are in crisis. There is no choice in crisis. You must do as we say.”
And so, as part of the Great Promise, we are led to the three cornerstones of the current already-constructed-but-not-yet-implented plan: Information Technology, Prevention, and Paying Incentives for better care. These things, above all others we are told, will save us from ourselves and ultimate economic collapse.
And I’ve got some ocean-front property in Arizona I’d like to sell you.
But before you put down a contract, let’s look briefly at these cornerstones:
Information Technology to Build “Efficiency”
To frame my comments, realize that I work in a hospital system with one of the most “efficiently” deployed installations of the hospital information system EPIC in the country. We have inpatient and outpatient versions of the software fully implemented. It is a wonder to behold as I efficiently type my operative note, copy the referring physician, and send a copy of my note to our billing personnel before the patient even leaves the operating room. Within seconds, literally, the ICD9 codes are analyzed, the diagnoses cross-referenced to assure they jive with the procedure codes, the whole package sent to the billing “scrubbers” to be sure the electronic Medicare claim submission form has all the t’s crossed and the i’s dotted, and * BOOM* off to Medicare the bill is sent, even before the patient leaves the laboratory. Man, talk about efficiency!
If there’s something out of whack when Medicare gets it, it’s sent back electronically, with a pointer to the boo-boo, and because of the “efficient” claims denial service that “works” the accounts receivable to get back to me as I see another patient so I can change the diagnosis code to a “more appropriate one” that will insure payment according to their “efficient” reimbursement assurance algorithm: *ZAP* we send it back. It’s the most efficient game of electronic ping pong you’ll ever see! So efficient, infact, that instead of our accounts receivable of 110 days before the system, we’ve now cut them to about 38!
And as anyone in business knows, cutting the time in accounts receivables to less than half is REALLY how you measure efficiency of any business system!
Oh sure, there are plenty of other “efficiencies” built into IT like ours. It’s hard to quantify them all. Nurses love the "efficiencies" of charting now. And who can argue with the efficiencies of lab reporting with this system? It’s truly remarkable to order a test and get the results routed to your in basket the same day or maybe even within the same hour. Seriously, it’s impressive. I’d hate to do without this now that we have it. This is "good" efficiency because it helps doctors to their jobs. Zipping those reports instantaneously to me and providing them to the referring physicians probably shortens hospital stays and saves money, but is that enough to offset the cost of the additional testing that's being performed these days? I wonder.
That's because electronic medical records greatly facilitate ordering tests, too. Tests that haven’t been done in a year or screening tests that are made to assure “quality.” (“Gee, I wonder how his ejection fraction is doing? Maybe I should get another echo.”) Alerts can be programmed to assure you order tests or consults. Just a simple *click* and another test is on its way. Increasingly when patients are admitted, nearly every one has a “critical pathway” designed for “efficiency” of care based on “best practices.” Panels of tests and consults medications are ordered automatically with just one click rather than ordering them individually. What could be more efficient? Heck, it’s so easy, I just want to order MORE, don’t you? Get them in, get them out. Over their length of stay? Where’s our Coordination of Care representative? Can't we move him to a skilled nursing facility? Let’s GO people! Efficiency, efficiency, efficiency!
Seriously, where is the cost savings to our health system with this model of “efficiency?” Is it to our health system as a whole or for the business administrators who get their money faster from the Medicare National Bank while it’s still solvent? Will skilled nursing facilities be our Great Savior in this time of economic need as we try to demonstrate cost savings to the system, or will they just facilitate patient bounce-backs? Will we dare to examine this?
Prevention to Save Costs
This cornerstone scares me because short of the public health initiatives of seat belts and smoking bans, we’ve done poorly at saving money with “prevention” initiatives when it comes to costs. One only needs to look at Illinois who still permits motorcyclists to ride without a helmet to have some understanding for my skepticism here. Or nationally, we can look at the Jupiter trial that promises to save millions of lives if we just put patients on a little Crestor. I’m feeling cost savings there! And prevention effectively means more testing of the healthy, more ominous spin from reporters assuring your death if you don't get checked, and plenty of advertising to boot, which leads to more revenues and costs. But it's all in the name of “efficient use of our health care dollar," remember? We're so proud of our "guidelines," too. Even when these "guidelines" are manipulated to assure people receive expensive tests or devices "in the name of quality." It's hard to see the cost savings here, folks.
Paying Incentives for Better Care
Now this is an interesting concept that is so flawed it boggles the mind. If we just do as the Big Boys say, walk lock-step in unison with the ever-growning (now, 153) Great Directives, we will be paid the full amount due. Seriously, do the policy wonks think hospitals and doctors were born yesterday? Presently, legions and legions of people now work on the Hill just to get a jump on the Lastest Edict coming from On High so they can implement the change to their work flows and assure payment from the Medicare National Bank. (You know, I’ve got a dog I can train to do just about anything I want, too.) But where are the cost savings with this model? To date, pay-for-performance initiatives have been a dismal and utter failure at controlling costs. By their own admission:
"Since we began accepting the quality data in July 2007 for the 2007 PQRI, we have identified and begun to remedy issues and questions raised about the 2007 PQRI results and feedback. CMS analysis of the results of the completed first cycle of reporting has identified a number of unanticipated issues we believe may have impacted the success of physicians and other professionals in meeting program requirements for reporting quality data. These issues, which are outlined in more detail in this report, include claims-based reporting mechanisms issues, National Provider Identifier (NPI) numbers not being included on the claims forms, incorrect quality reporting data or claims submission errors and the content of the feedback reports."
In our system, it cost more to implement this "initiative" than earned from Medicare. But why stop? We should do MORE! Change those doctors' behavior! Tell the IT boys with their “efficient” systems to put a “hard block” in their orders so they HAVE to be sure to order another test or write a prescription or show that we’ve counseled them on smoking (we did, didn’t we?) to assure we get paid. Look how “efficient” we are! See the money we're saving?
And so it goes.
IT, Prevention, and Pay-for-Performance: all bad bets for cost savings. But as Mr. Obama goes “all in” by building health care bigger, we must realize the risks inherent to this approach for our economy. Can we really provide “affordable, accessible health care for every single American,” without even a modicum of conversation about the true costs involved?
These bedrocks for change, while interesting, will be a losing hand for our economy without serious constraints on spending. Instead, get the employers out of the game (what are they for anyway? They only cloud the real costs involved). Provide incentives for training and maintaining primary care doctors. Work tort reform nationally. Discuss and implement end-of-life care limitations. Transparency. Cut the middle men. Do the Insurance Pool thing. Spend a little up front on IT so we can SIMPLIFY billing and collections.
But please, oh PLEASE, stop touting prevention and pay for performance as our health care saviors.
To do otherwise is risking fiscal disaster.