Yesterday, we began a bipartisan discussion to revamp nearly 1/5 of the US economy. We heard arguments for and against certain parts of the proposed bill. There was a lot of posturing during the discussions and strong arguments made by both sides. However, there are certain nonnegotiable that I believe need to be agreed to.
For any change to truly impact the rising costs of healthcare, we must have transparency. What does transparency mean as it relates to healthcare? Simple. All providers must publish their pricing for services. A simple idea but a key element to in taking the first step to saving money. We must get transparency into the discussion and from that, allow consumers to take a more active role in their healthcare purchasing.
Healthcare is one of the few remaining areas of purchasing where a consumer enters the system with little to no knowledge of what the charges will be. To truly get costs under control, the consumer will have to play a more active role in what the charges will be.
On Thursday, February 25, President Barack Obama is calling on lawmakers, in a bipartisan meeting to present their best ideas on healthcare reform. Leading up to the summit, the Center for Health Transformation (CHT) is hosting the "American People's Online Health Summit
," an online dialogue and live blog. I am one of the participating members presenting our ideas on constructive and meaningful payment reform that brings about true transparency and payment rationality in the market and would encourage each of you to go online to http://www.healthtransformation.net/
and participate in this discussion.
With the recent announcement by some of the largest insurance carriers in the United States regarding rate increases and the continual issue of budget shortfalls of states to support Medicaid cost, we are at crossroads of having to make tough choices. We all desire greater access to quality healthcare for all Americans but in doing so we must develop a payment approach that is supportive to the consumer, provider and plan sponsor.
As I see it, in the coming weeks we will have three potential outcomes of the healthcare debate:
- A healthcare bill is passed no matter what. What the bill contains or the cost of the bill itself is secondary to the main issue of just "pass something." The stakes are high for both Democrats and Republicans if a healthcare bill is passed - no matter what the bill is.
- No healthcare bill is passed. In this case we start from scratch. In some ways this is good and in other ways will we end up in the same position today of having two polarized positioned on healthcare.
- Baby steps accomplished. In my mind the best scenario is for rational bipartisan thinking to take hold and work on those items we all can agree on. There are many components of the current healthcare bill that both Democrats and Republicans can agree on and we should focus on those items and work toward resolution.
We can no longer wait and assume Washington will figure this out. It will require all of us to participate and make our opinions know. Please join the discussion occurring on the Center for Health Transformation blog.
Over the last few months we have been bombarded by numbers. We can't escape numbers being quoted in the 24-hour news cycles. If you are like me, after a certain amount of "number discussion" I start to get immune to the enormity of the numbers. A quote that was originally attributed to the late Illinois Senator, Everett Dirksen (1896-1969) which he denied saying, "A billion here, a billion there, and pretty soon you're talking real money." This phrase about government expenditures has been resurrected as we debate the validity of government bailouts and proposed healthcare reform.
As I was reading the January 2010 issue of "Managed Healthcare Executive" there was an article by Julie Miller titled, "Healthcare's big numbers difficult to put in perspective"
The phrase attributed to the late Senator Dirksen echoed in my mind. Ms. Miller quoted the following statistics in her article:
- Healthcare accounts for a dramatic portion of the national economy - 16% of GDP
- U.S. Census Bureau, 2008 revenue totals for healthcare services, not including pharmaceuticals, reached $1.75 trillion, up from $1.66 trillion in 2007. That's a 5.7% gain.
- Physicians' offices earned $185 billion from private insurance, $74 billion from Medicare and $18 billion from Medicaid.
- Hospitals earned $307 billion from private insurance, $184 billion from Medicare, and $70 billion from Medicaid.
- In 2008, the American Hospital Assn. reported that Medicare and Medicaid underpaid hospitals and physicians by $88.8 billion.
- In the insured population, 14.3% were enrolled in Medicare, and 14.1% were enrolled in Medicaid.
- Based on these numbers, roughly one-third of the insurance payment received by providers in 2008 came from sources that underpay.
So what happens to the $88.8 billion that is underpaid to providers? (Remember it's BILLION, not million). You're right, it gets shifted to employers and private pay patients. Think of it as a hidden tax.
As our elected officials continue to discuss how to provide access to all Americans, (remember a key funding element for this access is through cuts to Medicare and Medicaid) deductibles and coinsurance continue to rise for individuals.
A billion here, a billion there and pretty soon there is no money left.
During my college football playing days I had a coach who would repeatedly say during the week of practice, "Men, failing to prepare is preparing to fail." This short pithy statement gets to the heart of doing what is necessary to win against your competition.
I recently attended the HCAA Executive Forum and was impressed with the speakers and emphasis on how to prepare for the ever-changing environment of healthcare. Today's market is requiring payers and their vendors to be flexible and more strategic in their approach.
One particular speaker I enjoyed hearing was Rich Horwath, who is president of Strategic Thinking Institute. The title of his presentation was "Deep Dive: Strategic Thinking for Competitive Advantage." In his presentation he shared how most organizations today have no strategy to effectively compete. Failing to prepare for the oncoming competition is preparing to fail.
Mr. Horwath is also the author of the book "Deep Dive" and I had a chance to read the book on my flight back to Dallas. In one of his chapters he has a quote that jumped out at me by former Coca-Cola CEO, Roberto Goizueta. "If you take risks, you may still fail. If you do not take risks, you will surely fail. The greatest risk of all is to do nothing."
If we in this industry are to effectively "prepare" for the future we must take risks. We are at a tipping point in healthcare. Employers are near breaking point in having access to affordable health coverage for their employees. Employees are near breaking point in being able to afford the insurance their employer provides. New programs will need to be implemented where costs are brought under control. To do this, new and innovative approaches will need to be tried. Some will be successful and some may fail. We can no longer wait. Just talking about giving everyone access to healthcare without dealing with the cost and affordability of healthcare is leading us down the path of failure. Failing to prepare is preparing to fail.
Recently Steve Jobs, CEO of Apple, made headlines again with the release of the iPad. Apple continues to "push the envelope" of new product innovation by providing consumers with breakthrough technology that assists in organizing and making their lives easier to manage. As I was reviewing all the headlines around the release of the iPad and how Steve Jobs continues to make a "dent in the universe" with innovative products and solutions, it made me think, what is the most innovative thing that has been released in the world of employee benefits? Think for a minute...I'll wait. It's hard isn't it? What really can be considered "breakthrough"? The list that I could come up with is small and outdated:
Consumer Directed Health Plans
Health Savings Accounts
When I try to think of innovation in benefit design, I feel like I'm staring at an open box of 8 track tapes (for those who don't know what 8 track tapes are, just count your blessings).
I remember reading a commentary by a friend of mine, Maddy Bowling in Risk and Insurance dealing with this issue of innovation in healthcare, specifically as it related to worker comp. She reached the same conclusion. Innovation is sorely lacking. As consumers we are bombarded by innovation day-in and day-out. Our cell phones, TV's and computers continue to open a new world of possibilities. However, when you access the healthcare setting, you and I are confronted by a clipboards, paper and fax machines.
Picture this, as you are driving up to your doctor's office, you are on your cell phone emailing a proposal to your office, accessing the Internet to handle your banking and paying bills. You then walk into your doctor's office and are confronted with a clipboard filled with papers to fill out, faxing documents (yes faxing) and more papers to fill out.
We are at a tipping point in healthcare. We have raised our deductibles as high as we can. Our coinsurance is at maximums. Our PPO's are no longer "preferred" they are simply a list of all providers giving phantom discounts disguised as being "preferred."
Truly changing the industry requires us to take risks. Without taking risk, there will never be change. I'm proud of the innovation and risk taking we have taken at NCN to change the industry.
If healthcare is to survive, we must start thinking in terms of revolutionary ideas. We neither have the time or financial resources to continue in this evolutionary track we are on today. Fax machines, clipboards and paper....the clock is ticking.
Last week we had the honor and privilege of former Speaker of the House of Representatives, Newt Gingrich in our office. It was a great time to interact with Mr. Gingrich and his team. Our time together centered on how our organization is changing the face of how providers are reimbursed and value we bring in sharing this information is a fully transparent way. By focusing on a rational payment approach, we help create an environment where the sustainability of our healthcare delivery is achievable.
Mr. Gingrich gave us some valuable insights regarding the current views of healthcare reform in Washington and how our approach can have a broader application within the state and federal government. With the national discussion focused on access to healthcare, the need to have an equally important plan to effectively control cost is necessary for the sustainability of healthcare as we know it today. We are well positioned to have significant discussions with key leaders on a local and national basis to help bring a defensible, sustainable and rational approach to healthcare costs. We will be having many more meetings with Mr. Gingrich and his team from the Center for Health Transformation as we identify solutions for payment reform.