A Guest Post by Rosemary Gibson

Wednesday, March 19th, 2014 3:14 PM by Christopher Gregory

Tom Emerick ran this outstanding guest article by our colleague-in-the-cause Rosemary Gibson, and he was kind enough to give me permission to re-post it. Editors note:  Rosemary Gibson is author of The Treatment Trap, a book we highly recommend.

 

LETTER TO MOUNT SINAI’S HEART SURGERY FACTORY: LEARN A LESSON FROM DOWNTON ABBEY

It’s time for the health care aristocracy to fade into the sunset.

That’s the lesson from the scathing article last week in Bloomberg News about New York’s Mount Sinai Hospital whose headline screamed, “A Heart Surgery Factory With ‘Obscene Levels’ of Pay.”

According to the Bloomberg account, Mount Sinai climbed out of a multi-million dollar financial hole in part by ramping up the volume of cardiac stent procedures, doubling the number performed during the 2000s to become New York’s top stent factory.

Mount Sinai has had a troubled financial history. Its ill-fated merger with New York University Hospital that began in 1998 and resulted in a divorce five years later yielded junk-bond status credit ratings and combined debt of $670 million. It’s hard to imagine, or perhaps not, that this would happen to a hospital whose board of trustees is comprised of Wall Street financiers and whose address is Gustave Levy Place, named for the founder of Goldman-Sachs.

Mount Sinai is not alone in ramping up surgery volume to pump up the bottom line. The health care system is perfectly designed to be abused.

High priced hospital consulting groups like the Advisory Board Company tout volume growth as a “ticket” to profitability and advise clients on how to “grow” profitable procedures.

Profitable, indeed. The director of Sinai’s interventional cardiology, who oversaw the growth in stent procedures, was paid $4.8 million by the hospital in 2012, more than the CEOs of Microsoft and Amazon, according to Bloomberg.

The health care industry has created its own aristocracy with multimillion-dollar lifestyles at public expense.

Far away in Yorkshire, England, home to the wildly popular, made-for-TV “Downton Abbey,” the aristocratic Crawley family has had a similar share of financial distress, also of its own making.

A few seasons ago, the Earl of Grantham, lord of the abbey, invested the family fortune — which came from the dowry of his wife, Lady Cora — in an ill-fated Canadian railway venture that went belly-up. The family laid out a plan to eliminate the servants’ jobs and downsize. At the last minute, they are saved by the largess from an inheritance.

In the post-World War I era setting of the PBS series, many large estates in England were in financial tatters. Downton Abbey is forging a new path to sustainability, thanks to the sensible proclivities of the Crawley family’s former chauffeur and now son-in-law, Tom Branson, the anti-aristocrat who married Sybil, daughter of Lord and Lady Grantham, who died during childbirth.

Under Branson’s sober stewardship, the lands of the estate are now home to a herd of pigs that will bring home the bacon. For post-war England suffering from a food shortage, Downton is feeding its sausage-loving compatriots while putting itself on the path to self-sufficiency, at no one’s expense, except that of the pigs.

No surprise that Branson came from the world of real work for a day’s wage, never dreaming of having reams of other peoples’ money to blow up.

Palatial buildings and lavish lifestyles are rarely sustainable over generations, whether in a fictional aristocratic Yorkshire family or in a hospital along Manhattan’s Fifth Avenue.

Downton Abbey’s Crawley family is portrayed as having a sense of duty to its ancestral Yorkshire home. Likewise, hospitals feel a duty to keep a vital community resource intact.

Neither is an excuse for profligacy. At least the Crawleys were blowing up the money of their rich relatives.

Too-big-to-fail hospitals blow up the money of the working men and women of America, the people who work “downstairs” — the tireless Mrs. Patmores and Mrs. Hughes’ of the world.

Dependence on other peoples’ money becomes an addiction.

Rather than pare back the excessive paychecks and eliminate wasteful spending that keep the peace among fractious fiefdoms, the health care aristocrats impose their own kind of “tax” on the little people, those forced to fork over an ever-growing share of their paychecks to pay for the modern-day steel castles and the lords who preside over them.

The scary part is how shamelessly unsuspecting patients are reeled in, tests and surgeries done on them, to fill in a financial ditch and reap obscenely high pay.

Even the Downtown Abbey aristocrats would recoil from such a prospect.

It’s time for the health care aristocracy in the United States to fade into the sunset. The fiefdoms and their misplaced sense of entitlement to the public’s money need to be gone with the wind.

Follow Rosemary Gibson on Twitter: www.twitter.com/Rosemary100

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A YEAR LATER AND BUSINESS AS USUAL?

Wednesday, March 12th, 2014 4:05 PM by Christopher Gregory

Just over a year ago, on February 11, 2013, a group of thought leaders convened a meeting at Southern Methodist University for a group of prominent DFW employer representatives – mostly HR and benefits people.

A panel of well-known speakers from around the country came to Dallas to offer perspectives on our healthcare system. They took aim at serious problems we face in a healthcare delivery system that spends far more than other countries and delivers much less quality. I’ve personally written until I’m blue in the face that we do too much healthcare, we do it too soon and we deliver it at a cost that is way too high. We just don’t get a very good return on the massive and growing amount of money we spend.

Shannon Brownlee and Rosemary Gibson are two highly respected authors and lecturers on the subject of healthcare. They came to our symposium to deliver their compelling views on healthcare’s damaging impact on the nation’s economy and the harm a free-spending system often does to  people.

Tom Emerick is a longtime corporate leader in the campaign for higher ethical standards in the delivery of healthcare. He addressed examples of provider greed and profit motivated travesties to offer just a peek at what happens everywhere in our system. One could only conclude from hearing Tom that absent ethics, it’s a total jungle out there.

Dr. Richard Young, an educator and outspoken author on medical myths, provided a physician’s insights into the government-industrial medical coalition and how accepted notions about more-over-less medicine, overemphasized specialist care and big pushes for early detection are costing us dearly and aren’t producing better results.

Terry White spoke from an insider’s perspective as CEO of major hospital systems for many years. He addressed the pressing need to steer to quality, how quality-defining metrics are vital, the disparities in the qualities of facilities that exist within communities and how centers of excellence ought to be stressed as destinations for care.

Brian Klepper, PhD, a well-known and sought after healthcare economist thinker and activist, abandoned his prepared presentation to roll up his shirt sleeves and talk off-the-cuff about how important it will be for employers to work collaboratively. Working together, employers are the only real economic force strong enough to counterweight the continuing onslaught of the healthcare industry.

A year later, where are things in DFW? The healthcare environment is still dominated by healthcare interests. The standoff between the insurance companies and the health systems still occupies center stage. More hospital facilities and stand-alones are popping up everywhere. Employers still weakly accept the notion that wellness and prevention pushes will do the trick. The consultant-preferred environment that isolates companies (versus advocating collaboration) is still working and the laissez faire response by the HR-benefits community means that playing it safe is more important than going outside the box.

And still, the daily press reports that hospitals everywhere are hiring rainmakers to drive huge profits – like the Baylor neurosurgeon who was recently outed as a medical monster before being driven out of Texas and medicine. Like the Mount Sinai heart procedure factory paying its cardiology director $4.8 million. Doctors do more procedures fueled by personal and hospital profit motives – doctors do horrible treatments and procedures on patients who don’t require treatments. Hospital systems get hit with huge fines for violating physician conflict of interest compensation regulations (hundreds of millions in fines). And today, the story appeared about a civil lawsuit, filed Feb. 7 in U.S. District Court in Detroit, alleging that a physician concealed the profits he made as an investor in a medical device POD (physician-owned distributorship). It alleges that financial incentives arising from the POD may have caused him to perform unnecessary surgeries.  

But still, a year later, the weaknesses inherent in the employer community means that for healthcare in DFW, it’s pretty much business as usual.

One final note readers. The Baylor-Scott & White merger is the marriage of two systems. The Baylor system in DFW has to play ball in the BUCAH (Blue Cross-United Healthcare-Cigna-Aetna-Humana) ballpark. Health systems hate insurance companies. Scott & White is a hospital system and the 900 pound gorilla health plan in Central Texas. Does Baylor plan to learn from and emulate Scott & White to become its own health plan in DFW? Isn’t it a noted trend that around the country, large hospital systems foresee themselves as their own health plans? Don’t they see the day when they can tell the insurance companies to go fish? What happens to the ability to counterweight that consolidation of power when it happens?   

 

 

 

     

Employers Must Vigorously Pursue Health Care Quality

Friday, March 7th, 2014 2:22 PM by Christopher Gregory

The front page story in last Sunday’s edition of the Dallas Morning News used  red ink headline terms -  “Sociopath”“Clear and Present Danger”“Serial Killer” to describe a Dallas physician.

These descriptions were not employed by lawyers, but by Dallas area neurosurgeons to describe a fellow neurosurgeon who was crippling and killing patients at local hospitals. From the first hospital where he had privileges, he was paid a $600,000 annual base salary, plus whopping incentives to bring patient revenues in. He was hired as a rainmaker and proclaimed an aggressive surgeon could easily command a $3 million personal income. When serious problems surfaced and his privileges were suspended, he was given a clean bill of health by the first hospital, affording him additional time to gain operating privileges at other area facilities to inflict further harm. A troublesome question arose – was he operating in a substance impaired state, and why were no steps taken to stop him? When the horror stories from other physicians finally got bad enough, his Texas medical license was revoked and he left the state. FYI, Texas medical oversight is notoriously slow to act on such cases.

Troubling tales about a rampantly profit-infused American health care system abound. Hospitals paying physician obscene amounts to boost patient revenues, oncologists administering chemotherapy to patients without cancer, cardiologists placing stents in healthy hearts, heart surgeons operating on healthy hearts, hospitals with poor track records for post-operative complications, spinal surgeons doing multiple fusions on the same patients. There are legions of such instances of these abuses, all fueled by revenues. And hospitals/systems keep buying up physician(s) practices to control revenue flows.

There are effective, proactive filters out there which employers can easily incorporate  into their health benefit plans to identify and head off problems, e.g., classifying hospitals by  quality quartiles. Once identified, it becomes possible to steer patients to quality facilities, either best available locally or to outlying centers of excellence. The positive effects can be massive in terms of both quality and cost.

Yet in discussions with colleagues around the country, when employers or employer coalitions are approached with propositions to emplace these filters into their benefit plans, the response has been “we’re not ready for that”. When high(est) quality hospitals are identified out of the immediate areas, requiring travel, the response from employer benefits and HR personnel is “employees won’t travel”.

What is wrong with employer individuals who are charged with and ought to be held accountable for ignoring such proven, effective means to control cost and quality?  

Exactly what are employers waiting for, when delaying opportunities to steer employees and dependents to quality (either best locally or to centers of excellence) provider facilities, avoidance of unnecessary surgeries and reducing the cost of care for both employers and their employees?

The delays in the implementation of control/quality measures by employers in the face of the clear and present dangers that exist everywhere begs questions about awareness and commitment on the part of employer personnel charged with managing healthcare benefit plans, and the influences exerted by special interests, e.g., consultants. Metropolitan health coalitions are typically heavily infused by non-employer interests, e.g., hospitals/systems, insurance companies, wellness vendors and consultants who are satisfied to attract business from individual employers. These coalitions are happy hunting grounds for special interests, and collaborative employer action is to be avoided.

Here’s the bottom line. Employers do have tools at their disposal to make healthcare better, safer and less costly to both themselves and their employees. It requires a mindset change that largely hasn’t evolved yet. That is why employers remain islands in the stream for the most part, too reliant on advice lacking in innovative thinking and subject to ongoing high costs.  

 

 

EMPLOYERS HEALTHCARE – STUCK IN NEUTRAL

Tuesday, February 25th, 2014 1:39 PM by Christopher Gregory

Over the past few years, I have engaged in numerous discussions with thought and action leaders around the country regarding the state of our health care system. When waste, abuses, excesses and the “big business of health care” are the topics of conversation, invariably a repetitive question is asked.

Where, amid all of the holes and leakages costing us hundreds of billions each year buried in a (current) $2.7 trillion dollar annual healthcare spend, does a potential solution lie and how can a solution work as a counterweight to the massive outlays that result from doing too much, too soon, unnecessarily and at costs that are too high?

Consistently, the best answer and the hoped for solution of choice has been to turn the job over to the only force substantial enough to counterweight the health care system’s influence and penetration in our economy. That force is the nation’s community of employers, starting with major employers able to command attention by their presence in specific geographic or metropolitan areas.

This collaborative effort has been demonstrated successfully in areas like Milwaukee/Southeastern Wisconsin, the tri-state initiative in Wisconsin, Illinois and Iowa and Savannah, Georgia. They’ve even done this in Montana.

Action was proposed in Dallas/Ft Worth, and has been proposed in Philadelphia. In DFW, the initiative, discussions and meetings among prominent employers have stretched out over the better part of a year.

The DFW initiative aimed to bring prominent employers together, working in a collaborative analytic effort to pool claims information tasked to identify the best hospitals and best doctors in the formation of a high-performing network that would be owned by the employers and operated in the interests of member employers. The key determinants of this network would focus on cost and quality.

As the old saying goes – “Rome wasn’t built in a day”. Tom Emerick told me that when PPOs were first envisioned, the response was pretty dismal.

Why have these efforts and efforts elsewhere failed to gain substantial traction? I’ll offer a couple of suggestions.

First, any genuine transformative efforts have reduced chances for success if the target audience is the employer’s HR and/or benefits manager. They do not have the ability or authority to move these initiatives forward. They are process people, and innovative vision is diluted by the daily myriad distractions of multiple administrative functions. There is little, if any, room left to entertain innovative solutions to the ongoing challenges of growing employer health care costs. Too often, innovation takes the form of increased cost-shifting to employees.

HR and benefits people have become far too reliant upon the highly expensive network of benefits consultants  who have infiltrated the thinking and potentials that could serve as the rich medium for innovative thinking about tackling health care costs for quality care. Look at any metropolitan area and you will find a community organization purportedly representing the aims and goals of a working cooperative to accomplish such aims. Look more closely and you will find that these are essentially social organizations heavily populated by insurance companies, health care systems and consultants all there for one reason – to promote their own agendas for profitability.

The area of employer health care is an especially ripe environment for health care consultants. There is a great deal of money being spent on ideas that have looked good but have not worked (e.g., wellness), compliance processes and tedious projects that are overly drawn out (and profitable to the consultants). The consultants benefit from the willingness of middle management HR and benefits personnel to defer decisions to “the experts”. More than once, I’ve heard that consultants have been shown the door when, at the end of the day, benefit costs have continued to climb unchecked.

A key to action was successfully demonstrated in Milwaukee years ago. CEOs of major employers there came together and collectively and collaboratively fashioned an employer-directed game plan for the purpose of influencing their local healthcare spending environment. The founding CEOs gave the order for action and the participating employer community benefited significantly. There were no endless debates, no tedious and protracted studies commissioned by HR and benefits personnel to prolong a decision which clearly needed to be made. The insurance community and the provider community did not sit at the table. The consultants were called up to support specific projects, not to run the show. The end results were nothing short of spectacular – this in a substantial metropolitan area saturated with health care systems and insurance companies. And consultants.

Why hasn’t this happened in other major areas with concentrations of notable employers? Why haven’t benefits consultants forged collective employer alliances? My guess is that the consultants don’t want it that way, because this would force them into proximity with one another, and could threaten their business book. “Divide and conquer” is a much better and more profitable solution for consultants, even when there exists a clear possibility that collective employer aims and activities might deliver reshaped systems built upon accountability and best cost and quality practices.

Prominent employers, no matter how large a workforce they may represent in a metropolitan area, will not be able by themselves to fashion such networks.

It cannot happen if each employer is held captive by consultants, profit interests and an unwillingness to step outside the box. That must come from senior C-Suites.   

 

 

 

   

THINGS THAT JUST DON’T MAKE SENSE

Monday, January 13th, 2014 2:00 PM by Christopher Gregory

Nutrition, Health, Cost and Special Interests

An article appeared in the newspaper before the Christmas holiday that I had intended to write about. It’s actually one part of a collection of observations (below) that makes me scratch my head when I think about the black hole into which we pour health care money.

The article focused on the terrible poverty in the Rio Grande Valley of Texas, and the massive overreliance on the food stamp assistance program. Almost 40% of the population in one county is enrolled in food stamps. While this is an extreme, don’t think for a moment that this problem doesn’t manifest itself throughout the U.S.. We have families in poverty everywhere.

Having worked in the Valley and having seen those manifestations, I can appreciate the problem caused by a widespread reliance on cheap, processed foods heavy on preservatives, fat, salt and refined sugar. On food stamps, “quantity over quality” stretches the budget and shows up in an obesity rate approaching 40%. In Texas, 54% of the lowest income children are obese. The rate and cost of more immediate problems like juvenile onset diabetes, and the longer-term complications of obesity and diabetes are staggering. For one of the first times ever in the U.S., children in South Texas have a projected lifespan that is a few years shorter than that of their parents.

Ask yourself where this problem impacts the costs of treatment and where the highest cost treatments for low-income families are most likely to occur. Is the tradeoff in the cost of quality nutrition for a reduction in long-term, chronic health problems worth it? It seems like such a dumb question, really.  And yet the Texas Beverage Association lobbied (successfully) to head of any attempts to ban food stamp purchases of energy drinks – high in caffeine and higher in sugar, with little or no nutritional value. The Association desperately wanted all of these drinks available for sale to the fastest growing market in America: the food stamp market.

That kind of profit motivated influence is costing us dearly in lives and dollars, and we’re seeing just the tip of the iceberg.

Late-life Care

For years, many people in medicine have understood that late-life care for the chronically sick is not only expensive but also, much too often, ineffective and inhumane. Fort Worth’s Dr Richard Young, in his travel to and observation of the general practitioner focused British health care system noted that the Brits have a much more wholesome and sensible approach to the end of life. They reason and accept what can and cannot be done within the limits of a national budget for health care.

The director of the Altarum Institute’s Center for Elder Care and Advanced Illness says that a gradual and medically complicated down-slide was once exceptional, but is now the likely path for half of today’s elders. Seniors with five or more chronic conditions account for less than 25% of Medicare’s beneficiaries, but more than two-thirds of its spending. This is the fastest-growing segment of the Medicare population.

A solution has been proposed for the wasteful spending and often inhumane treatment of the chronically ill elderly. It employs a home-based primary care model built on a multidisciplinary approach to people who, while they might not be on death’s doorstep, are never going to recover from myriad medical problems.

The Sutter Health System in California figures that the program, by keeping people out of the hospital, saves Medicare $2,000 a month on each such patient. The VA says its program reduces hospital days by more than a third and reduces combined medical expenses to the VA and Medicare by about 13%.

But, as always, we come to the glitch – in this case the business model. For doctors, nurses, health systems and insurers, providing in-home services costs money. Medicare pays for hospitalizations, but not much for in-home care, for social workers, or for time spent coordinating complex cases and traveling to homes and talking with caregivers.

Switching to a home-based model of primary care for the medically frail will be a challenge. One compelling reality is that the space for cost-shifting of money lost on Medicare patients to commercial insurance is shrinking. An executive at Sutter Health in California says that the way to bend the cost curve now is by focusing on where there’s waste and inefficiency. That’s care at the end of life in the Medicare population.

Extraordinary Measures

Finally, I’d encourage you to read a thought-provoking American HealthScare commentary that Dr Young recently published, entitled Assuaging Grief with Expensive Medical Technology. There’s so much room in our health care dialogues for horse-sense questioning like this. It’s my hope that enough of this hard, common-sense attention to the craziness out there will get some action moving in the right direction.

As these thoughts above demonstrate, we face astounding amounts of ignorance, special interest influences, and bureaucratic apathy as we attempt to make headway with the healthcare drain on our national economy.  We face it in government, the health care industry and sadly, even in the private sector where employers remain entrenched in archaic approaches to resolving health care cost and quality issues.

Why aren’t we using more horse sense nowadays, to cut through the muck we’ve imposed on ourselves?

WHAT RESULTS FROM BEING TOO TIMID ABOUT REAL HEALTH CARE CHANGE?

Friday, November 15th, 2013 3:02 PM by Christopher Gregory

A recent special report appeared in the Washington Post, entitled “Spinal fusions serve as a case study for debate over when certain surgeries are necessary” You can read the whole report here Washington Post Special Report.

I am going to focus in on one section of the report, that deals with the 2006 study Medicare conducted to take a closer look at spinal fusion surgery. The reason I emphasize this study is that most insurance companies look to Medicare for the guidance in setting payments. Follow the leader.

Fact. Big-ticket surgeons are heavily incentivized by hospitals and surgical device manufacturers to do a lot of surgery, as the report details.

Degenerative disc disease

Your attention is drawn to the massive upswing in back surgeries. For degenerative disc disease alone, lumbar spinal fusion surgeries tripled between 1998 and 2008, and because of that Medicare decided to take a much closer look at this area. A team of researchers commissioned by Medicare to summarize evidence found four randomized clinical trials.

Three trials, funded by government and nonprofits found that for degenerative disc disease, spinal fusion offered no clear benefit.

The fourth, funded by two companies that make spinal fusion equipment, found there was a benefit. Surprised?

The physicians who led the evidence review prepared a report to a nine member Medicare physician advisory group – three of whom owned stock or worked for makers of spinal equipment. A “5” vote meant fusion was likely to benefits patients, and “1” vote meant that fusion was unlikely to benefit.

In the aggregate, the 9 member expert panel adjudged that spinal fusion graded out at  “1.5” – “less than reasonably likely” that spinal fusion would offer a benefit to degenerative disc disease sufferers.

Yet Medicare never changed its policy: it still pays for spinal fusions for degenerative disc disease.

A Medicare spokesperson offered this statement: “By law, Medicare must cover items and services that are reasonable and necessary. Within those rules, doctors and their patients are free to make medical decisions that are best for the patient”

And therein lies the heart of the problem. If you read the whole Post report, you will see that doctors are massively incentivized to do these very expensive fusion surgeries. These over-doers are cash cows for the hospitals, and as the Post story illustrates, a doctor can easily sway a patient by saying the patient will be paralyzed without the surgery. Think it doesn’t happen? Consider the many many reports about doctors making millions doing too many unnecessary cardiac stents, joint replacements and spine surgeries. We are not listening.

The average patient is ignorant because he doesn’t know how to participate in critical discussions and engage in thoughtful decision making conversations with a physician who wants to cut into them. Because of a lack of incentives to be better consumers, patients are vulnerable to health and financial risks. 

Are too many employers clueless and complacent when it comes to taking steps to motivate their employees into becoming smarter, ask more questions and look before they leap onto the operating table? And when strategies are recommended to do just that, and to motivate employees to become better decision-makers, and to make sure they are getting second opinions and ensure they have necessary surgeries performed at facilities that excel at these procedures – what do many employers do?

They come up with rationales (I call them excuses) for why they can’t or won’t do it. They say “our employees won’t pay attention” – translation: “we won’t put the time into communication/education.” They say “our employees won’t travel to centers of excellence” – translation: they won’t put in incentives to go to the best places when necessary. Even when hard proof exists that this will save significant dollars.

They say “our claims administrator won’t cooperate in our pursuit of best rates (flat case rates at centers of excellence).” Translation: their claims payers push them  around (who is paying who?).

They rely on consultants who haven’t demonstrated innovative thinking or promoted cutting-edge solutions.

The bottom line is this. It seems employers would rather fuss about the high costs of health care, instead of stepping outside the box and innovating for change. They are basically shying away from real change. They are overly cautious about taking what may be seen as unpopular steps.

And this Post spine surgery report offers an example of how things turn out. We end up with spinal fusion surgeries costing us billions, by some estimates half of which shouldn’t even be done and which continue to rapidly increase in numbers.   

One old saying goes “everyone wants to go to heaven, but nobody wants to die.”

Everyone wants to curtail the rise in health care costs, but as long as the health care interests (profit-motivated doctors, hospitals, equipment manufacturers and politicians who get bankrolled by special interests) hold the high ground, we are going to fumble around. No effective changes will take place. In places where innovation would work, there’s too much timidity and fear about making bold advances on health care that will continue to drain our resources.

 

 

“OBAMACARE”

Friday, October 25th, 2013 12:24 PM by Christopher Gregory

There are endless arguments for and against the Affordable Care Act, which for the first time requires that all Americans have health insurance. Prior to passage, the nation endured a firestorm of fact and fiction about the proposed law, played out in every possible media. Bottom line, the U.S. was the only leading industrialized nation that did not provide some form of universal health care access to its citizens, and 45 million uninsured citizens was evidence offered in support of the law’s passage. Many of those without insurance would ultimately end up working through the economy, in the form of the exaggerated costs we the people end up absorbing when individuals with nowhere else to go end up in our nation’s emergency rooms. How many very sick people could have been helped, and how much expense could have been avoided if a health care system existed to provided access to basic care when needed?

By mandating universal eligibility and participation by all, the rationale is that by spreading risk evenly among the entire population, threats of adverse selection and moral hazard can be greatly reduced or eliminated. Adverse selection occurs when increased numbers of individuals who need health care become covered, which disproportionately drives up the costs of care. Moral hazard occurs when individuals will only purchase health insurance when they need it, without risk of being refused or forced to pay more. And, it was assumed that setting up access to health insurance in a competitive marketplace was a way to make coverage more affordable. For those lacking means, subsidies would help reduce costs even further.

Opponents protested the law as further massive government intrusion into people’s lives and decidedly anti-business when (small) employers are forced into offering employees coverage under threat of penalty. The impact of tax subsidies and assistance to low income citizens has been decried as a potentially catastrophic burden on the federal budget, which would balloon the deficit. It will be expensive, no doubt. How much so remains to be seen.

The magnitude of the outcry against Obamacare is reminiscent of the vehement opposition to Medicare prior to its enactment into law in 1965, branding it as socialism. Ronald Reagan famously warned that with the passage of Medicare, grandparents would one day tell their grandchildren stories about what it was like when Americans were free. Yet today, Medicare is a program that works and ensures senior citizens and disabled Americans access to health care, where previously one-half went without.

Perhaps we should cease hostilities and simply give this law a chance. Prior to passage, recall the horror stories (e.g., “death squads”) being spread, which were boogeyman myths to stampede people into opposition.

After all of the lead-up, congressional entrenchment and a nearly disatrous government default on our debt, there is now a debacle taking place with the government website, touted as the way to ensure fast and easy access for all to the various health insurance marketplaces. Following a meltdown of the www.healthcare.gov website at its launch on October 1st, we are learning that the testing of the system was too late, ill-timed and overseen by people who are basically incompetent when it came to the orderly process of debugging the system. This failure to launch a much ballyhooed federal marketplace, in an age of technological rapid access to just about anything, demonstrates how inept management put egg on a lot of administration faces. The Obama administration is in full scale damage control, and has been forced into dialing back compliance dates for business and individuals. Haste makes waste, and $400 million paid into a system which essentially has crashed is lamentable … ridiculous … ludicrous.

What needs to take place now is: 

  1. fix it now, fix it right, test it adequately and delay implementation until it has been entirely cleared for use – all the while being straightforward with the American people; and
  2. when the wbsite is fixed, and enrollments can occur correctly, give a law which has been passed and upheld by the nation’s highest court a chance to demonstrate its operation without all of the catcalling.

And for heaven’s sake, let’s not ever lose sight of that fact that, amid all of this political sound and fury, the staggering cost of our nation’s health care is rooted in an overindulgent environment that prescribes too much, diagnoses too much, treats too early and performs way too many procedures, fueled by a voracious fee-for-service system that won’t cease until the major payers (our nation’s employers) decide to do something to exercise some genuine economic muscle.

 

 

STILL CALLING FOR REPEAL: WHERE’S THE LOGIC TO ALL OF THIS?

Friday, October 4th, 2013 10:55 AM by Christopher Gregory

A backlog of Americans tried to get onto the Obamacare exchanges that went live on Tuesday, amid the delays and glitches of high demand/traffic with the marketplaces. With something as massive as this, is it really expected that there would be no glitches and traffic jams?

As that was taking place, the shutdown of a large part of government continues as the GOP tries to defund, delay, or otherwise dismantle the law.

David Stockman, former director of the Office of Management and Budget in the Reagan Administration, former member of Congress, and author of “The Great Deformation,” essentially says: bring it on (referring to the GOP effort to have its way). This, despite The Affordable Care Act being the law, passed in 2010 by a president who was re-elected in 2012 (while the candidate who ran on repealing it was defeated), and which has been upheld by the Supreme Court.

So why should it be repealed according to Stockman?

“It is the worst law ever passed in the last four decades by the federal government,” Stockman argues. “It is a massive entitlement to end all entitlements. It is going to cause a fiscal hemorrhage that is not even yet anticipated. It will tie up one-sixth of GDP in the most monstrous, massive, bureaucratic snarl that you can’t imagine. So therefore this needs to be stopped before it becomes operational.”

On the one hand, there is some logic to this position since the cost to the government to subsidize the insurance cost for millions of newly eligible insureds will be huge. But then let’s not forget that individuals who do not have insurance still get sick, need care and are costing or likely will end up costing us vast sums when they go to hospital emergency rooms to seek care at wildly exaggerated costs. With or without Obamacare, the cost for the uninured today or the newly insured tomorrow will be substantial.

The operative word in this morass of political-economic rhetoric is  – cost. We spend vast sums on care that is too much, too soon, too costly and driven by a system that is basically acting as bush-beaters to drive far too many people into the health care black hole which is eating up our resources at a staggering rate.

Will the holders of the purse – American business – answer the call for help? We’ll see. 

 

WE ARE MISSING OUT ON THE BUSINESS SOLUTION FOR HEALTH CARE

Thursday, October 3rd, 2013 5:48 PM by Christopher Gregory

Political gridlock in Washington threatens this nation with incalculable losses as we edge toward a financial catastrophe. The primary culprit is one faction of one political party dedicated to scuttling the Affordable Care Act, which is the law of the land. Forty one previously failed attempts at overturning the law have not yet sunk into the thinking of zealots who don’t care about the cost of their zealotry. They keep on trying no matter what the fallout. It is a radical faction goal to dismantle a law no matter what harm may occur as a result of the  budgetary stalemate that has now closed much of our government. All this has taken place without even giving the law a chance to demonstrate its potential effectiveness. If it’s bad, we can get rid of it – but shouldn’t we give it a chance?

When will partisan politicians come to their senses? The Obamacare fracas is all about politicians’ misplaced, misguided squabbling over who pays for healthcare as the endgame of some political power play. It’s a game of chicken whipped into a frenzy with only a bad outcome in clear view. This furor is a political football cloaked in the guise of partisan hatred of perceived government intrusion, even if the law might have an outside chance do some good for our broken health care system. We need some economic good to occur in our broken system.

Healthcare is damaging our country simply by virtue of the extravagances that are taking place and the toll wanton spending is exacting on our main economic engines – our employers and our citizens. Business is the lifeblood of our economy and it is in the crosshairs of the broken system holding our employers and our citizens hostage as a result of uncontrolled spending. Yet we are blind to that reality, and healthcare has become an ideological bone fought over by political dogs. No matter that it has frozen us in a perilous economic position.

We must come to the realization that the political battle over healthcare is nonsense. We must instead focus on the reality that the real target of a fix for our nation’s healthcare system ought to be control over spending where so much is unnecessary, excessive and wasteful. We have done a terrible job at that, no matter how much jargon, rhetoric and promise we hear coming out of the “new ways” being touted. At the end of the day, it’s about wanton spending. We need to measure it, and take dead aim at what measurements identify as the culprits in this spending frenzy.  

The cure lies with American business and business know-how. It is the largest and only force which can bend the curve of health care spending which, if left unchecked, will continue to consume an ever-increasing part of our nation’s GDP.

We must look to the business market forces which can operate on our behalf in bringing these costs under control.

Not politicians.

Dallas Fort Worth HR and Benefit Executives – Considering the Challenge

Thursday, September 5th, 2013 8:41 AM by Christopher Gregory

On August 29, 2013, HR and benefit executives representing 16 of Dallas Fort Worth’s leading non-healthcare employers met to hear about a substantially different approach to the common problem of unabated rising health care costs that take a painful toll on these companies and their employees.

Eighteen months ago, a group of healthcare thought leaders from around the country joined into conversations and communications regarding the misdirection and misinformation about healthcare and the impact when employer and employee health care resources are lost in an unchecked environment of excessive and wasteful spending. A collective decision was made to hold a meeting in a major healthcare market and DFW was chosen as ground zero for a movement to promote change.

On February 11 of this year, with the assistance and hospitality of Southern Methodist University, a symposium was presented to DFW employers. Six recognized, knowledgeable experts in healthcare lent their perspectives to different facets of the healthcare challenge abundantly evident in Dallas Fort Worth. Following the SMU symposium, followup evaluations evidenced attendees’ reactions to revelations about certain healthcare notions. Some attendees indicated their surprise to hear a respected physician debunk myths about early testing, diagnoses, interventions and treatments, i.e., that too much and too soon yields negative economies that can lead to both physical and financial harm. Another presenter demonstrated the significant quality disparities among DFW area hospitals, especially for given conditions (e.g., costly heart and spinal procedures).

The February symposium closed with a recommendation that employers establish a claims data warehouse to collect information on the spending by collaborative non-healthcare employers. It would be an actionable step toward collectively influencing and controlling the rising costs of care through an employer-directed and employer-controlled high performing network of hospitals, physicians and suppliers in the DFW area.

Burlington Northern Santa Fe Railway has taken on a committed role in this initiative by recognizing, advocating for and promoting the notion that employers working together can constitute an effective counterweight to the substantial influence healthcare providers exert on the directions and costs of healthcare in the Dallas Fort Worth metropolitan market.

On August 29, Part 2 of the initiative effort took place, hosted at Burlington Northern Santa Fe’s corporate campus. Again, HR and benefits executives of some of the area’s most prominent nationally headquartered companies attended to hear two presentations.

The first presentation was given by Dianne Kiehl, Executive Director of the Business Health Care Group in Milwaukee. She told how the CEOs of 14 prominent companies headquartered in Wisconsin authorized a unique campaign in the southeastern corner of Wisconsin to take on the challenge  of their healthcare costs that were running 39% higher than the Midwest average. She  explained how employer resolve and a straightforward action plan of innovative bargaining brought the cost of companies’ healthcare to a near flat rate of growth in aggregate costs over the past seven years. It is important to mention that over many hours preceding the 8/29 meeting, a group of progressive leaders at other highly successful non-healthcare employer collaboratives around the country lent advice and stories of success to offer indisputable evidence that collectively, employers can have a dramatic impact on cost controls and quality improvements in their markets. Attendees were cautioned that the environment is ripe for this type of a change initiative and now is the time to bring together the strengths of non-healthcare employers who pay extraordinary amounts for health care.

The second presentation was by a respected national data analytics firm. Truven Health Analytics demonstrated the methods and the strategies that will enable the data warehouse project to produce data that enables collaborating employers to commence a data-grounded campaign to selectively contract for a high performing cost and quality network of hospital, physician and service providers. At all times (and particularly at renegotiation times) the provider network data would be sufficiently transparent to enable ongoing surveillance and negotiations for the benefit of the employer network.

Our meeting host challenged the HR and benefit executives, noting the mindset of many that HR and benefits executives rely on incremental, non-disruptive steps and do not act aggressively enough to bring about real change (perhaps too much reliance on consultants?). The call was simple – the idea works – you’ve heard it presented today. The call to action was made to HR and benefits executives: agree to a collective effort dedicated to a common goal to bring about effective cost control and quality improvement so desperately needed by employers and employees in DFW and around the country.

There should be no doubt that other areas around the country will watch DFW. If this innovative step can take place in a major corporate area like DFW, it can become a fulcrum for change around the country. What is needed is common purpose and dedication by a few leaders to make this happen.   


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