Three Strategies for the Health Care Industry While Reform’s in Limbo

With the Supreme Court hearings it was like taking a time machine back to late 2009, early 2010. Had you forgotten when the news was all health reform all the time?

Those of us who are in the industry have been paying close attention, exchanging transcripts each afternoon, and reading a lot about which way the Justices will go. But it’s all speculation. The only thing certain is more uncertainty.

One set of “victims” of the uncertainty are insurers, hospitals, doctors and others in the field who have spent money over the last two years to comply with ObamaCare thinking it was a done deal. Now there are a couple months to wait until the June ruling. Then we’ll find out if the Justices rip up the bill entirely, modify it in some way, or do nothing.

Even If the law is upheld, a GOP victory in November may achieve the same partial or full repeal. Any outcome here is going to be unsettling to managers who will have to redo their strategies.

Here are three considerations while we are in ObamaCare Limbo:

1. Keep Reforming

The Patient Protection and Affordable Care Act is really two bills combined into one. The first is an entitlement plan that involves redistributing income and changing the way insurance is paid for–with subsidies, exchanges, regulations on who’s covered, and public program expansion. All that will disappear, at least for a while, if there’s a repeal. In that case the payer mix of insured versus uninsured would change. Overall health spending will decrease.

But the other half of the bill is a grab bag of reforms that pilot new ways to pay for care (bundles, Accountable Care Organizations), promote primary care (medical homes, clinics, medical education, ACOs again), and endorse evidence-based medicine (the Independent Payment Advisory Board).

All those themes are here to stay. If Medicare or the government exchanges aren’t the vehicle–because there’s a repeal–other payers will step in. Here in Iowa Wellmark Blue Cross-Blue Shield is developing its own ACOs. So are Aetna, UnitedHealth–and the rest.

If you are a doctor or hospital, these trends are very much still the future. If I were a hospital executive experimenting with an ACO I would keep my blinders on during all of this–and go for it. If an ACO is a good model–and the evidence is unsettled until they begin to proliferate and scale–it will be smart to get in on the ground floor.

2. Embrace Uncertainty

In some ways, there’s no real regulatory certainty in any industry. If companies were so easily paralyzed by politics, AT&T would not have tried to buy T-Mobile. Chesapeake Energy would stop fracking shale for natural gas. And Boeing would have never tried to build a factory in South Carolina. (To name a couple recent examples from other industries that were in the news–and went both ways.)

Good managers in health care will have to run their organizations knowing there are question marks hovering over every decision. Want to build a new Children’s Hospital? It would be good to know if the Medicaid expansion is happening. But if it’s the right thing to do, and you can make the numbers work with sensitivity to both outcomes–go for it. Are you a 23-year-old currently enjoying being back on mom and dad’s insurance? Now’s the time to also start shopping for your own, just in case.

3. Cheer Up and Stop Complaining

It’s all too easy to get depressed by the angry politics surrounding health care and the feeling, when you’re on the inside of the industry, of being unable to determine the outcome.

The best in the industry will be those who don’t succumb to negativity.

A quick digression: I heard a very interesting presentation yesterday by a hospital executive who has embraced the teachings of a company called Heart Math. The idea–and I am massively simplifying–is that stress often results from, or at least is associated with, your heart getting out of rhythm. And there are exercises you can do–similar to meditation and positive visualization–that can calm the rhythms, pull you back from the stress feelings (cortisol hormones firing throughout your body) and recalibrate. Studies have shown that Heart Math reduces blood pressure, test-taking anxiety, and so forth.

I started thinking about that in terms of all the uncertainty–and in some cases panic–that’s flowed this week. My prediction is: Those execs who can keep cool, make rational decisions, and visual the positives (remember that no matter what happens the U.S. has the best health care system in the world!)–will be the ones who win in the end.

David Whelan is a contributing editor at Forbes, where he was a staff writer for 8 years covering health care payers, providers and policy. He’s currently studying and working in hospital administration. Follow him on Twitter @WhelanHealth

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2 replies »

  1. Good observations, David. I would go quite a bit further, especially with your Point #1: The whole debate over the PPACA has obscured the fact that there is a massive shift in the economic structure of healthcare that we are seeing the beginnings of, and that will accelerate over the next few years, and that will likely change the way we do business in this field massively, leading, I believe, to much cheaper healthcare done much better for many more people. Those parts of the PPACA you refer to are small catalysts of some of this change, but are not the change itself.

    ACOs themselves, in most of the forms we are seeing, are not actually business models. In ACOs the government is saying, in effect, “find ways to cut your own revenue stream, follow a lot of restrictions and procedures perfectly, and we will let you keep some portion of the money you saved us.” That’s not a sustaining economic model. Other models, like the Alternative Quality Contracts of the Massachusetts Blues, actually are a business model — organizations under them make money by saving the system money. This is a crucial difference. If you can base your business on making money by saving the system greater amounts, you have a sustainable business model that drives the system toward leaner, more effective territory very quickly.

    So I would say to healthcare execs: Don’t pay too much attention to what happens to reform. Plan your strategy right now to leapfrog beyond it to completely new business models, before your rivals do, and before new organizations are formed to take the opportunity away from you.

    It’s all in my book, out May 1, which I am flogging relentlessly:
    Healthcare Beyond Reform: Doing It Right For Half The Cost.