It’s one of those clichés peddled at health care industry conferences by consultants who charge by the hour for helping attendees brace their organizations for all those terrifying changes just over the horizon. Not only is this cliche not true, but it is exactly untrue. The only constant in health care is gnawing anxiety about change that never actually occurs.
The Obama Administration’s health care reform plan – we can all call it “ObamaCare” now that the Administration finally owns the label it should have from the outset – is the motherlode of anxiety over change about to storm through the health care system. That is, unless you happen to cover your ears and block out all the partisan screaming, along with the political ideology dressed as legal arguments in the Supreme Court this week, and look at the actual plan and its numbers.
Yes, ObamaCare is expected to cram 30 million uninsured people into the current non-system. Complementary elements of the law make it illegal for health insurers to kick any of us out if we get too sick or stop paying our bills if we get too expensive. And if an insurer makes too much money in the process, it needs to refund a portion. Aside from these four economically intertwined health insurance market reforms, most everything else about ObamaCare is business as usual.
For more than a year, I have immersed myself in the history of for-profit hospital chains and their associated enterprises. My goal is to produce an account of the for-profit sector that will be a valuable resource to all parties involved in the serious health care policy-making that must surely take place in coming years.
Along the way, I have begun to understand the pressures that will soon make for-profit provider chains an even greater force than they already are – and will lead to an existential crisis in the non-profit hospital sector.
Hospitals wield immense influence in every city and county in the U.S. They are always among the largest employers in town. They touch the lives of all in the community as the sites of all births, most deaths and many health events in between.
Even the smallest hospital, in the smallest town, is worth tens of millions of dollars. Thus, for example, buyers in 2010 paid $28 million for a 124-bed facility in Marion, South Carolina (population 7,000), and $86 million for a 108-bed hospital in Ottumwa, Iowa (population 25,000). And at the upper end of the scale, another buyer acquired the 2,000-bed Detroit Medical Center for $1.5 billion.
Those buyers were for-profit hospital chains, and the sellers were non-profit operators. Some of the factors motivating such transactions have been around since the advent of the for-profit chain era in the 1960s – including inadequate access to capital for charities and local governments that needed to upgrade their hospitals, competitive pressure from deep-pocketed for-profits, and crises arising from poor management and governance. Although not-for-profit hospitals have long been coping with those issues and have often chosen to solve their problems by selling out to the for-profit chains, eighty percent of American hospitals are still non-profits, with about a third of those being government-owned. Those proportions are about to change dramatically.
As we trudge forward into various iterations of what and how ‘accountable care’ strategies can be sensibly configured and locally seeded for Medicare, Medicaid as well as commercial markets, attention is often focused on the ‘necessary’ but ‘not sufficient’ contribution(s) from health information technology (HIT). It is rare that a conversation centered on accountable care or ACOs in particular doesn’t shift to HIT, where EHRs, HIE’s (heath information exchanges) or other data banking or connectivity solutions aren’t a material part of the dialogue. Often posited as the central spine enabling the required coordination and integration essential to accountable care, the technology side of the challenge frequently preempts other issues including physician culture, clinical and financial risk management tolerance and sophistication, or the history of successful physician/hospital joint ventures, in the local market.
Yet in the paradigm shift from volume to value via accountability many are focused on the presumptive return expected from consumer empowerment and electronic health information connectivity. Whether couched as informed choice via up-leveled health literacy, e-patient activism, ‘data liquidity’ or the litany of supportive ‘apps’ including mhealth, wireless or other prevention and wellness oriented platforms, the consumer empowerment movement incentivized by HITECH and further challenged via the triple aim quest are energizing many entrepreneurs, healthcare providers and even regulators.
The possibility that the Supreme Court will strike down all or part of the Affordable Care Act has given new life to Republican calls to put market mechanisms to work in holding down health care costs. The public is certain to hear lots more about it on the campaign trail later this year.
There’s one big problem, though. Markets cannot work when consumers and patients have almost no information about the prices they pay for health care.
Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, has resuscitated his proposal to turn Medicare over to insurance carriers. Future retirees would be offered financial help to pay for policies sold through public exchanges similar to the ones set up under the health care reform law, a.k.a. Obamacare. The subsidy would be limited to the value of the second-lowest cost plan offered on the market. The idea is that over-65 consumers, who would still have the option of remaining in traditional fee-for-service Medicare, would drive down costs by forcing the plans to compete for their business by offering lower-cost alternatives.
Other Republicans and conservative think tanks are touting laws that would allow insurance carriers to sell individuals policies across state lines, which would be coupled with incentives to shift people away from employer-based coverage. Under such plans, individuals could buy catastrophic coverage for expensive hospital stays while using the savings to pay the entire cost of routine health services, just like they pay out-of-pocket now for lawyers, flat-screen TVs or the week’s groceries.
Of all the provisions of the ACA, probably none has received greater attention from health insurers than the exchanges. Though the exchanges are expected to be the conduit for just a small fraction of all the insured at their start in 2014, they will be where most of the growth in health insurance lies. Given the rule that the individual exchanges must be integrated with Medicaid, their role will be critical for any insurer that wants to compete and grow in the individual or Medicaid markets. The dominance of the exchanges for growth in the small group and even the Medicare markets may not be not far behind. It should be no surprise if, eventually, all fully-insured business goes through the exchanges, leaving only self-insured plans outside.
So getting it right matters. Now is the time to think hard about getting it right, before the exchanges are created and inertia sets in. And, as some have argued, getting it right means that we think about the exchanges as places for people to choose their health care, not just their health insurance. So how should we do that?
Here is what we should not do: make it easy to choose care without considering both the quality and the cost of care delivered by the care system. It would be an enormous lost opportunity to improve consumer attitudes towards health care if we built the exchanges to make it easy for people to reason: “I like doctor A. Doctor A accepts insurance products X, Y and Z. Of these three, insurance product X seems to have the lowest cost, so I’ll choose product X.”
Dr. Mark Schuster is the William Berenberg Professor of Pediatrics at Harvard Medical School and Chief of General Pediatrics at Children’s Hospital Boston. This essay is based on a speech he gave the featured speaker at the Children’s Hospital Boston GLBT & Friends Celebration in June, 2010.
The first time I stood before a large audience to speak was when I was 13 years old. It was at my Bar Mitzvah. I walked up to the podium, looked out over the sea of faces, and thought to myself, I am a homosexual standing in front of all of these people. And I wondered what would happen if I told them.
That was in 1972, and even mentioning the word homosexual, unless paired with an expletive or derogatory adjective, would have been unacceptable at my synagogue. It would have been unacceptable in my home, my school, or any place I knew. I could not have conceived of telling my doctor. I assumed that I would never say out loud that I am a homosexual. The idea that I would someday be able to stand in an auditorium, stand anywhere, just a few miles from where I live with my husband, our two sons, and our dog, with everything but the white picket fence, was not something I could imagine.
Today I stand on a different stage. The Children’s Hospital Boston GLBT and Friends group asked me to share my story as part of its celebration day. How I got here, what I learned along the way, especially at Children’s, and how the world changed — these are what I will talk about.
A decade after I considered turning my Bar Mitzvah into a public confessional, I entered medical school at Harvard. Some students had started a gay group the year before. They had scoped out the territory, searched for role models, and come up nearly empty. In a creaky old closet, tucked way in the back, they found a world-renowned senior physician at Children’s. He advised against starting the group, offering that it was much better to be secretive about being gay so that no one would bother you. I’ve heard that same advice many times from men and women from earlier generations who had fewer options in their day.
Being in limbo is never a good feeling – it’s in our nature to make decisions, feel comfortable, and find solid ground. So many state leaders may be feeling uncertainty and hesitancy now, as they weigh the pressure to move forward with building a health insurance exchange with the knowledge that the Supreme Court will soon weigh in on the future of the regulations. As my peers have pointed out recently, states are taking different approaches to handling being in limbo. Some are moving forward with confidence, some are testing the waters, and others are doing nothing – determined to wait and see.
One thing is certain, however – there is an opportunity for states to examine how to best use technology and solutions to serve people, regardless of how the regulations play out. As the researchers at Urban Institute point out in this New York Times article by Robert Pear, the states currently making the least progress toward an exchange are actually the ones that could benefit the most from an Exchange, because they have large numbers of uninsured residents.
States can move forward now with the following considerations, which will be helpful in either the event that the health insurance exchange mandate is upheld and they are asked to move forward, or in the event that they have more flexibility, but still need to use technology to best serve their citizens.
I am getting caught up on the news after a couple of weeks away and two stories caught my attention. The first is the ongoing debate about the tax exempt status of Illinois nonprofit hospitals, which has received extensive coverage in the Chicago Tribune. Nonprofits avoid paying most state taxes, notably property taxes. For some nonprofit, the tax exemption could be worth tens of millions of dollars annually.
The question before the state is what they should expect of nonprofits in exchange for tax exemption. The current law requires nonprofits to provide “community benefits” commensurate with their tax savings. The state and the Illinois Hospital Association have been unable to find mutually acceptable language to replace this vague standard. The most draconian approach limits community benefits to charity care. At the other extreme, the IHA (and the Chicago Tribune) largely back a proposal by the Civic Federation that defines community benefits broadly to include losses incurred on Medicare, Medicare, bad debt, and community outreach programs.
A few years ago, I advised the state Attorney General’s office on this issue. I argued for the following conceptual approach: In exchange for tax exemption, nonprofit hospitals should be required to perform a commensurate level of “charitable acts,” which I defined as services and programs for which the hospital expects to lose money. Alternatively, charitable acts are those that investor-owned hospitals would not undertake.
The San Francisco Department of Public Health says it is ahead of the curve in rolling out databases that keep tabs on tens of thousands of patients across a citywide network of clinics and hospitals. The rollout is needed not just to make a local form of “universal health care” work, but also to meet a 2014 deadline under national health reform.
And the city says it spent just $3.4 million on new patient-tracking technology. Not bad for an unprecedented charity care initiative whose total budget has grown to $177 million just this past year.
But while clinics and hospitals across the city are now linked up to a common intake tool that eliminates overbilling and duplicated medical appointments, that is only the first step in making the Healthy San Francisco program successful, directors of local health centers and technology experts say.Continue reading…