The Grassroots Health Care Revolution. John TorinusЧитать онлайн книгу.
of their ability to turn things around. That manager would conclude that the major players in health care have been talking reform for decades but have demonstrated little success.
Major players in health care have been talking reform for decades but have demonstrated little success.
Our expert would be looking for a clean sheet of paper. Our turnaround tough guy would look for a new business model.
Some hospital initiatives have slowed the cost escalation, especially among providers that have employed the lean disciplines that were introduced into manufacturing with great success 40 years ago. But only about 1 percent of providers, like the Cleveland Clinic and Gundersen Health and ThedaCare in Wisconsin, have adopted transformational lean methods.
Provider corporations that own hospitals and clinics, whether for-profit or not-for-profit, have had little incentive to fix the old system heretofore. These huge organizations have profited handsomely in the current dysfunctional environment. While they face government price controls, they face neither market disciplines nor regulatory price controls on their private sector book of business. They see limited competition. This means there is little incentive to cut costs. They are almost immovable objects. Why should they move? Life, for them, is good.
Provider corporations...have profited handsomely in the current dysfunctional environment.
It is also good for health insurers.
Since the main assets of health insurance companies are their networks of providers and the volume discounts they bargain for, it’s unrealistic to expect them to be agents for reform. Why would they push their de facto partners hard when they need them and when they get a cut of the rising costs? Indeed, they have a huge disincentive to drive down overall costs and premium prices, since doing so would reduce their revenue increases.
The Affordable Care Act may expand health care coverage to 94 percent of Americans, but it makes the cost outlook worse. Under “medical loss ratio” rules, health insurers may keep for themselves no more than 15 percent of large company plan premiums and no more than 20 percent of small company premiums. This gives them every reason to want the other 85 percent or 80 percent—the amount they’re obliged to spend on medical care and quality improvement—to be as high as possible so their 15 percent to 20 percent cut in dollars is protected.
It’s not that health insurance companies aren’t seeking some efficiencies, but their intrinsic motivations for reform are not compelling. Cost reduction is just not where they live day in and day out.
Would-be reformers who assume that competition among insurance companies will rectify the economic ills of medicine in America are simply misguided. Competition among third-party payers has existed for decades, with little resulting reform. Why would that change going forward?
The real horse to ride for reform has to be the payers—employers and their employees as consumers. Because of the economic pain surrounding health care, the reform campaign has been building in the private sector, where most innovation takes place.
Private payers are saying, “Enough already!” It’s time to take charge.
They are the parties demanding what I call real health care reform. For decades they have faced stiff premium increases, year in and year out. A 10 percent increase on a low base cost in the old days was bad enough, but a 10 percent increase on premiums on a higher base, as high as $20,000 per employee, is untenable.
There are two major ironies in all this. First, the high costs caused the access issue that ObamaCare tries to address. If costs were low, access wouldn’t be an issue. Second, because of decades of hyperinflation of health costs, because costs are so bloated, huge savings await companies that manage health care costs aggressively.
ENTERING THE GAME: WHAT BUSINESSES ARE DOING NOW
The long-AWOL executives of corporations have come belatedly, but decisively, to the challenge of managing the chaos on the economic side of American health care. No other vendor would get away with double-digit increases for decades.
CEOs, CFOs, and COOs in front-running companies are doing radical surgery on an unsustainable system. They are bringing management concepts and marketplace principles to bear. They are tackling what they see as an undermanaged supply chain.
That means:
■ Elevating their employees from passive, entitled recipients to engaged consumers
■ Insisting on transparent prices and quality
■ Creating incentives and disincentives and a culture of smart consumerism
■ Moving business to the highest-value providers.
■ Treating health care vendors with respect, but demanding performance
■ Creating a culture of fitness and health at their companies
■ Making workforce health and health costs a strategic priority
In the process of making health care a top-of-mind issue, they are inventing a far better business model for the delivery of health care for the whole nation. In that sense, it is patriotic work.
Before they got fully engaged, it was common practice for managers to use the one-time tactic of shifting costs to employees. But there is only so much mileage there. Employees can only afford so much for care, especially since wage increases have generally been anemic for more than a decade.
The executives have learned that health costs can be managed, and they have discovered they are in the business of behavior change. They have calculated that a well-managed health plan can be a competitive advantage.
Consider the fundamental health care dynamics today: insurance companies have a short-term, transaction-based, impersonal relationship with the insured’s employees.
The same short-term mentality is true of large corporations that run hospitals and clinics; they excel at reacting to, not preventing, medical problems. In the existing model, primary care office visits last six to eight minutes. Frontline doctors oversee 2,500 to 3,000 patients each, forcing them to act only as gatekeepers to more expensive and profitable specialists. They are paid by volumes of procedures. Theirs is a production-centered business model, not a patient-centered model.
In stark contrast, most, though not all, employers foster a mutually beneficial, long-term relationship with their employees. Assuming a career of 25 to 40 years and an average of $16,000 in annual health costs per employee, the mutual bill for health care over a long career can easily exceed a half million dollars.
Conclusion? Employers and employees are the only health care players with a deep mutual interest in a long-term game plan. They are in a health care compact for many years.
Employers and employees are the only health care players with a deep mutual interest in a long-term game plan.
Good health profits them both—not just in workplace productivity and happiness but also in their respective budgets. Remember: the average split in the country on health care expenses for a family plan is 72 percent employer and 28 percent employee. (Some experts put the employee share higher.)
What better team for fixing the broken business model than employers and employees? This is the tandem of payers to ride for real reform. And that is exactly what’s happening.
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