Healthcare
Reform: Ambiguity Squared
The healthcare executives we work with every
day are concerned about healthcare reform.
They struggle with a dark looming future.
Some people we work with are very concerned
that the United States of America cannot afford to spend 17.6 of gross domestic
product (GDP) on healthcare, according to the last reliable estimate in 2010. Since that 2010 estimate, healthcare spending
as a percentage of GDP has surely increased further. It is predicted by the U.S. Department of
Health and Human Services that U.S. health care spending will reach 19.5
percent by 2017 if not sooner.
Interestingly, in the 50 years between 1960 and 2010 U.S. spending on
health care grew from 5 percent to 17.6 of GDP percent in 2010.
This is all fascinating. If you look at healthcare spending around the
world, the United States stands out as spending far more on healthcare than any
other country on earth. Our neighbor to
the South, Mexico, spends 6.4 percent of its GDP on healthcare. Our neighbor to the North, Canada, spends 10
percent of GDP on healthcare. Much has
been said about the healthcare delivery system in the United Kingdom. The Brits, Scots and Northern Ireland
combined spend 8.7 percent of their GDP on healthcare.
As a matter of fact, the highest spending on
healthcare after the United States is the Netherlands at 12 percent of GDP.
Most healthcare executives we interact with
are profoundly confused with respect to what actions should be taken next. As a consequence of this confusion, most
leaders in healthcare administration are unsure of what next steps should be
taken to protect their hospital or health care system.
In some healthcare markets we see an arms
race unlike anything that anyone should be forced to watch. Dr. Atul Gowande, Professor at Harvard University has written on this
topic with far more eloquence than anything you will read here. He compares two similar towns in South Texas
where the strategies by local providers are remarkably different. In South Texas Town Number One there is an
effort to make healthcare affordable, reasonable, cost justified and of the
highest quality. In the other South
Texas town the providers are engaged in an all-out war. Technology, both diagnostic and therapeutic
is being purchased without regard to community costs. As a consequence, costs are higher, and there
is no evidence that care is superior to South Texas town Number One.
There is unbelievable gridlock between the
President of the United States and the U.S. House of Representatives regarding
what might be done to reach a deal on the entire federal budget. There appears to be minimal doubt that
healthcare spending is going to be trimmed in ways that are completely
unimaginable. There are straws in the
wind. On Saturday, December 1, President
Obama trimmed $700 million in care for patients battling AIDS. Senator Richard Durbin (D-IL) has openly
offered that Medicare and Medicaid spending must be reduced.
In the mix is the uncertainty over the
Patient Protection and Affordable Care Act.
Generally referred to as Obamacare, even by President Obama, the
legislation is going back to the U.S. Supreme Court to determine if certain
components of Obamacare are constitutional.
Looked at it in the most favorable manner, Obamacare is little more than
insurance reform. The quality and
patient satisfaction components of current and past legislation wears “soft
shoes” when it comes to the real issues facing health care consumers.
What are you or the other members of your
management team doing to prepare for the future? When I was a rookie in healthcare
administration, one of my mentors shared with me a definition of
“planning”. It went something like this,
“Planning is the cooperative participation
with the inevitable”.
Why is so little being done to prepare for an
altered financial state in healthcare?
There is no shortage of dissipated energy. Physician practices are being purchased left
and right. Hospitals are being herded
together with very little known regarding the future. The Securities and Exchange Commission, the
Office of Inspector General, hospital boards of directors, organized medical
staffs and hospital CEO’s are abuzz with “buckets full of busy”. Home health agencies, long-term care
organizations, both not-for-profit and for-profit are busily preparing for an
avalanche of clients as the baby boom generation starts to enter
retirement.
The baby boom generation was born between
1946 and 1965. It is the largest cohort
in United States demographic measurements.
The pressure on the Medicare Program is enormous. There are currently five gainfully employed
individuals supporting one person on Medicare.
This number will be four gainfully employed individuals to support one
person on Medicare by the end of 2013.
The Institute
of Medicine has done two major studies and estimates that the U.S. hospital
and health systems accidentally kill approximately 100,000 patients each year. There is no one on earth who really knows how
many people are killed as a consequence of being admitted to a U.S.
Hospital.
Dr.
Martin Makary, Professor at Johns Hopkins University Medical Center has
documented in a new book, Unaccountable that the fifth leading cause of death
in the United States is simply being admitted to a hospital.
Putting
a human face on this shocking and tragic statistic, Luis Fabregas has
documented in a new book entitled, A Transplant for Katy the unnecessary death
of Ms. Katy Miller, a patient of the UPMC Montiefore Hospital Transplant Center
as a consequence of surgical mismanagement.
What can be done? Most healthcare executives we interact with
are extremely busy. There is no clear
direction. How should the U.S. healthcare delivery system be organized,
financed, insured and operated?
The U.S. healthcare delivery system is likely
to be crushed by an increase in costs and a reduction in revenue from all
sources.
Many healthcare executives yearn for
retirement. Young people in healthcare
administration are riding a horse of unbelievable uncertainty.
Some experts argue that less diagnostic and
therapeutic efforts would improve the quality, satisfaction and overall
outcomes within the healthcare industry.
Other experts argue that health care is no different from any other
service or commodity. Let the free
market reign. The patient is caught between the raging forces of ever changing
health insurance rules and regulations, physicians, hospitals, home health
agencies, long term care facilities and many more providers of health care
services. Where does the typical consumer
go for clarity of direction with respect to the simple basics of personal care?
The challenges we face are cosmic to
miniscule. On one end of the spectrum is
the challenge of organizing the U.S. health care delivery system, how to pay
for it and what workers within the industry should be paid. On the microscopic level, it is enormously
challenging to require health care workers to wash their hands when managing
patient care.
At some point in the future, the leadership
will emerge to make some sense out of this disorganized chaos. As of 2012, it is very unclear where this
leadership might emerge. In the meantime,
we continue to muddle through from day to day with very little direction.
Jan Ricks Jennings, MHA, LFACHE
Senior Consultant
Senior Management Resources, LLC
JanJenningsBlog.Blogspot.com
724.733.0409 Office
412.913.0636 Cell
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