May 6, 2013
OPINION – May 6, 2013 -- Health reform was not initiated with ObamaCare. We have been reforming in spurts unsuccessfully for decades, always driven by populism. Beliefs that win the contest of ideas do not usually endure the requirement of proof of concept. It is not so surprising that assumptions have failed to tame healthcare costs, but rather the passionate certainty of their advocacy. Would you have believed: "The shortages of trained medical personnel and health facilities have impaired American health standards and increased the cost of hospital care beyond the financial capacity of most American families....we pledge increased support for hospital construction programs.” – from the 1956 Democratic National Platform. With the passage of Medicare in 1965, the same legislation embraced "community health planning" (CHP) and Certificate of Need (CON). Ironically believing that excessive costs were driven by too much capital spending deemed inadequate 10 years prior. Hospitals were viewed in an arms race and largely incapable of "sensible" sharing and coordination of services. Laughably this stimulated high visibility sharing of such non-vital and economically insignificant services as laundry, print shop, infection control, power, management, as if these demonstrated an all-out assault on healthcare costs. In the early 1970's I sat in a graduate school classroom listening to Paul Ellwood (the "father of HMOs) extoll the obvious merits of HMOs as they "paid doctors to keep patients well." My administrative residency with Kaiser impressed me with its profit sharing arrangement with their physician group (Permanente). Alain Enthoven and Rep Dick Gephardt pitched us with variations of free market "pro-competition," followed by the gradual dismantling of Certificate of Need and regulated planning among hospitals. Today's rhetoric is loaded with the costs of fat people and smokers, and blame for the unnecessary costs of end of life care. We have been told the inadequate integration of provider and payer services has justified a large scale consolidation of the industry and investments in profoundly upgraded information systems. One article several years ago estimated as much as 1/3 of hospital capital spending was directed to system integration. Indeed many believe policy must engage the organized rationing of healthcare services, priority lists, death panels and the like. Some advocacy believes healthcare would be less expensive if everyone had access to services without financial penalty and government were empowered to drive a harder bargain with the supply chain. Investment in preventative services by inflating benefit mandates would have an obvious payback. After all, if there were less demand for healthcare services, our collective costs would certainly decline. ObamaCare will reduce our healthcare costs. Others see the problem centered on "fee for service medicine" and how providers are compensated, as if changing the method of compensation would reduce their take-home pay. Some choose to blame the administrative costs of status quo. Or another big one, the inadequate coordination of the care of incompetent or poor patients. What happens to all these assumptions if costs are really driven by: 1. A proprietary and politically powerful healthcare system under excessive pressure to grow revenues. A conflicted public sector that sees healthcare as its one remaining opportunity for growth? An industry that knows the richest country in the world has no political capacity to say "no." 2. A healthcare education establishment that manufactures students with little consideration of marketplace need. Note the pending shortages of healthcare manpower and the conflicting suggestion that nearly half of healthcare spending yields no medical benefit. 3. The lack of will to set financial targets and measure the results of policy reforms. How do we know we are achieving anything if we don't measure what is critical? No wonder it is a challenge to design a credible path forward....lousy track record, solutions that do not withstand critical examination, no proof of concept, government hopelessly corrupted by its own self interest. As they say, "follow the money." Stephen Gregg is a retired hospital administrator and health plan chief of staff. He can be reached at [email protected].
