Tuesday, January 26, 2010 | | 2 comments

TANSTAAFL

Most pundits are arguing that ObamaCare was derailed last week by the election of a Republican to replace Ted Kennedy. For reasons discussed in my recent posts to this blog, I believe that health reform was well on the way toward collapse under its own weight. The voters of Massachusetts only provided the straw that broke the camel’s back. Focusing too narrowly on Massachusetts’ role in the Democrat’s loss of their 60th Senator runs the risk of missing a lesson that must be learned by any political leaders who resurrect health reform in the future.

Commentators are building quite a list of factors that presumably explain the special election’s results and foretell its implications. Most of their insights are valid because health reform had a lot going against it. However, the cancer that was likely to kill reform, without help from Massachusetts, was its evolving complexity and resulting costs. Given the precarious 60th vote, Democratic leaders kept expanding the scope of reforms to solidify the support of wavering Democrats. The net result was a Rube Goldberg of special concessions built on a cumulative foundation of uncoordinated provisions.

The emerging legislation was anything but a coherent package of reforms that could be understood by a growing number of voters, including a majority of Democrats by the time Scott Brown stepped on to the national stage. Public support for reform was falling fast as voters perceived the price to be paid for “affordable” coverage was an unpleasant combination of rising taxes and reduced benefits. Political leaders seemed to assume that voters would forget a fundamental principle of economics—TANSTAAFL. (“There ain’t no such thing as a free lunch.”) Well, voters weren’t forgetting it.

The more politicians put on the plate, fewer people wanted to sit at the table because they knew there would be a big bill to pay, not to mention smaller individual portions once the resulting lunch was served to everyone. Paying more for less just didn’t make sense. Neither did the premise that insurance companies could be forced to provide more coverage without raising rates. Most voters understand the laws of economics, especially in a sick economy.

We’re back to where we started a year ago when everyone agreed that rising expenditures on health care were unsustainable—indeed, were a major cause of the economy’s ills. How can we stop the growth in spending on health care without wasting another year on reforms that most Americans won’t buy? I vote for promoting accountable partnerships of providers, payers, and purchasers to cut waste out of the system. Rather than putting more on the plate and increasing the bill, let’s create a healthier lunch for the amount that we are already paying. What would you do?

Wednesday, January 20, 2010 | | 0 comments

The “Shot Heard ‘Round the World” of Health Reform

It’s ironic to have happened in Massachusetts, but not surprising that an anti-reform Republican defeated a Democrat in the Senate election yesterday. Opinion polls over the past few months suggest that the same result would have occurred almost anywhere. A growing majority of voters across the country are disenchanted with the direction of health reform because politicians on both sides of the aisle have failed to address the general public’s #1 concern—affordability.

Yesterday’s Democratic loss should not be interpreted as a significant Republican victory in the ongoing war to revolutionize health care in the United States. Given the troubled state of the American economy, voters in upcoming elections will be no more impressed with Republicans’ lack of a compelling solution than they are with the expensive (i.e., unaffordable) plan being crafted by Democratic leaders.

One of those leaders hit the nail on the head last week when he noted that Democrats can’t sell a reform plan if Americans can’t buy it. Voters were not buying purely political concessions made to organized labor or Nebraska because they feared (correctly, in my opinion) that health care will cost even more if a bill is rushed to the President’s desk. Opposition to deficit spending is also a powerful message of the vote in Massachusetts, the only state that has effectively implemented the expensive reforms being finalized in Washington.

If yesterday’s outcome is telling politicians that affordability is the #1 issue, then we can only hope that legislators will start looking for ways to lower consumers’ total costs of medical care—a goal very different from reducing the number of uninsured. Leaders in both parties need to refocus reform on supply and demand problems that cause American health care to be unnecessarily expensive and then to promote responsive improvements in the medical marketplace. Some of these serious structural problems, like fee-for-service reimbursement and uncoordinated care, have been addressed in the reform debate. Other important causes of high costs, like counterproductive regulations and organizational inefficiencies, have not gotten the attention they deserve.

I think yesterday’s voters in Massachusetts represent frustrated people all over the country who want our politicians to put top priority on creating a health system that consistently produces acceptable care at reasonable prices. I don’t think reform has been heading in this direction for the past year. Does anyone else share my belief—and, surprisingly, my optimism—that we could build a really good and affordable health care system in the United States if we were to redefine reform accordingly?

Tuesday, January 12, 2010 | | 2 comments

Don't Even Count Your Eggs Yet...

Requests from speaker bureaus give me a pretty good indication of our industry’s current expectations. Inquiries over the past week suggest a perception that ARRA/HITECH requirements and health reform are finally final—or sufficiently close to closure that health care executives will want to attend meetings this spring to learn how to qualify for new government funding.

In my opinion, many people are overacting to last week’s stories about stimulus and reform. We’re not close to a final definition of “meaningful use,” a statutory prerequisite for HITECH payments. The publication of proposed requirements in the Federal Register, expected for January 13, will start a 60-day period for public comment. (Ironically, the comment period would end on the Ides of March—a date forever associated with betrayal by a false friend.)

The final rules would presumably be issued later in the year, but such deadlines are routinely missed. Even in the most optimistic scenario, the gap between passage of the law and distribution of the bulk of authorized HITECH funds will be nearly three years. Delays in subsidies for expanding health insurance coverage will be even longer if a reform bill passes in early 2010. Progress on programs may be in the news right now, but checks will not be in the mail for years to come.

Speaker bureaus apparently aren’t being deluged with requests for presentations on last week’s news that will affect the survival of health care organizations this year—unemployment staying above 10% and government tax revenues falling far short of already gloomy expectations. Consumers, employers, and governments simply do not have money to pay more for health care. Help from Washington cannot come fast enough to fill the void created by economic stagnation.

The wisdom of not counting chickens before they hatch brings to mind a French saying, “To make an omelet, you must break eggs,” that also provides important perspective on the current news. We’ve got to break out of our shells and change the way we do business because customers cannot pay us to keep doing what we’ve done in the past. Supply-side enterprises in the medical marketplace cannot count on getting any more nest eggs than they’ve got right now. I think we must scramble—move quickly and stir things up—by putting top priority on business process transformation in 2010. Do you agree, or do you think I’ll have egg on my face by the end of the year?

Tuesday, January 5, 2010 | | 2 comments

The Obligatory Predictions for 2010

As a health futurist, I am sure the blogosphere expects me to start 2010 by predicting what will happen in health care over the coming year. The task is particularly daunting because nobody knows how reform will play out over the coming month. (See previous postings for my outlook.) Nevertheless, here is my “big picture” prediction to launch a healthy discussion.

The realm of possibilities will be largely defined by the economy, and I believe that economic activity will be stagnant over the course of the year. We will see ups and downs in key monthly indicators, but the overall trends won’t give us confidence that the economy has returned to sustained growth. The year will most likely limp along in a jobless recovery, meaning that employers stay profitable by cutting costs—not by increasing sales—as unemployment continues to hover around 10%.

The net result for health care enterprises will be an abnormally difficult year. The number of patients with employee health benefits will continue to decline, as will the coverage of health plans. Serious financial difficulties, particularly delinquent receivables, will cause an elevated number of business failures and mergers and acquisitions. Many people will be disappointed that the time and energy devoted to health reform in 2009 (whether or not a law is passed over the coming weeks) did nothing to improve the economic problems of American health care in 2010.

Crisis will be the word used most often to describe the medical marketplace throughout the coming year because the overall situation is bad and is not going to get better. The good news is that a crisis is not necessarily a hopeless situation in the context of health care. Crisis describes a clinical situation where the patient can get better or get worse, depending on the appropriateness of diagnosis and treatment. Although I expect that a large number of health care enterprises will be in worse shape at the end of the year, I also believe that many will be better off because they diagnosed and treated the real causes of their immediate problems, particularly inefficient and ineffective operations.

In other words, I see successes and failures in my crystal ball for 2010. In spite of economic adversity, health care enterprises have a lot of control over their futures this year. The successful enterprises will see 2010 as the year to end business as usual and take control of their own reforms. Do you think I’m an optimist, or a pessimist?