Government and Regulations

An Imperfect Solution


There is no doubt we are getting healthcare reform, and in the end, Democrats will declare victory for the first meaningful progress since the 1960s, when Medicare and Medicaid were passed. Of course, in the interim, we have had legislation facilitating the development of HMOs under President Nixon and a senior pharmacy benefit under President George W. Bush, but many presidents have flailed at taking a crack at making major changes.

Republicans will declare victory, too, for stopping many bad ideas and trying to hold the line on costs. And everyone will complain about all the things that are not in the bill President Obama will sign this year.

And everyone will be right.

What we are more likely beginning is an unraveling of business as usual and a reshuffling of the deck—and some key stakeholders won’t like the cards they will be dealt. The best way to think of what is happening in 2010 is that this is the first step toward having the healthcare system we will have in 2020.

One Out of Three

To oversimplify things, all of the talk about healthcare reform has focused on three main areas:

  • Increasing access for the uninsured and underinsured;
  • Reigning in healthcare costs; and
  • Designing a new system that rewards performance and safety.

At best, all we are getting is a down payment on access—and it will come with a substantial cost.

But what we are more likely beginning is an unraveling of business as usual and a reshuffling of the deck—and some key stakeholders won’t like the cards they will be dealt. The best way to think of what is happening in 2010 is that this is the first step toward having the healthcare system we will have in 2020.

Civic Obligation

It is a national embarrassment for the U.S. to be the only developed country that has not come up with a solution that offers most of its citizens access to healthcare. As a culture, we have decided that every child deserves a free education, that all families should have access to fire and police protection, and that we all should have access to due process and “an attorney who will be appointed to you if you cannot afford one.”

But right now in our country, about 47 million people live sicker and die quicker because of a healthcare system that doesn’t include them. A more sorry aspect is the “underinsured,” the constantly employed person with “good” insurance who is unfortunate enough to be diagnosed with cancer only to find out that their $1 million lifetime benefit runs out in year two or three. Those families face the tough choices between bankruptcy and foreclosure, or allowing Mom or Dad to give up another year or two or three of life. Is this the America we are living in?

Reform, Part I

To get this partial loaf of healthcare reform, Obama and Congressional leaders had to be creative. What has torpedoed previous efforts has been the vast power and reach of large, well-funded stakeholders who see any change as a threat and take a “what’s in it for me” approach. These industries have not been shy about using power and money to influence Congress and the White House, and even more insidiously have gone “direct” with advertisements and commentators who use “Harry and Louise” tactics to frighten an underinformed public about this complex process.

But this time, Obama promised the doctors, the insurance industry, the pharmaceutical companies, the hospitals, the device-makers, and just about anybody who would listen that “they” would not be hurt by these reforms. In fact, in the access discussion for many of these stakeholders, the initial result would be 47 million more customers paying for healthcare products and services. Is it any wonder that the price tag must go up, and by trillions of dollars?

It is the price of admission, at least to get the ball rolling. Now we all are in the box. With a price tag approaching $3 trillion a year, and an aging population and a taxpaying workforce shrinking relative to those they must support with entitlements (think Medicare and Social Security), the die is cast for “Healthcare Reform: The Sequel.”

Trust me—the next round of change will be more cataclysmic. In the aggregate, physicians will make less than the nearly $500 billion we make now. Sure, the primary-care physicians (PCPs) and lower-paid specialties might not be hit (and could even move up), but some physicians will see a marked change in their compensation.

Hospitals will need to adapt as well. They must become more efficient. We saw this in California, Washington, Oregon, Massachusetts, and elsewhere, as capitation and managed care ratcheted down on the old “cost-plus” payment method and moved the industry to reward value and efficiency. Those who are efficient and effective will do very well. Those who have lived by just doing more and more without demonstrating their performance or achieving standards will suffer and be dissatisfied.

More Reforms Possible

The future of the insurance industry will be very different as well, maybe because of government’s more intrusive role (think Medicare for most people) or by evolving to a model like Germany’s, where 200 nonprofit insurance companies compete for business. We will demand that insurance companies return $0.95 on the dollar for patient care, not $0.75 or less, as is common practice today.

Device-makers and Big Pharma might start to see a glimpse into the future as comparative-effectiveness research looks at the value of new, expensive technology and advances in treatments. As medications become “included” in the standard benefits bundle, just like physician fees and hospitalizations, we will see a relentless push downward on pricing. Drugs will become just one more line item to be budgeted for, especially if MedPAC and Congress are involved. We will get what we can afford, not everything that is possible or available.

Because this is 21st-century America, under the cacophony of Glenn Beck and Keith Olbermann and Rush Limbaugh and Rachel Maddow, the potential losers will be loud. They will trumpet any fact or pseudo-fact to alarm the populace. Phrases like “government takeover” and “you will lose the great healthcare you have,” and “death squads” and “illegal immigrants” and “back to 19th-century healthcare,” will bounce around the 24-hour news cycle. They will make real, positive change difficult.

But the beauty of what we are passing now, in 2010, is that the train is leaving the station. We are burning the boats. The healthcare system shakeup officially is under way. There is no turning back.

HM was not borne of a new law or mandate. We are an innovation of a system that must change and evolve. And while HM is not all it eventually will be, there are hints of what we can become. For a new healthcare system that offers greater access and is grounded in documented performance and efficiency, HM will be a solution for hospitals with hospitalist groups.

A lot of uncertainty remains out there, and the next decade promises to be even more turbulent, but hospitalists are as well positioned as any stakeholder in healthcare.

We are ready to be an active, contributing, and solution-oriented profession that will add value to our patients and our healthcare communities.

Stay tuned. TH

Dr. Wellikson is CEO of SHM.

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