Tuesday, March 16, 2010


I think the term “reconciliation” is an interesting one to describe what’s going on in Congress these days. Seems like there should be some reconciling in Washington today. Both parties have contributed historically to the difficulty in getting to issues that will create significant and beneficial reform. For example, we need healthcare reform, but at this point it is hard to imagine that Congress will find any middle ground—or reconciliation—to get us to there.

I recently heard governance guru Jamie Orlikoff say “…no one can afford healthcare today. Government can’t afford it, companies can’t afford it and individuals can’t afford it.” He went on to cite a New England Journal of Medicine article that indicated a full 30 percent of current services delivered in America are clinically unnecessary—that represents 5 percent of the United States’s gross domestic product. The reasons include duplication of testing, defensive medicine, differences in training, financial incentives to do more than needed, etc.

Seems to me Congress should put their full effort toward working on ways to eliminate this waste. Things like wellness, malpractice reform, and reducing fraud all will help, but the big one must be payment reform. The incentives today are all wrong. Orlikoff argues we have to focus on “value” and not “volume” regarding the payment if we ever hope to get the cost under control.

Of course, as someone who leads a “tweener” hospital in a state with some of the lowest government reimbursement rates in the country, I would agree. When your costs are already well below the national average and your reimbursement is around 62 percent of cost, it’s hard not to feel like the government is getting pretty good value. Medicare spends a paltry $5,232 per beneficiary in Grinnell annually. That’s a full 36 percent below the national average. Yet our state consistently ranks among the highest states in the U.S. on quality measures. The sooner we move to a value-based approach the better, from my point of view.

As the Democrats feverishly work to find a way to get the Senate Health Bill passed, I worry there is not enough focus on “value” in the current legislation. Ensuring more Americans have access to health insurance is of course a priority. However, more access to the current wasteful system will break the bank…maybe for good. Again, simply consider our little hospital as the test case. If this bill goes forward (even with a minor tweak to improve payment for tweeners), Medicare payment will decrease some half a billion dollars nationally. Today we already have to pass the massive losses from current Medicare patients onto others. Even if everyone has access to insurance, the cost curve is not bent and we end up just expanding our current problem. Hospitals and healthcare providers will need to increase the price of care to everyone not on Medicare just to survive.

Conventional wisdom would suggest that politically it is anathema to reduce benefits to seniors and/or raise taxes. So all that’s left is cutting Medicare payments to hospitals by $500,000,000 and expanding access to the uninsured. In 2009, some of the nation’s most well-known and established hospitals closed their doors. With this new plan, many more hospitals would be forced to close and local access to healthcare will be lost. The federal deficit will double and the system along with our economy could well collapse.

As a registered Independent voter, it is my hope that this bill isn’t forced through Congress right now. I would far prefer that the two parties “reconcile” their differences by doing what’s right: Make the system simpler; pay for value; incent personal responsibility and wellness; reform malpractice; and then we can afford to dramatically expand access to all Americans.

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