Hoping for Repeal is Not a Strategy

Philip Betbeze, for HealthLeaders Media , November 19, 2010

On the surface, many of you feel that by improving quality, your reimbursement per unit of service will likely go down. That's one issue. On the efficiency side of the ledger, however, many studies have shown that healthcare still has a long way to go. From electronic medical records to better contracting strategies, improving your institution's efficiency is a winner regardless of the regulatory environment. It's simple math. The cheaper it is for you to provide a service, the more of the reimbursement you get to keep. What's so difficult to understand about that formula?

I realize improving efficiency isn't something the Act even indirectly addresses, except in various demonstration projects, but it's a strategy for dealing with the funding challenges the new law will bring, even if its scope is whittled down by the new Republican strength in Congress.

Impending changes in regulations in such a highly regulated industry can be a tempting excuse for inaction, even if, as a leader of your organization, you're not consciously sitting on your hands. In the larger economy, many explain the high unemployment rate as a function of the uncertainty about various reform attempts from finance to healthcare. Companies don't want to make the investment in people, the reasoning goes, if regulation makes it potentially too much of a gamble to hire people when federal regulations that in part determine an employee's cost seem so capricious and quick-changing. But the fact is that excuse just doesn't fly. The regulatory environment is always uncertain. What's always true is that improving efficiency goes straight to the bottom line.

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3 comments on "Hoping for Repeal is Not a Strategy"

barium (11/22/2010 at 10:27 AM)
Unfortunately, bob (if you'll excuse the pun) misses the boat. Reorganizing the chairs on the deck of the Titanic as it cruises toward the iceberg isn't a sound strategy. The cost of care and the increases are simply too high unsustainable. Unfortunately, virtually nothing in PPACA addresses this. A consumer-driven, bottom-up movement to connect patients to the cost of care and have some skin in the game may be a great start. With consumers armed with transparent data on cost, value, outcomes, etc., and choosing based on these (e.g., with high deductible HSA plans), medical costs will start to go down.

Joe Tye (11/21/2010 at 3:32 PM)
Great column, Phil, nad a vital message. We need to deal with the challenges of reform legislation specifically and the overall healthcare crisis generally with what Jim Collins calls "the genius of and" - better efficiency AND higher quality. The one thing I would add is that there is also a huge attitidunal component. If there was a culture of ownership in every hospital - if everyone from CEO to nurse to food service technician came in every day with a smile and a commitment to bringing their A-game to patients and coworkers - we would not have a healthcare crisis today, it would be a healthcare speed bump. - Joe Tye

bob (11/19/2010 at 7:22 PM)
The health reform legislation, with continuing support from the AHA the AMA and other health service and financing organizations is based on the assumption that health care will not become cheaper, but rather that the rate of increase can be slowed. If the rate of increase can be reduced by no more than a per cent or two annually, health care will no longer contribute to the national deficit. If done well, care will be more effective quality will be improved, and premium increases will also be lower. In the Carter administration, when increasing health care costs were rising at as very scary rate, the AHA, the AMA and Blue Cross and business and labor groups and others joined in a national Voluntary Effort to reduce the rate of increase by two per cent a year. The Voluntary Effort was so successful that eventually, it declared victory and closed down,when the threat of excessive government price interference disappeared. Whatever happens to the health reform legislation, all hospital and health system leaders are well advised to develop their strategic plans and set their budgets to reduce their rate of increase in expenditures by a per cent or two annually. Already, available data indicate that the rate of increase this year is down at least one per cent , so things are moving in the right direction. Right now is the time for a new national Voluntary Effort to focus on success in bending the cost curve. Any program to bend the cost curve at your organization by one or two per cent annually can best start with belt tightening. With strong top leadership, that will eventually lead to the kind of internal and external collaborative voluntary initiatives that will enable the health system to provide more and better care while bending the cost curve. Costs will continue to rise.....but not so steeply. Go for it!




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