CEOs: Now It's Time to Address Affordability

Philip Betbeze, for HealthLeaders Media , June 29, 2012

"What was once a ‘Godfather offer you can't refuse,' is now an economic offer for each state to consider," Lupica says. "So, now we have all those state legislatures to watch."

That makes sense to Connelly, who says absent big decisions by state legislators, CHP's seven regional health systems will struggle with how to deal with increased eligibility, which creates problems of its own.

"What's going to happen here is that a million more people in Ohio will be covered under Medicaid while [Medicaid] is still not paying primary care docs enough to take on these patients," he says. "As a result, they'll come to our ERs and we'll spend 3 to 4 times as much to care for them as we should but regulations hamstring us on that."

Connelly suspects a legislative battle will focus on how to modify the health insurance exchange plan to loosen some of the regulations and to accelerate the issue of payment model reform.

"Unless payments change, we can't afford costs of expanded coverage," he says. "There's universal acceptance that we can't afford the cost of healthcare. It's 20% of the economy and it is the primary source of the government's deficit. All know we need to fix the deficit and we can only fix that with Medicare and Medicaid reform."And don't count on the commercial market to significantly drive the change to a more accountable and value-based approach to care, at least based on his experience, Connelly says.

"We don't see the commercial market leading this change. The insurance payers actually do better financially in the old model," says Connelly. "All their systems are set up to pay fee-for-service, and the vast majority of insurers' business is still self-insured so they make their margin off of volume. Getting them to move has not been very successful."

Whether we have reform based on legislative and regulatory action or based on market demand, the healthcare sector still desperately needs to change its approach, says Newpoint's Lupica.

"We still need to move from encounter-based to value-based payment, and to design the network structures, information tools, and cultures to match," he says. "Society's explicit message may just be to bring down costs. But the message, now a scream, may prick our sector to change the way we deliver and manage our care. Our providers may do so to save costs, but a more rational delivery of care may come along with it."

One can only hope.

Philip Betbeze is senior leadership editor with HealthLeaders Media.
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