Court's Decision Reduces Uncertainty, Somewhat

Philip Betbeze, for HealthLeaders Media , December 13, 2012
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This article appears in the December 2012 issue of HealthLeaders magazine.

While the clarity of the Supreme Court's ruling on reform enables the industry to move ahead with some assurance of what the law means, the path to deliver greater access to higher quality at lower costs continues to be a formidable challenge.

When, like the unseen men in the NFL's instant replay booth, the Supreme Court decided to weigh in on healthcare reform legislation, many would like you to believe that a hush fell over the crowd as the players stood on the sidelines and waited for the decision. But the replay of healthcare reform legislation before the highest court in the land was anything but instant. Hospitals, health systems, employers, and payers had to muddle through. What kept them driving were not only the relentless march of ever-higher healthcare costs and the persistent questions about the quality of that care, but also the hope that a confluence of technological and evidence-based treatment protocols is ready to finally deliver improvement on both fronts.

Still, the justices' decision to review the Patient Protection and Affordable Care Act led to widespread uncertainty about how hospitals, health systems, and, indeed, any entity associated with the business of healthcare, should alter its strategic plans. And that waiting game went on for many months. Because the ultimate decision clarified what the law is able to do—namely, to force people to obtain health insurance or pay a penalty—and what it is not able to do—namely, to force states to expand their Medicaid eligibility rules—the justices' ruling deserves a mention as we look at those making a difference in healthcare.

Clearly, there is no unanimity of opinion on the matter—among the justices or the members of the healthcare industry—but the fact that the decision allows reform to proceed under some certainty is why many hospital and health system leaders are grateful.

"The need for reform and the reform process had begun even before the passage of ACA," says Michael Schnieders, president and CEO of Good Samaritan Hospital in Kearney, Neb. "The ACA accelerated that rate of change. The Supreme Court came out with its ruling giving direction on the federal level, and we can continue our reform. Uncertainty remains at the state level regarding Medicaid expansion."

When the decision finally was announced in June, it gave senior leaders at least a modicum of solid ground upon which to begin making decisions about how to position their organizations strategically for the intermediate and long-term future.

"We know there's a need for radical change," Schnieders says. "It wasn't going to stop the train if they came back and ruled it unconstitutional, but it would have slowed down reform and it would have had to restart at some point in the future. Reform is going to occur one way or another, and we would rather have planning and thoughtful preparation to deal with it. That said, even today, we're not really sure what the regulations are going to be, so there's still a lot of uncertainty about what will be required."

So, despite all that the Court's decision makes clear, CEOs are not fooled into thinking they can simply adapt to the law's provisions and continue to prosper. In fact, the toughest part of healthcare remains its stubbornly high cost, which continues to rise much faster than the rate of inflation or GDP growth.

"No matter what happens with the state decision on [Medicaid] expansion, hospitals in this country, and physicians as well, all know we need to reduce our cost of business," says Schnieders. "How do we increase efficiency and improve quality? We know the  financial commitments of the government, and just like in our home budgets, we've met the problem and it's us. We've got to reduce our costs. Our movement toward a new way of providing well care as opposed to sick care after the fact—that moves us to a new cost structure, not laws."

This article appears in the December 2012 issue of HealthLeaders magazine.

Philip Betbeze is senior leadership editor with HealthLeaders Media.




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