The healthcare circus happening in Washington

I spent two days last week in the belly of the beast at a symposium for the 50 highest level employees of a large hospital system in an affluent, somewhat rural area. They asked me, along with two others, to serve as thought leaders for the direction they should take over the next 15 years. Needless to say, my summary for them was “I’m glad I’m not you.”

Like most hospital systems, they are their own entity providing the infrastructure and the billing systems to support the doctors who work in their facilities as independent contractors. So here are the main players:

  • The Hospital System
  • The independent doctors
  • Medicare
  • Private Insurance companies

Ideally, the payors and the providers all work within the same pot of money. If they do the most cost-efficient and highest quality work, they should make more money and their patients are better off for it. But each entity is separate with their own goals.

  • The hospital system wants to maximize their profitability by increasing high margin services. The more revenue their doctors bring and the better they can streamline healthcare processes, the more they profit.
  • The doctors want to maximize their profitability by increasing their volume, especially through their high margin services.
  • Medicare wants to stop paying for volume and rather pay for quality. However, the hospital and doctors are still writing on paper, therefore eliminating the potential to measure quality. They did, however, recently spend nearly $100 million on a 1986-based electronic medical record system that will take 4 years to roll out in an attempt to connect all these independent contractual doctors practicing in silos. The doctors hate the system because it’s just so fast and easy to write on paper.
  • Private insurance companies are salivating at the opportunity to maximize their profits by immediately following whatever Medicare does.

The failed strategies are:

  • The hospital system is trying to hire their independent doctors. They want to control their doctors and dictate what they can and can’t do in their practices. The doctors don’t want to be employees and therefore controlled in both behavior and potential revenue. The hospital system wants to do the right thing. They want to eliminate quantity medicine and become a closed loop system that creates a culture of doing the right thing, rather than doing the most things. Because doing the right thing is good for patients, good for quality, and measurable. Once things are measurable, strategies can be put in place to streamline processes and make them more profitable.
  • Medicare is saying “We want to pay hospitals in bundles for quality healthcare. Hospitals must figure out how to pay all of these independent contractors from the bundle of cash we send them.”
  • The docs are saying “Yeah right. We don’t work for hospitals, nor do we want to be their employees. We don’t want our revenue slashed by 30%. And, by the way hospitals, last we checked, you need us. We can go elsewhere and start competing with you rather than working with you.”

So all these entities are staring at one another, pitted against one another, waiting to meet at the bargaining table, with all eyes on bickering senators in Washington arguing over big picture strategy and minor details with hopes of keeping their deep-pocketed constituents and lobbyists as happy and profitable as possible. Because once the shit hits the fan and Washington starts screwing with $2.5 trillion, I can assure you, the profiteers are going to start pulling on the publics’ heartstrings, knowing that 85% of us have blank check insurance plans and we’re very happy having Aetna and Medicare pay $1000 for a visit that costs us only a $20 copay. The AMA, the American Hospital Association, the insurance and pharmaceutical companies- they’ll all pay hundreds of millions of dollars to swiftboat the public and water all this big talk reform down into almost nothing but a lot of empty air. And then the hospitals and doctors at the local level, like this place last week, will then have to start negotiating a watered down, overly regulated even bigger mess that requires even more administrative costs to deal with.

I have no faith in our corporate government. I have the utmost faith in new companies that will spring up to compete armed with new business models, new technologies, and new networks that enable them to deliver much better quality healthcare at a fraction of the cost of the dinosaurs swimming in their own bloated processes thinking they are going to live forever oblivious to the fact that their extinction is as sure as GMs.