Healthcare Business News

At a turning point

With reform set to transform the industry, Modern Healthcare starts new era, too

By Merrill Goozner
Posted: December 8, 2012 - 12:01 am ET

The healthcare industry is on the cusp of its most dramatic transformation since the advent of Medicare and Medicaid in the mid-1960s. As the new editor of Modern Healthcare, I have been granted a precious gift: the opportunity to lead a talented staff in covering what is certain to be the major story of the coming decade.

While the challenges facing leaders in this industry—our readers—are well-known, they are worth repeating since they frame the understanding that journalists need to have if we are going to play the useful role of honest broker in the process. They certainly guide my thinking.

First, America is growing older with all the attendant health problems that aging brings. The 77 million baby boomers are turning 65 at a rate of 10,000 a day. Some will enjoy longer, healthier retirements. But many will not and will develop the debilitating chronic conditions of aging such as heart disease, cancer, diabetes and arthritis. Virtually none will avoid end-of-life care, which has become extraordinarily expensive in America.

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In short, an aging America means that the nation's per capita healthcare needs and expenditures will continue to grow.

Second, people of working age are under unique stresses as the broader economy continues its dramatic transformation. The information age has made work more sedentary. Obesity is on the rise. It has become more difficult to find and keep jobs that sustain a middle-class lifestyle. Income distribution has become more unequal with no quick fixes on the horizon.

In short, the social determinants of health are working against the healthcare system's best efforts to create a healthier society.

Third, the country's fiscal capacity to deal with those problems has declined. If the only problem America faced were an older population, the transition might be manageable. But one only has to look at the latest headlines to know the nation's infrastructure is weak and facing new challenges, especially from global warming and rising seas; the education system is in need of reform; and the world still relies on the U.S. for global security. Meanwhile, the nation's overall debt burden is reaching levels not seen since the end of World War II, while voters—and the politicians who represent them—have become bitterly divided over the perennial political issues of taxation and spending, with most of the fervor for cutting spending focused on healthcare.

In short, the national angst over our government's fiscal plight is focused on the healthcare industry, which now comprises a fifth of federal spending and a third of spending in most states.

The healthcare system's draw on the national paycheck has outpaced the rest of the economy almost nonstop for more than 40 years. Now almost 18% of gross domestic product, nearly 50% greater than in the next highest country, healthcare is projected to grow to 20% of GDP before the end of this decade and a quarter of the economy by 2030. Economists endlessly debate the reasons for this exponential growth: aging, improving technology, the higher prices Americans pay for healthcare goods and services, or some combination of all of the above.

No matter. Economist Herbert Stein, who served as President Richard Nixon's top economic adviser, famously articulated in his eponymous law that if something cannot go on forever, it will stop. When we face the fact that a dollar spent on healthcare is a dollar that otherwise could go to higher wages, investment in other pressing social problems or lower taxes, it becomes clear why the day when Stein's Law will be applied to our sector of the economy is long overdue.

There isn't a healthcare leader in America—at least one who wants to keep their job—who doesn't know that change is coming because of these unprecedented social and economic conditions. They understand their organizations must become more efficient at delivering higher-quality care at lower cost. Dr. Donald Berwick, who recently concluded his unfortunately truncated tenure at the CMS, first called the goals of the transformation the “triple aim.” Healthcare organizations needed to simultaneously improve population health, improve the patient experience of care and reduce per capita cost.

Your organizations, whether hospitals, doctors, payers, suppliers or myriad pre- and post-acute-care organizations, are working every day to make this transformation happen. Now that the election is past, your guiding framework will be the Patient Protection and Affordable Care Act, which belatedly seeks to give everyone in the U.S. access to insurance while nudging providers toward new ways of reimbursement designed to incentivize you to deliver lower cost, higher quality care.

There will be gazelles and laggards in the effort to achieve those goals. There will be winners and losers. Some will try to game a system in transition. Others will bring to the fore the flaws in the reform framework that can teach our political leaders how it must be changed. That is your big story and ours.

This magazine has long been a leading and trusted source of news and information for healthcare leaders like you. My goal as editor is to maintain and extend that franchise as our industry—the news business—undergoes its own transformation. But whether we reach you through the magazine, our website, via e-mail or Twitter, our goal remains the same. We want to be a valuable tool for helping you make a successful transition to delivering higher-quality, lower-cost healthcare.

We plan to let you know how you're doing in your transition. I hope you will take the time to let us know how we're doing in ours.

Merrill Goozner, Editor

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