P.O. Box 409095
Chicago, IL 60640
Length: 22 minutes
Interviewer: Ralph Fargnoli Jr.
Interviewee: David Burda
[00:00:00.00] Womans Voice: Youre listening to Spotlight on Healthcare, featuring Ralph Fargnoli, president and CEO of Beacon Partners. Ralphs a business owner, a healthcare management consultant, a trusted adviser of dozens of senior executives, and, like you, hes insatiably curious about the trends, technologies, and people making a real difference in health care. Ladies and gentlemen, Ralph Fargnoli.
[00:00:35.07] Ralph Fargnoli Jr.: Good afternoon. This is Ralph Fargnoli, and thank you for joining us today for our Beacon Partners podcast. Today I have joining me David Burda, editor of Modern Healthcare.
[00:00:49.16] David Burda: Hi Ralph, how are you doing?
[00:00:50.16] Ralph Fargnoli Jr.: Very good, Dave. I appreciate you joining us. A little bit about you. Dave oversees the editorial content, direction, and policy of the magazine and the entire editorial staff. Daves background includes 25 years reporting healthcare business news at various publications. Dave joined Modern Healthcare in 1987, so Dave Im pretty excited to be talking to you today, with regards to healthcare and some of the political platforms and policies that were seeing at this time of year.
[00:01:21.26] David Burda: Sure, its the No. 1 domestic issue.
[00:01:24.00] Ralph Fargnoli Jr.: So what did you think last night? New Hampshire primaries, I guess the pundits and all the media had it wrong. Were you surprised by any of the results?
[00:01:32.03] David Burda: Not really. I had a gut feeling that the Northeast would come out strong for Hillary (Rodham Clinton), and on the Republican side, I was a little surprised that (Mitt) Romney didnt finish first. Again, same thought there, that the Northeast would come out strong for somebody from their corner of the country, but it didnt work out that way.
[00:01:51.10] Ralph Fargnoli Jr.: Right. I just think that coming from Massachusetts, Dave, that theres a lot of negativism associated with Romney.
[00:02:00.00] David Burda: Uh-huh.
[00:01:50.02] Ralph Fargnoli Jr.: And I cant quite figure it out other than that most of the media says that he didnt spend most of his governorship in the state of Massachusetts. So, but anyways, heading into the presidential politics, and now lets talk a little bit about the candidates. In your articles that you wrote last November, and you did a great job in summarizing all of the candidates and their platforms for healthcare, do you think that in the whole frame of the election that healthcare is on the minds of most Americans? Is it the No. 1 topic?
[00:02:34.05] David Burda: Yes, I would say so. At least on the domestic front, and that comes from two issues. One, the cost of healthcare becoming a burden not only for individuals, but also for the business community. And then two, access to healthcare services for everyone.
[00:02:53.15] Ralph Fargnoli Jr.: Uh-huh. Do you think that candidates create a platform with [unclear], education, healthcare, and so forth--
[00:02:59.29] David Burda: Sure.
[00:02:59.29] Ralph Fargnoli Jr.: and foreign policy. Do you think that platform will move over to the Congress, because as you probably saw at the office of national coordinator--
[00:03:10.14] David Burda: Uh-huh.
[00:03:11.10] Ralph Fargnoli Jr.: of healthcare information technology, they got pretty much a flat budget vs.
[00:03:16.11] David Burda: Right.
[00:03:16.11] Ralph Fargnoli Jr.: last year. And so, you know, the platforms from the candidates, does it transcend into Congress and does Congress have a similar focus?
[00:03:26.27] David Burda: Yeah, I would expect healthcare reform to be high on the agenda of the next president, and I do expect Congress to take that platform seriously and again it gets back to the issue of cost and access. I really dont see how the candidates can campaign so hard on healthcare reform, but yet once they take over the oval office just forget about it wholesale. So I do think it will be a big issue in 2008 and beyond.
[00:03:56.06] Ralph Fargnoli Jr.: Uh-huh, uh-huh. Do you think that among the candidates, do you see from all of your discussions and research, do you see vast differences in what theyre shaping as their healthcare policies?
[00:04:10.00] David Burda: Oh, absolutely. I think every candidate is talking about or wants to achieve a universal access to healthcare, and what they mean by that is ensuring that everyone has some sort of health insurance that gets them through the hospital door and into their physicians office. The difference is, really the role of the government, the federal government, into pursuing that universal coverage ideal. And I mean that role can take the shape of a single payer system, advocated by some candidates, or the governments role can be minimized in providing that universal coverage, as with John McCains plan.
[00:04:57.02] Ralph Fargnoli Jr.: Uh-huh, uh-huh. Talking about universal coverage
[00:04:58.28] David Burda: Uh-huh.
[00:04:59.07] Ralph Fargnoli Jr.: (Barack) Obama wants universal coverage, but its more focused on the, I believe, the children, where Clinton wants everyone under what shes calling the American Health (Choices) Plan. In Massachusetts, we have universal coverage thats required
[00:05:15.00] David Burda: Right.
[00:05:15.28] Ralph Fargnoli Jr.: and we only have about 50% compliance so far as of January.
[00:05:20.06] David Burda: Uh-huh.
[00:05:20.06] Ralph Fargnoli Jr.: Is it realistic to expect that we can insure everybody, that everybody wants to somehow contribute to the cost of their healthcare?
[00:05:29.20] David Burda: No, I think its unrealistic to expect 100% of the people to have public or private health insurance, just as its unrealistic to expect there to be a zero unemployment rate. You know, you can never get to true zero on either one. But what youre really talking about is mandating that individuals that dont have coverage, either through their employer or through an established government program, be required to purchase their own coverage, just like people are required in many states to purchase their own car insurance.
[00:06:04.25] Ralph Fargnoli Jr.: Uh-huh, uh-huh.
[00:06:04.25] David Burda: Now, I think Obama does not have that requirement in his reform plan, though Hillary Clinton does.
[00:06:13.05] Ralph Fargnoli Jr.: Right. Thats correct. Thats correct. Now lets talk a little bit about the IT factor in all of this.
[00:06:18.22] David Burda: Uh-huh, sure.
[00:06:18.22] Ralph Fargnoli Jr.: You and I have read probably many articles and heard many stories of the impact of IT
[00:06:25.07] David Burda: Sure.
[00:06:25.07] Ralph Fargnoli Jr.: and, you know, Ive read the platforms and I think most candidates understand the importance of technology in improving cost controls and efficiencies
[00:06:35.29] David Burda: Uh-huh.
[00:06:36.15] Ralph Fargnoli Jr.: Is it the governments role? Do you see the candidates saying that it is the governments role to fund this or participate in the adoption of healthcare IT and to what extent?
[00:06:49.28] David Burda: Well, I think it would depend on the next presidents economic philosophy. On the Republican side, and you see this in the current Bush administration, you see the creation of financial incentives to adopt IT in the healthcare community. Where I think if, on the Democratic side, if that comes to pass this year, you may see not incentives, but grants and actual funding bills to do that. Again, it gets down to the role of the federal government in wanting IT adoption. You had an idea floated this past fall, I think by HHS Secretary (Mike) Levitt, physicians who want their full Medicare payment update must be required to buy IT and install it in their offices and clinics. So again, its a financial incentive that may drive that under Republican administration next time around, or with a Democratic administration, it would take the form of grants and outright funding.
[00:07:57.27] Ralph Fargnoli Jr.: Uh-huh. Uh-huh. So, if the government gets involved in the funding of this, of the healthcare initiative.
[00:08:06.14] David Burda: Uh-huh.
[00:08:06.14] Ralph Fargnoli Jr.: You know, (Dennis) Kucinich had this, and I read in your articles, something about, you know, you need to get rid of the for-profits.
[00:08:16.04] David Burda: Right.
[00:08:16.04] Ralph Fargnoli Jr.: Many, many people out there believe that healthcare is a birthright.
[00:08:20.10] David Burda: Uh-huh.
[00:08:20.10] Ralph Fargnoli Jr.: And that born in the United States, you should have access to the best healthcare, and somebody else should pay for it, and so forth.
[00:08:27.17] David Burda: Sure.
[00:08:27.17] Ralph Fargnoli Jr.: And, you know, when we look at the markets today, there seems to be the conflict of healthcare is a live or die type situation, and so forth, and is it right for there to be companies out there making profits and should they be making these profits from the federal government who is supplying the money?
[00:08:49.06] David Burda: Well, I think that, you know, as a business publication, Modern Healthcare is very much pro capitalism--
[00:08:55.04] Ralph Fargnoli Jr.: Right.
[00:08:55.04] David Burda: and we believe that, you know, those dollars, although in some cases those are pretty high profits margins, largely are plowed back into making improvements in healthcare, expanding services. The same thing could be true of competition. Again, its whether your economic view is regulation, a cure for what ails healthcare, or is it competition? And we happen to believe at Modern Healthcare that competition is the way to succeed, and in that case, high profit margins in the private sector for segments of the industry that are propelling us forward arethats a good thing.
[00:09:35.12] Ralph Fargnoli Jr.: So, profits for the insurance companies, profits for the, even nonprofit organizations that provide the services, youre saying that that drives competition, you believe that would drive efficiencies and cost control.
[00:09:49.07] David Burda: Absolutely. We think that competition is the best way to control costs, to improve access and to improve quality.
[00:09:58.01] Ralph Fargnoli Jr.: Uh-huh, uh-huh. With regards to profitability, you know, we see many provider organizations and insurers. I mean, theyre under the gun because of the discussion of the citizens dont have healthcare coverage, making of large profits, what should they do with those profits? So I will agree with you, though, that capitalism will contain, eventually contain, the cost and the quality of care.
[00:10:25.18] David Burda.: Uh-huh, uh-huh.
[00:10:25.18] Ralph Fargnoli Jr.: Now, do you think from a, from what you saw in your discussions with some of the candidates and some of your straw polls and so forth
[00:10:36.07] David Burda: Sure.
[00:10:36.07] Ralph Fargnoli Jr.: do you think that theres any one candidate that has the ability to force Congress into saying lets fund this, and lets allow the profits, lets allow capitalism to succeed in this market?
[00:10:51.17] David Burda: Sure. I think John McCains plan would be the closest to that; his main concern is the cost of healthcare, and he wants to place that burden back on individuals. His plan supports, I believe, a tax credit for people who buy their own insurance policies. Those who dont have access to coverage through any other means. And he believes in the marketplace. He, and depending on the makeup of Congress, you know, that will get a friendly or an unfriendly reception. Our readers, you know, what do Modern Healthcare readers want? Well, of course they want altruistic things like great patient care and great patient outcomes, the best technology, but in a business sense, the thing I think they want most is they want their bills paid.
[00:11:41.20] Ralph Fargnoli Jr.: Uh-huh, uh-huh.
[00:11:41.20] David Burda: Because if they dont get their bills paid, nothing else can happen. And what our reader poll, which we took in mid-September through mid-October, showed is that our readers, although most of them identified themselves as Republicans, voted, if they had to vote during that stretch, would vote for Hillary Clinton.
[00:12:05.16] Ralph Fargnoli Jr.: Hmmm.
[00:12:05.16] David Burda: And I think that shows that their belief that under her presidency, they would get more of their bills paid.
[00:12:12.12] Ralph Fargnoli Jr.: Right.
[00:12:13.24] David Burda: And that would happen a couple of ways: One, her program would provide health insurance to more people, so youd have more patients with insurance, and I think our readers also believe that she would adequately fund those federal insurance programs.
[00:12:30.20] Ralph Fargnoli Jr.: Uh-huh, uh-huh. Yeah, I think that, I guess shes thinking economies of scale, and also, well, with the reversing the tax breaks
[00:12:40.13] David Burda: Uh-huh.
[00:12:40.13] Ralph Fargnoli Jr.: on all those wealthy people out there
[00:12:41.23] David Burda: Right.
[00:12:41.23] Ralph Fargnoli Jr.: in the country, that help pay for and lower the cost
[00:12:46.12] David Burda: Uh-huh.
[00:12:47.10] Ralph Fargnoli Jr.: Let me ask a question, you know we have the aging population here in this country
[00:12:50.20] David Burda: Uh-huh.
[00:12:51.20] Ralph Fargnoli Jr.: I mean, whats the time frame, do you think, that any new president has to try to implement something new in the country. I mean, our population is aging at such a quick pace.
[00:13:05.23] David Burda: Well, if you would have asked me that question last week, I would have said they would have had maybe, you know, the first year or two of their presidency
[00:13:13.21] Ralph Fargnoli Jr.: Uh-huh.
[00:13:16.14] David Burda: earlier this week, the government came out with some new national healthcare spending figures that showed a dramatic increase in Medicare spending from 2005 to 2006. In a one-year period, it rose almost 19%, I believe to over $400 billion.
[00:13:37.08] Ralph Fargnoli Jr.: Right.
[00:13:39.08] David Burda: And if you read the government analysis of this, they attributed that largely to the new prescription drug benefits. So now, the next president, if he or she proposes, you know, a further expansion of Medicare, or the creation of a Medicare-like program for those who dont qualify for Medicaid or Medicare, like Obama does, I just dont think youre going to have a very warm reception.
[00:14:08.02] Ralph Fargnoli Jr.: Right.
[00:14:09.04] David Burda: So how do you, so I guess thats the skeptic in me to say, with these new spending figures out, Im not sure anyone could pass any sort of major healthcare reform bill during their years in office unless it actually reduces costs. Because the cost figures that were released earlier this week are really out of sight.
[00:14:31.09] Ralph Fargnoli Jr.: Uh-huh. I saw the same article.
[00:14:33.08] David Burda: Uh-huh.
[00:14:33.08] Ralph Fargnoli Jr.: I did find that interesting, I mean, when you add up that cost increase and you look at the Social Security issues, the Medicaid issues, the foreign policy issues
[00:14:41.26] David Burda: Uh-huh.
[00:14:42.05] Ralph Fargnoli Jr.: The amount of money that this country is going to need over the years is going to be a hell of a lot more than the reversal of the taxes on the wealthy to pay for everything.
[00:14:52.21] David Burda: Absolutely. Absolutely.
[00:14:54.06] Ralph Fargnoli Jr.: So
[00:14:55.25] David Burda: And there was a reportwhen was that released?ah, maybe three months ago. It was one of these Medicare trust funds type reports where they say were going to go insolvent in a few years. Well this one actually looked out all the way out to year, like 2075 or, it was 2080, I think. So over the next 75 years or so, and they estimated, absent any major Medicare reform, that Medicare and Social Security alone would take up 16% of the Gross Domestic Product. And that, at 16% right now, is all of healthcare spending. So what theyre saying is over the next few decades, Medicare by itself will eat up that much of the economy.
[00:15:41.06] Ralph Fargnoli Jr.: Right. Right.
[00:15:42.15] David Burda: And so I think for the next president to come in and say we, he or she supports even an even bigger role in government in healthcare, I think thats going to be a tough sell.
[00:15:55.05] Ralph Fargnoli Jr.: Right. And I think that that tough sell is going to be difficult within Congress and the industry, and I think that you listed in your magazine
[00:16:06.03] David Burda: Uh-huh.
[00:16:06.03] Ralph Fargnoli Jr.: You had a list of the healthcares heavy hitters. The Whos Who of some of the largest healthcare providers and insurance companies
[00:16:12.22] David Burda: Right, right.
[00:16:14.15] Ralph Fargnoli Jr.: who gave money. So, you know, not only are we, you know, you have the public consumer
[00:16:19.16] David Burda: Uh-huh.
[00:16:20.12] Ralph Fargnoli Jr.: You have the Congress
[00:16:23.00] David Burda: Uh-huh.
[00:16:23.00] Ralph Fargnoli Jr.: and then you have your, the influences, the people that lobby for or against change.
[00:16:28.29] David Burda: Yeah.
[00:16:30.12] Ralph Fargnoli Jr.: My own personal feeling is that this discussion is going to happen way into maybe possibly the second term of possibly the president.
[00:16:35.25] David Burda: Sure, sure.
[00:16:36.17] Ralph Fargnoli Jr.: To get [unclear] and try to figure out what the priorities are.
[00:16:40.09] David Burda: Right, and I think that, I hate to use a cliched tipping point, but I think that the thing that will tip things toward action is the cost
[00:16:50.06] Ralph Fargnoli Jr.: Right.
[00:16:50.06] David Burda: of healthcare. I mean, look at the access issues. And you have, what, 84% of the population has some form of public or private health insurance.
[00:17:02.17] Ralph Fargnoli Jr.: Right.
[00:17:02.17] David Burda: So now youre really only talking about 16% without it; of that 16%, youre never going to achieve true zero, right?
[00:17:11.14] Ralph Fargnoli Jr.: Uh-huh.
[00:17:11.14] David Burda: So, yes thats an issue.
[00:17:14.01] Ralph Fargnoli Jr.: Right.
[00:17:15.12] David Burda: You look at the quality of care; its improving all the time. Is it perfect? Of course not. We read about patient-safety incidents all the time. But there are groups out there, you know, really pushing for quality improvement and better patient safety. But what really hasnt changed is the cost issue.
[00:17:37.03] Ralph Fargnoli Jr.: Right.
[00:17:37.03] David Burda: And at some point in the near future, its just going to be, its just going to be way too high for the federal government to keep, to keep spending.
[00:17:46.21] Ralph Fargnoli Jr.: Right. And I think that all of us feel the cost issues with the yearly policy or premium increases, either
[00:17:55.09] David Burda: Oh sure, sure.
[00:17:56.07] Ralph Fargnoli Jr.: work or so forth. So copays increase on office visits, precription drugs.
[00:18:01.01] David Burda: Right.
[00:18:01.01] Ralph Fargnoli Jr.: And so, with that, Dave, we could probably go on forever. This is a great topic. But let me ask you something, who do you see as the final nominations for the president?
[00:18:13.26] David Burda: Boy, if I had to pick, I would say, Im going to go with Hillary Clinton on the Democratic side.
[00:18:23.29] Ralph Fargnoli Jr.: Yep.
[00:18:23.29] David Burda: And I believe Mitt Romney will make it in the end on the Republican side.
[00:18:28.02] Ralph Fargnoli Jr.: Very interesting. So we have a federalist against the
[00:18:32.03] David Burda: You have polar opposites.
[00:18:32.03] Ralph Fargnoli Jr.: Yeah. Very much so. So either universal or it will be free market.
[00:18:36.13] David Burda: Right.
[00:18:38.14] Ralph Fargnoli Jr.: Which will definitely make it an interesting political year, but also it will have a huge impact on our industry.
[00:18:44.08] David Burda: Absolutely.
[00:18:45.06] Ralph Fargnoli Jr.: Well, Dave, I appreciate the time that you spent with us here today.
[00:18:48.29] David Burda: Ralph, it was my pleasure.
[00:18:50.20] Ralph Fargnoli Jr.: And again, if youre at the HIMSS conference, I look forward to seeing you there.
[00:18:54.18] David Burda: Back at you.
[00:18:55.11] Ralph Fargnoli Jr.: And, actually were having a voting process at the HIMSS conference to, everyone there gives us some input.
[00:19:02.19] David Burda: Oh really? Great.
[00:19:02.19] Ralph Fargnoli Jr.: On their thoughts, yeah.
[00:19:04.13] David Burda: I look forward to reading the results of that.
[00:19:06.07] Ralph Fargnoli Jr.: Well share them with you.
[00:19:06.13] David Burda: Great.
[00:19:07.17] Ralph Fargnoli Jr.: All right, you have a great day.
[00:19:08.14] David Burda: You too.
[00:19:09.13] Ralph Fargnoli Jr.: And thanks again.
[00:19:09.13] David Burda: Talk to you soon. Bye bye.
[00:19:10.18] Ralph Fargnoli Jr.: All right, bye bye.
[00:19:22.29] Womans Voice: Youve been listening to iSpotlight on Healthcare, featuring Ralph Fargnoli, president and CEO of Beacon Partners. Hes a business owner, hes a healthcare management consultant, hes a trusted adviser of dozens of senior executives. Now that youve heard his views and opinions on the state of healthcare information technology, please e-mail your comments and suggestions to [email protected] If youd like to stir things up around the water cooler, and spark some interoffice debate, let your colleagues know about the Spotlight on Healthcare podcast at www.beaconpartners.com. Thanks for listening, and be sure to check back frequently for future editions of Spotlight on Healthcare.
[00:20:26.17] Womans Voice: Beacon Partners is a healthcare management consulting firm committed to helping you enhance patient outcomes by maximizing your organizations enterprise yield. Enterprise yield is the output generated by a healthcare facilitys unique mix of people, processes and technologies. Beacon Partners provides strategic, clinical, and operational consulting services designed to fine-tune your organizations enterprise yield for optimum performance. We can help you; we promise youll be pleased. Were so sure of it, that we offer the industrys only satisfaction guarantee. For more information, please visit www.beaconpartners.com. We look forward to hearing from you.
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