Healthcares finance experts converged in the surreal city of Las Vegas last week, but could not escape two powerful, unpredictable forces with the potential to upend the industry: Novembers election and a sour economy.
Healthcare reformfor industry insiders, a top domestic issue throughout the protracted presidential campaignremains a leading concern for voters despite mounting anxiety as gas and food prices eat into paychecks and the housing market continues to falter. And with six months until Novembers victors arrive in the White House and Congress, major healthcare groups, including the 35,000-member Healthcare Financial Management Association, are maneuvering to position themselves for a high-stakes debate.
Meanwhile, the shaky economy has added stress to hospital budgets. Hospitals that paid for pricey technology or construction with debt sold in frequent auctions saw interest rates spike in February as jittery investors abruptly quit bidding amid fallout from the housing crisis. Losses on patient debts continue to grow. Experts cite a weak economy and healthcare inflation as culprits behind the growing ranks of the uninsured and underinsured who cannot pay their medical bills.
The HFMA opened its yearly meeting in Sin City with the release of its own reform plan, which, unlike far-reaching proposals issued in recent months by insurers and trade and professional groups, is tightly focused on restructuring how healthcare providers are paid (June 23, p. 6).
Richard Clarke, president and chief executive officer of the Westchester, Ill.-based HFMA, said the narrow focus reflects the associations expertise and argued that any comprehensive reform must include an overhaul of healthcares financial incentives and billing. In a quick review of healthcares good and bad when discussing the proposal, Clarke dubbed payment the ugly.
Insurance covers the cost of unnecessary or ineffective care while failing to offer incentives to prevent or manage costly chronic disease, he said. To remedy what Clarke described as perverse incentives, payers should reward high-quality results and promote healthy behavior and wellness under the associations proposal. Insurers should also stop paying to cover medical bills when hospital patients end up injured or ill because of provider oversight or error, according to the plan.
Healthcare is getting worse, not better, which is why its a key political issue, entrepreneur Steve Case, co-founder of AOL and chairman and chief executive officer of Revolution Health Group, told attendees. The industrys performance affects patients financial security, health and happiness, he said, and pressure for significant change is mounting. Healthcares robust inflation, an epidemic of obesity and related chronic disease, and the strain of caring for the uninsured are squeezing household, business and provider budgets. And the insured increasingly pay more for less, he said.
Case made his own pitch for reform. Not surprisingly, he called for well-informed consumers and a competitive marketplace to transform the industry, curb spending and improve the nations health and access to care. Revolution Health, a year-old privately held firm based in Washington, operates medical information and networking Web sites for patients.
Consumers, who for too long have lacked incentives or information to make healthy and cost-effective choices, must be more aggressive in order for reform to succeed, he said. Im not here to blame consumers, he said. It is time for consumers to take more responsibility for their own health. To do so will require greater access to information via the Internet that has transformed U.S. retail and industries such as finance, he said. The markets will determine who wins and who loses, he said. Consumers will tell you what they think.
Case described healthcare as among the last industries to see consumers emerge as powerful players. Hospitals face pressure to improve transparency as employers shift a growing share of healthcare costs onto workers, he said. Consumers are being asked to pay more, so naturally, they expect more, Case said. He urged the industry to take note. It is more opportunity than it is threat, he said.
Richard Umbdenstock, president and CEO of the Chicago-based American Hospital Association, in his remarks, touted yet another reform proposal. The AHAs five-point reform plan, which does not endorse specific policies, calls for universal coverage and incentives for health promotion and disease prevention; quality improvement; technology adoption and more efficient care. The association acknowledges the need for additional collective financing.