Employers are divided on the merits of healthcare reform, but they are unanimous in expressing uneasiness about its business implications. Many purchasers have absorbed hefty costs in complying with reform's most immediate provisions.
Hospitals, employers each have crucial roles in making reform succeed
Purchasers worry that if key quality and cost-controlling provisions in the legislation—provisions that many purchasers supported and some lobbied for—fail to deliver promised results, the business community will be on the hook for more cost increases in the future.
Now in the wake of the midterm elections, Congress may give the business community a new platform to air those concerns.
Why are purchasers so worried? After all, Congress and President Barack Obama articulated as a core goal of the legislation “bending the cost curve.” Yet purchasers know from years of experience that the strategies in the legislation are far more challenging to implement than they seem, and if they don't work as intended, it is not clear who will be held accountable.
Taken together, most of the cost and quality strategies in the legislation rely on a significant shift in the role of hospitals in American life.
First, the law contains provisions to keep people from needing hospitals, including myriad wellness and prevention incentives, expanded primary care and penalties for excess readmissions. The law also calls for new financing arrangements that would attempt to sideline hospitals among the many providers patients encounter.
For instance, accountable care organizations would presumably weight financing incentives toward primary care and other services that are less expensive rather than hospital care. And for those times when hospitals can't be avoided, the law imposes financial penalties on those that fail to achieve goals for reducing hospital acquired conditions and improving quality.
Many of these ideas came from purchasers. During the past few years, purchasers have launched innovative wellness programs, embraced the idea of patient-centered medical homes and implemented dozens of pay-for- performance programs to better tie their payment to the level of excellence they expect for their employees' healthcare. Some purchasers have even partnered with hospitals to help them apply safety and quality strategies from other industries. Yet the pace of change is glacial or nonexistent. Studies do not suggest significant improvement in safety or quality of hospitals over the past decade, though costs have risen by more than 100%.
There are exceptions, and some of those exceptions are purchaser-driven. For instance, exactly 10 years ago, purchasers formed my organization, the Leapfrog Group, to measure hospital performance and use the information to drive purchasing strategies and consumer decisionmaking. Studies of data from Leapfrog's annual hospital survey demonstrate that Leapfrog-reporting hospitals have improved over the past decade and tend to excel in the quality of care they provide.
Leapfrog is one example, and there are other promising models. But high performance must become the norm, and despite many efforts, that has not happened yet. This fact could drive some purchasers away from the healthcare market altogether, and reform makes that more possible, not less.
Reform brings new opportunities for Americans to access health insurance without needing their employer, and with mounting costs and quality problems, businesses will watch for opportunities to exit. This could prompt erosion in the employer base for healthcare in the U.S, which would not bode well for the future of our healthcare system.
One good option may take root with the new Congress: introducing more market accountability into the healthcare system. Consumers should be able to compare hospitals and doctors on price and performance, the way they would any other product or service in the marketplace, while still recognizing there are special complexities unique to healthcare.
Judging from the remarkable advancements in other industries such as airlines, computers and retail, transparency can spur improvements in quality and stimulate the economic vitality of an industry. We owe it to ourselves as Americans to apply at least some of these principles to the healthcare industry. Heightened transparency and accountability also will give the private and public sector leaders reassurance that health reform is moving in the right direction, or if it is not, information to make a midcourse correction.
Transparency and accountability may or may not impact implementation of healthcare reform. There are provisions for “public reporting” in the reform law, but the details are left to the HHS secretary. The worst-case scenario is that federal officials water down public reporting to the point that it is useless for consumer or purchaser decisionmaking. The best-case scenario is imposition of requirements for unbiased public reporting, including candid assessments of the variability in performance among different providers.
This best-case scenario is the best case for hospitals too. For some hospital leaders unaccustomed to transparency, this seems counterintuitive, but the experience of Leapfrog hospitals suggests the opposite.
First, unbiased public reporting shows hospitals how they perform as compared with particular peers across the country, so they can identify and seek out role model hospitals and set realistic goals for improving their performance. Second, public reporting builds trust with the community, which will prove essential as hospitals navigate today's uncertain political climate and rely on the advocacy of their communities.
No amount of hospital news releases can truly tell the community about the importance of the hospital to the life of the community the way credible, unbiased public reporting can. Finally, unbiased transparency motivates staff, board members and clinicians and acknowledges their success.
Ironically, healthcare reform put employers and hospitals in the same boat. They both are carrying the keys to success for the legislation, with little acknowledgement of the peculiar burden that places on them. If hospitals fail to transform, it might keep costs high and thus erode employer engagement. If employers fail to engage, it might erode the economic viability of our hospital system.
We could all hide and let the chips fall where they may and rely on Washington to make everything work out. Or we can work together in a spirit of candor and higher purpose, and do our best for our communities.
Leah Binder is CEO of the Leapfrog Group, Washington.
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