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Healthcare, a “Remarkably Inefficient, Unproductive” Industry

April 18, 2012
by Jennifer Prestigiacomo
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New York forum highlights need for payment and evidence-based care reform
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On April 17 at New York Ideas 2012: Questions For America in a Year of Choice, industry leaders agreed that regardless of whether or not if the Affordable Care Act (ACA) is ultimately struck down by the Supreme Court, reform would have to take place on both the payment and delivery sides of healthcare to remain sustainable. New York Ideas is a day-and-a-half long forum in New York City that assembles a wide variety of leaders to take on issues like the economy, education, global politics, and healthcare through interviews, discussions, and debates.

The biggest concern for Bruce Bodaken, chairman, president, and CEO of Blue Shield of California (San Francisco), one of the panelists on the panel entitled “Health Care Debate Act One: The Supreme Court, Reform Implementation & The Future of Health Policy,” was that if the individual healthcare mandate of the ACA was eliminated, the nation would still need a diverse insurance pool, including young and healthy people to offset those who need more care. “We have a fundamental problem whether or not [the healthcare system] can be sustained over time,” he said. “An economically sustainable program simply has to have a way in which, sick or well, we all have a responsibility to be part of the program.”
Bodaken also had concerns if the individual mandate is upheld. “If we have only one chance to enroll people, and if we get an adverse population in that first enrollment of millions of people; and then those people that come on are only those who need [healthcare services] later, we’ll never get the growth,” added Bodaken. “So we have to make sure that the first enrollment is a balanced enrollment.”

Bruce Bodaken

The Hon. Melody Barnes, former assistant to President Obama, and director of the White House Domestic Policy Council, said that elements of the ACA like the patients’ bill of rights, and requirements like allowing children to stay on their parents’ insurance till age 26, and providing coverage to children with pre-existing conditions, should stay intact. “It’s hard to take away a benefit once it is conferred,” she added.

Shannon Brownlee, acting director, Health Policy Program, New America Foundation, a nonpartisan public policy institute based in Washington, D.C., did not mince words when she said that the U.S. healthcare system is a “remarkably inefficient and unproductive industry,” and needs to change the way it pays providers. “Healthcare is going to eat our lunch,” she said. “It accounts for about 20 percent of unemployment right now for the drag it exerts on private employers. It is eating into what states and federal can allocate for. The federal government now spends more on healthcare than on defense.”

Shannon Brownlee

Evidenced-Based Care
Panelists agreed that healthcare was one of the few industries that has not been consistently using evidence-based practices and quality metrics to change outcomes and reimbursements. Brownlee also suggested that providers needed to be viewed as competitively as insurance companies did to help solve this problem, and that the industry should be comparing the care physicians are providing in meaningful ways.

Brownlee also advocated extending evidenced-based practices to patient care. “Most Americans think that whatever their physician has recommended is grounded in good science, and I think that at least half the time—if not more—it’s not grounded in any science, but belief, theory, or profit. In healthcare you can’t tell if something works unless you have good science.”

Brownlee said that Americans need to change the current ethos of “more is better” to “less can be better.” She mentioned the “Choosing Wisely” campaign as an important step in that direction. In that campaign, sponsored by the American Board of Internal Medicine (ABIM) Foundation, nine physician specialty societies identified the five specific tests or procedures that they say are commonly used but not always necessary in their respective fields.

Bodaken recommended that the healthcare industry focus on the 1 percent of patients who account for 30 percent of healthcare costs. A move in that direction, he said, are 50,000 providers in Sacramento who took on the challenge of forming accountable care organizations (ACOs) with shared risk to get costs down to zero.“The one challenge is devoting the amount of money that we’re going to have to devote to information technology to support automation, which is absolutely necessary, not only so providers can communicate to make sure they know what the evidence base is to provide care, but also so members and patients can look on a portal and see what the history of this physician doing this type of procedure is and how much it costs at hospital A versus hospital B,” he said.  He said that this initiative would broaden to include 20 different ACOs over the next three years.

“Those progressive physicians and hospitals will be more than happy to be paid on an outcomes basis because they in fact think they can make as much or more money,” said Bodaken. “They see it as a competitive advantage with those physicians who still want to be paid on a fee-for-service basis.”


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