Sometimes the grass is not always greener on the other side of the fence (in this case, the other side of the pond)
The reality of sweeping changes made with the passage of PPACA is now happening. Some will argue it’s for the better and others view the passage of PPACA as the beginning of the end to healthcare as we have known it in the USA. I personally believe the delivery system and the payment structure to support the healthcare system needed to change, however with the passage of PPACA, be careful what you wish for.
Covering 30 plus million additional people without the means to increase the structure of primary provider care, absolutely no effective rational payment methods to balance what a provider charges, and the fiduciary responsibility of the employers to manage assets of the healthcare plan … and now the added bureaucracy to implement all the provisions of PPACA as they exist today, with more bureaucracy to follow.
So what have we done? We looked at our neighbors in Canada and across the pond to the UK and said, “We should do what they do.” The grass sure seems greener over there. Is it?
I find it interesting that as the debate around healthcare reform occurred last year, many looked to the Canadian system and UK system as success on how to provide access to all and still deliver care in a cost effective way. As one of my mentors once said, “Truth over time prevails.” Just this week in a July 25th New York Times article, the headline read, “Leaders plan to turn healthcare upside down.” At first, I thought this article was another long list of articles detailing the new PPACA plan. On further review, the article announced that Britain’s healthcare system would need to be totally revamped or it would go bankrupt. Yes that’s right…bankrupt.
The British socialized program is in for major changes. The new coalition government has enacted substantial cuts in health spending. Although not all the details have been made public, what we do know there is a new focus on switching from a highly centralized control of their health system to allow the care and decisions to be made at a local level.
As mentioned in the New York Times article a document produced by the National Health Service (NHS) of the UK states, “The current architecture of the health system has developed piecemeal, involves duplication and is unwieldy. Liberating the NHS and putting power in the hands of patients and clinicians means we will be able to effect a radical simplification, and remove layers of management.” As the article goes on to say, “Currently, how and where patients are treated, and by whom, is largely determined by decisions made by 150 entities known as primary care trust – all of which would be abolished under the plan.”
It seems as we are heading (at least in my opinion) from a highly decentralized system to one that is highly controlled at a national level. While we are moving in this direction, the British system is moving away from a highly centralize to a decentralized system.
Sometimes the grass is not always greener on the other side of the fence…in this case, the other side of the pond.
When I was in graduate school I had a professor who would always say "always remember, the big print giveth and the small print taketh away." He was referring to reviewing financial reports and how important it was to review the small print (footnotes) at the end of the spreadsheets (always in small print). The long, hard-fought battle over-health care legislation is quickly turning into a battle over health-care regulations.
Three key things to remember:
- The longer key parts of the bill remain unclear; renewal rates for plans will assume the worst-case scenario.
- Since most employer plans renew in January, brokers and consultants will need to develop their renewal story as meetings start occurring in July and August to discuss January renewals.
- What will be their "story"?
Most employer plans received double-digit increases for 2010. With the health reform act providing more access with no cost controls in place, you can expect double digit increases in 2011. Raising deductibles and coinsurance and adjusting network access is no longer an acceptable renewal story. Brokers and consultants will need to share a completely different way to manage the escalating costs of healthcare. What's in place today is not working and will not work in the future.
We at NCN believe you must address healthcare like any other business and that is to manage from what it "cost" to deliver care not from what is "charged" to deliver care.
The ultimate impact of the law President Obama signed depends on fine print that has yet to be written. As my professor said, "the big print giveth and the small print taketh away." Let's watch carefully over the next few months the small print that is being written in Washington.
This question is asked by millions of people each day. Whether getting their car repaired, home repaired or getting a simple haircut. This basic question allows the consumer to sort out a number of options before them. Are this person's services going to fit within my budget or what I have in my bank account? If not, I need to check around and see if someone who performs like services is able to offer those services more cost effectively. It is the way we do business today...except for healthcare. There is an exception to this rule and it is for procedures that typical not covered by health insurance plans such as plastic surgery. I was driving into work and listening to the radio when an ad came on for LASIK surgery. This facility is located in Dallas, TX and is a leader in this type of procedure. What was interesting about this ad was this statement, "We will beat any price in the metroplex." Hmm...I wasn't listening to an ad for an electronics store or a big box retailer. I was listening to an ad for a very sophisticated procedure on the eyes.
Let's think about this for a minute, do you hear ads for maternity care based on cost...come to our hospital to deliver your baby and we will beat any prices in the metroplex. We will even throw in 12 months of free baby check-ups and a lifetime supply of portrait sittings at any Sears photo studio. No we don't hear these ads because most people aren't paying for this care out of their own pocket. In these examples of LASIK or plastic surgery the consumer is paying for the procedure themselves. Price competition occurs and a decision about whether a procedure is truly necessary happens. It's interesting to note that in 2009, Americans received 18 percent fewer plastic-surgeries. The recession is likely to blame but all indications are the cost of surgeries have come down as well. In one report, I read that LASIK surgery charges have come down nearly 50% (refer to my comment about the radio ad). Competition entered the market along with consumers having "skin in the game" AND an understanding before the procedure is performed what the charge will be. Transparency is a beautiful thing.
Yes most people have a deductible and coinsurance to pay but the consumer has no idea what the provider is going to charge. Why, because there is no reason to ask. Once the consumer signs the paper work of the provider allowing surgery to take place, a copy of your insurance card and driver's license is taken and you are told what you owe for your deductible or coinsurance. Outside of this, you are completely removed from the interaction of the provider with your insurance company. You have no idea what the total charges will be for the procedure because someone else is paying the majority of the charges. It's like going to restaurant and paying $10 to enter the establishment. Once seated, you are given a menu with a listing of all the entrees and dessert but with no prices listed. Someone else is picking up the tab so you just order off the menu or select what the waiter suggests (not asking of course what the selection costs) and enjoy.
NCN believes that consumers need to know and understand what the charges are for procedures and more importantly what the true costs are for procedures. We must start working from a "cost plus acceptable margin" verses just reviewing what people charge. Even though just getting a handle on what people charge is a good first step. "Well beat any price" will become more in more prevalent as consumers take greater control of their healthcare dollars. Until then, costs will continue to go up, premiums will continue to rise and more and more people will wish they asked "What will this cost?"
I recently had the opportunity to visit with old friends and enjoy dinner together. During our time, we were reflecting on each of our life's journeys and how we experienced different life events that helped shape us as individuals. As I listened to their stories, I gained a greater appreciation for the unique personalities that had been molded over the years based on these experiences. By understanding their stories of life, I may not agree with how their situations or problems are handled but I have a better understanding of their "context."
With passage of the healthcare reform bill, and as the dust starts to settle on what is actually is in the bill, it will require many entities that in the past were viewed as potential "enemies" to now sit down and dine together and understand how we will work in the new normal. As Stephen Covey wrote in his bestselling book, "one must first understand to be understood" and for healthcare to move in the right direction, we are going to need a whole lot of understanding.
Judy Miller, editor-in-chief of Managed Healthcare Executive commented in its April, 2010 issue that "of all the players seated around the healthcare reform table, payers are the only ones challenging the cost of care, and yet, they're the ones getting the beating. They know $20 for two aspirin is a rip-off, but no one is listening."
She is right. The payers are taking a beating in the press, and yet very few people are addressing the irrational charges being passed on to the payers and consumers of healthcare. Payers AND providers must "sit down at the table" and understand that a rational approach to controlling the cost of healthcare is the elephant in the room.
Both sides need to better understand the pressure points driving this irrational behavior. As Karen Ignagni, President of AHIP recently said, "To suggest that cost containment can be achieved by singling out health plans ignores the very inconvenient truth that premium increases reflect increase in the underlying cost of medical services. Regulating premiums won't do anything to reduce the soaring costs of medical care. This would be like capping the prices automakers can charge consumers, but letting the steel, rubber and technology manufacturers charge the automakers whatever they want."
Since 1994, NCN's mission has been to provide a rational, defensible and transparent payment methodology that strives bring the payer, provider and, at times the consumer, to the table to discuss openly what is a rational payment for care.
Yesterday, we began a bipartisan discussion to revamp nearly 1/5 of the US economy. We heard arguments for and against certain parts of the proposed bill. There was a lot of posturing during the discussions and strong arguments made by both sides. However, there are certain nonnegotiable that I believe need to be agreed to.
For any change to truly impact the rising costs of healthcare, we must have transparency. What does transparency mean as it relates to healthcare? Simple. All providers must publish their pricing for services. A simple idea but a key element to in taking the first step to saving money. We must get transparency into the discussion and from that, allow consumers to take a more active role in their healthcare purchasing.
Healthcare is one of the few remaining areas of purchasing where a consumer enters the system with little to no knowledge of what the charges will be. To truly get costs under control, the consumer will have to play a more active role in what the charges will be.
Many of us are familiar with the phrase, "the shot heard ‘round the world." The phrase originates in Ralph Waldo Emerson's
Concord Hymn, 1837 and relates to the start of the American Revolutionary War:
By the rude bridge that arched the flood,
Their flag to April's breeze unfurled;
Here once the embattled farmers stood;
And fired the shot heard 'round the world.
On April 19th, 1775, on Lexington Square the British Major John Pitcairn and his six light Infantry companies faced about seventy colonial militiamen. The details of the fight, and who fired the first shot, are disputed. What is clear is that this was "the shot heard 'round the world."
On Tuesday, Jan. 19th 2010, almost 235 years later in the same state where the phrase was coined, votes were cast that changed the landscape of politics (at least for this election cycle). I know it's extreme to say that this election had the same seismic effect as the battle that occurred in 1775 but what is clear:
- People are frustrated and feel government is not listening to them
- Healthcare although an important issue, cannot be viewed as one big massive spending bill, with over 2,000 pages and no one yet able to articulate what it actually will cost or mean to the average American
- With bailouts and a never-ending sea of debt, our economic ship is taking on more water making the public feel very uncomfortable.
What has been set in motion in Massachusetts is sending a strong signal to the rest of our elected officials. Healthcare reform is now on hold, the current administration is retooling and the American public is struggling to get their "sea legs" about them in the never ending economic merry go round we are on. We live in interesting times that requires great thought and perseverance.
Just as the "shot heard ‘round the world" set in motion tremendous change in our country. The voters in Massachusetts have set in motion an interesting political environment for us observe and participate in. We live in the most uncertain times, and it requires all of us to engage in problem solving.
With the recent bill that's currently being debated within the Senate, ultimately it comes down to providing a little over 30 million underinsured or uninsured people to have access to care. The problem with that is it still leaves between 11 and 15 million people not having care.
So, have we truly moved the needle in providing healthcare reform? I would say no. A couple of reasons for this:
By providing access to care for an additional 30 million people, no one has really thought about where are those people going to go in today's environment? The assumption is today that most of these people who are underinsured or uninsured seek care primarily in the emergency rooms. If now they are given access to care through primary care or traditional methods, currently we do not have enough primary care physicians to treat those already insured. Adding another 30 million people to that pool will surely overwhelm the primary care physicians.- With the reform bill that's being debated today, cuts are being made to the Medicare payment system, and when you do that more and more providers, especially primary care physicians, will no longer seek or treat Medicare patients. So we'll have an exit of the primary care physicians once this passes, and we already have a shortage of primary care physicians.
It's important to note that in medical schools today, only five percent of students go into primary care. The feeling is that once this reform bill is debated, and the final details are communicated, that number of 5% will go lower once people realize the magnitude of not only the patient volume but also the ability to make money on these patients will be minimal.