What’s Really Different This Time Around?

September 2013

At a recent dinner meeting, a banking executive who makes loans to healthcare providers asked me,

“Isn’t all this stuff that is going on, with ACOs, assuming financial risk, physician employment, and development of care continuum services just a repeat of what we did in the 1990s? What’s really different this time around?”

I must admit that I have heard this over and over again, especially from health care executives who were around in the mid-to late 1990s when “managed care” was the soup de jour. We were all frantically buying physician practices, home care agencies and long-term care organizations, entering into full risk capitation agreements with payers, buying health plans, and a lot of other frenetic stuff that frankly didn’t work out well for a lot of health care providers. The public rebelled against “managed care” and “gatekeepers” (primary care physicians that denied referrals to specialists) —

  • We lost money on capitation agreements;
  • we learned that we didn’t know how to manage physician practices, and;
  • we had no idea how to run nursing homes.

Many of those plans were abandoned, and we went back to high-tech, high-cost services and the medical arms race; a bed tower frenzy with the adage “build it and they will come;” sold off non-inpatient, unprofitable “non-core” businesses; and increased our prices every year. 

It was good old, fee-for-service medicine all over again, and boy, in hindsight, it was a “cake walk” (relatively speaking) to run a hospital in the early 2000s!

My concern today is that those of us who lived through “managed care” environment of the 1990s tend to be instant skeptics when it comes to health care reform in 2014 and beyond.

We feel we’ve “been there, done that!”

We may not be viewing healthcare reform of the present as a different set of circumstances and imperatives that are facing us today – namely, as a nation, we have truly “hit the wall” because healthcare is unaffordable for many businesses, individuals and families. People are “voting with their feet” and not using elective services.

As we view the road ahead with the benefit (or hindrance) of hindsight, we may not be considering the fact that in the 1990s we had no clinical information systems or integrated clinical and financial data for managing patient care to speak of — but now we have much more.

We may not be considering the fact that some solutions to “bend the cost curve” that were tried in the 1990s probably had merit, but were perhaps ahead of their time or not able to be actualized because we didn’t have the tools to support them or the will and desire to see them through.

In short – I believe that the “been there, done that” mindset from those of us who lived through the 1990s managed care era is a potential death knell for innovation and transformation of the delivery system!

We mustn’t let biases from yesterday’s experiences to blind us from having a clear view of what must be done to be successful in the future. It’s time for us to stop the “been there, done that” skeptic routine and face the music!

In short, we look forward to the revolution!

Michael A. Slubowski, FACHE, FACMPE
President and Chief Executive Officer
SCL Health