• 500 Eldorado Blvd. Suite 4300 Broomfield, CO 80021
  • 303-813-5190

What Local Experts Say About Possible Health Care Reform

September 25, 2009
Friday, August 28, 2009 | Modified: Sunday, August 30, 2009 What local experts say about possible health care reform Denver Business Journal - by Bob Mook Will health care reform do anything to contain soaring medical costs? Will it bring care to more people? Or will it bankrupt the nation just the same as if the U.S. does nothing to the current system of delivering, and paying for, health care? For part three in the Denver Business Journal’s series of conversations on health care reform, the Denver Business Journal talked with another elemental set of stakeholders in the debate: doctors and hospital executives. One the group’s baseline conclusions: They’re worried the current proposals don’t do enough to change they way health care is paid for. Until payment of medical care is based more on outcomes — instead of the number of tests, drugs and procedures a doctor prescribes — little will be accomplished in bringing down the costs of care. The panel members were Dr. Jandel Allen-Davis, vice president of government and external relations for Kaiser Permanente Colorado; Dr. Patricia Gabow, CEO and medical director of Denver Health; Jeffrey Selberg, president and CEO of Exempla Healthcare; Steven Summer, president and CEO of the Colorado Hospital Association; and Dr. Jay Want, president and CEO of Physician Health Partners. The group met Aug. 21 for an hour-long discussion. Their recorded conversation was edited for space and clarity. (This is an expanded version of the discussion that appears in the Aug. 28-Sept. 3 print edition of the Denver Business Journal.) DBJ: What do you make of the health care reform debate right now? What do you like? What don’t you like? Gabow: What I like is that we’re actually having more substantive discussions than we ever had under Clinton. We’re a lot further along than we were before. What I don’t like is the anger and hostility of the debate, and the fact that we aren’t having a civil conversation that uses data. They’re putting forth things that are clearly false as scare tactics. But I think the thing we’ve come to agreement on is that we need health reform. The country can’t sustain the current direction that we’re on. We must control costs or our businesses will suffer and our competitiveness will suffer. I think we all agree that in order to cover everyone, the poor are going to need help. Medicaid expansion, premium subsidies, whatever it takes [to help the poor], it’s a good step. Individual mandates and employer mandates are gaining ground. I think all those are positive movements. Where I’m disappointed is that I don’t think it’s bold enough. I don’t think there’s enough discussion about payment reform — there’s some, but it’s not enough — and there’s minimal discussion about delivery reform. To me, if you don’t reform the payment model and the delivery system, it’s going to be very hard to achieve those goals of coverage and access. Want: It feels negative now, but I think we need to pause and be thankful for the things that have passed at this point. Coverage was still an active live issue last year. People didn’t think universal coverage was a good idea. Now, concepts like universal coverage, individual mandates, guaranteed issue, community rating are almost assumed to be part of the package right now. One of the things I find heartening is the level of sophistication in this dialogue has actually gone up quite a bit in the last 12 to 18 months. Selberg: I think the reason [the debate] is so emotional is that this is going to require a new model of a public-private partnership. I think that’s where the emotion comes in: Too much government, not enough government. But it’s about the fundamental concept of government in this country that’s going to have to morph to something else in order to have true reform to occur. Summer: I think we got to where we are by doing incremental reform. So, we’re looking for an easy solution for something that really has to be handled as a whole. Allen-Davis: We don’t have a great place to have a genteel, informed, civil discussion about this because there’s so much spin out there. There’s not an easy-to-use [guide for health care reform] — something that cuts it down to terms that could help John Q. Citizen figure this thing out. But we are more informed than where we were. DBJ: Has this been too much about insurance reform and not enough about reforming the delivery system? Allen-Davis: In 2006, I joined the Physicians Congress on Health Care Reform over at the Colorado Medical Society. And we recognized that delivery-system reform is needed and insurance reform is needed and coverage issues need to be resolved. It was fascinating, because 85 cents on the dollar is all about what we [medical providers] do. But before you know it, we were back to talking about coverage and benefits because it’s easy and tangible and it doesn’t feel as big. But it also enables us to say, “It’s them” [the insurers]. Selberg: But how can the government reform delivery? Gabow: They do it by payment reform. As long as you pay fee-for-service, you’re going to get exactly the kind of delivery system you have. You’re not going to get the kind delivery reform unless you change the payment. [Congressional leaders] don’t want to use the word “capitation” because of all the history, but that’s what they believe they want to get to. Selberg: I agree with you, but there’s an incredible political will that has to occur in order for that to happen. We went into capitation in the mid-’90s by basically applying the current configuration of the system, and it was a total disaster for us and also on the consumer side. Want: One of the reasons I’m more hopeful now is the computing power available is much more available and affordable to smaller entities. Gabow: With [health care] information technology, it’s much easier to deal with accountability. As an industry, we’re more aware about transparency in quality than we were back then. There are many more tools available and a much different view of the world. Allen-Davis: If the consumers are going get in the game, we have to give them information. And I don’t mean figures that are hard for them to digest. When you talk about the reporting we even do now, it’s not at the level that allows anyone to make informed choices. What I worry about is whether we’re going to put this out in a way that’s completely transparent so people can make informed choices. Gabow: We’re talking about a $2.4 trillion [a year] industry. People are making a lot of money off the current dysfunctional system. And because it’s being driven by a business model, there’s no truth. It’s about making money, increasing margins and paying stockholders. Those things aren’t conducive to having true transparency. Summer: I don’t know whether some of the things we’re talking about can be resolved in a public policy process or a bill. We’re talking about stuff that is a moving target and we’re trying to force it into the static process of putting it in legislation. Want: But I do think creating incentives in order to do this is a public policy issue. Selberg: The critical issue in reform is that expanded coverage is going to cost people a lot of money. Are we saying the nation is going to have to rely on the private sector to more effectively cost-manage itself in an effort to afford it? Want: I like the idea of a public-private partnership. That means business and government will have to work together in a much less adversarial way in order to produce a better result. I don’t agree with either extreme that complete public control is the way to go, nor do I believe that the free market unchecked is the answer. There’s a proper role for each of those sectors. And they work best when they actually work together. Allen-Davis: We ought to look at statutory change as a failure to solve our problems in other ways. Gabow: What’s not being discussed is all is the administrative and regulatory costs [in health care]. I wrote an op-ed piece that no one wants to publish titled, “Is it Time for Evidence-Based Regulation?” While I agree government has to put in regulations and rules, it has to be evidence-based and should lead to simplification. DBJ: Is there anything among the current reform proposals that gives you hope that this is going to reduce your administrative burden? Gabow: No. DBJ: But this is getting sold as something that will reduce the administrative burden ... Summer: I’m not saying let’s do away with regulation. Regulation is an important strategy — and an appropriate strategy at certain times — but it’s not the end-all to all things. DBJ: Much has been said about insurance-company profits and executive compensation. Are the excesses on the provider side responsible in any way for the rising cost of health care? Want: The data very clearly says yes. The McKinsey Global Institute did a study in 2007 that showed three-quarters of the excess [in health care] comes from hospitals and physicians. I’m not saying insurance companies should be excused from being improved at this point, but a lot of it is the payment systems that drive the disorganization, fragmentation and the poor care we have. DBJ: But that’s been the discussion publicly. The President is now referring to this as “insurance reform.” How do you react when you hear that? Allen-Davis: In part, I think it’s fraud. We’ve got some of the specifics underneath it. But we’re got to understand that even in the insurance business, there are all kinds of plans out there. Does it include Medicare and Medicaid? Does it make a distinction between for-profit and not-for-profit systems? Even when you talk about reforming them, I’m not convinced that any of those reforms in and of themselves are going to actually drive down costs. It’s going to require more regulation. And also, I’m not convinced the savings from administrative costs are going to come anywhere close to [cover] what’s going to be needed to cover every single person. Gabow: Everybody is part of this cost problem. Insurance companies happened to become a magnet for a lot of excess. That’s the interface where people feel very frustrated — where profit seems to be above the good. DBJ: So are we simply reforming insurance because it’s politically plausible to do that? Want: I think that fits our political frames at this point. Doctors are good. Hospitals are good. Insurance companies are bad. So, it circles back to the question we had in the beginning: Why has coverage been the thing we’ve gotten done and delivery system not front and center? The answer is coverage actually increases the number of customers for all the entities. There are more customers once you put them in the pool. But payment reform actually takes money away from those entities, so that’s a much more difficult proposition. Summer: The other thing we’ve lost sight of is people can feel and touch their physician and their hospital, so people will react to that as very personal. Over the years, insurance has become less local, and I think we’ve come to the point where government can paint them [insurance] as being a little more evil. Selberg: I think insurance companies put together a deal to accept insurance reforms as long as they [the policymakers] put forward an individual mandate. Gabow: If you have something that’s generating 16 percent of the GDP, there’s a lot of people making a lot of money off this dysfunctional system. Something I learned very early in this business is if you try to take money out of someone’s closed fist, it is not easy. DBJ: Do any of you think that the cost-reduction mechanisms the President is talking about in the current proposals have any chance of working at all? In Grand Junction, he said the public option would keep insurance companies honest... and other providers would want to be efficient in dealing with private insurers because they wouldn’t take the reimbursement rate they’d get from the public option. I’m not an expert in this, but it seemed like he was talking anti-gravity. Want: Essentially, if you’re going to limit expenditures, one has to have a budget. I think the only thing that will bend the [cost] trend is a conscious, community sense of a limitation of resources that must be spent wisely. Until people understand there’s no more money, we don’t get to bend the cost trend because we’re too clever at finding ways around it. Summer: There are some things, and we know what needs to be done to contain costs. But right now, the payment system doesn’t drive us to do those things. Selberg: I think the public plan has done a good service already in forcing the private plans to be a bit more responsive. I’d like to see [the public option] happen. I think we need that dynamic. Gabow: I am a big believer in the public sector. We know that public entities tend to be more accountable, transparent. They’re also not paying off stockholders. And because a public plan will have a budget, you’ll do things to control costs. I think the best thing is we have the ultimate capitation: zero premiums. For those reasons, I favor a public plan, and I don’t think you’ll get real competition unless there is a public plan. Allen-Davis: I think there’s enough of a specter [around the public plan] to make us think “OK, what do we do differently?” The question is, where’s that specter for making providers figure it out? What does that specter look like? Just by talking about this thing, we’re watching the changes that need to take effect happen. Certainly, at Kaiser we agree that we need an individual mandate tied to a guaranteed issue. Gabow: I think the specter that’s out there is when the Medicare system goes broke. Allen-Davis: I’m not sure it’s a threat enough. Maybe because it’s not a clear and present danger. DBJ: How do you get the public to move away from this idea that reform means less care? Want: I’m going to say this very, very carefully: If less care is appropriate, there should be less care. But it should actually be better at meeting peoples’ needs. The linkage we have that the more we spend, the better it gets has to be disconnected because it’s absolutely untrue in the current financing scheme for health care. Allen-Davis: Well, it’s also untrue in the current quality-outcome scheme for health care. DBJ: The president says he doesn’t want anybody to come between a doctor and the care a patient receives. But somebody has to. Gabow: Right now, we’re in a fee-for-service model and as long as the doctors do more, they make more. Allen-Davis: What we haven’t given physicians is the tools to say “no” to patients without sounding cheap. Gabow: One of the things physicians have to agree to do is give standardized care — which leads to better quality at a lower cost. DBJ: Assuming a [health care reform] bill passes by the end of the year — and that’s probably pretty unrealistic — what will be the biggest piece of unfinished business out there in health care reform? Something we’ll have to tackle later on. Selberg: True, sustained management of cost so the coverage is sustainable. Gabow: We got to start somewhere. And this is a good step. Allen-Davis: I think we need to recognize there will always be a pull-tug between the incremental and the bite-the-elephant approach. The downside with the incremental approach is there will be unintended consequences. And we ought to be looking at what those are. Summer: One of my fears is we’ll pass something and it will not have the kind of change that we need. Certainly, no one in the public policy is going to re-present this issue. What are we going to do at that point? Selberg: I think the real reform will occur when each of us believes we have a patriotic duty to improve what we do because the economic viability of this country is at stake and the education system is at stake. The Panelists Dr. Jandel Allen-Davis, vice president of government and external relations for Kaiser Permanente Colorado Dr. Patricia Gabow, CEO and medical director of Denver Health Jeffrey Selberg, president and CEO of Exempla Healthcare Steven Summer, president and CEO of the Colorado Hospital Association Dr. Jay Want, president and CEO of Physician Health Partners.