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A Hospital CEO’s Perspective on the Healthcare Debate

Dave McRae, the CEO of University Health Systems of Eastern Carolina (one of my firm’s clients), recently wrote an opinion piece for The Daily Reflector in Greenville, North Carolina. This is a thoughtfully constructed piece. I have avoided blogging about healthcare reform because the issues are so complex, and frankly, I am far from being an expert in this arena. But I admire Dave’s clear, level-headed thinking regarding the healthcare debate. The text of his opinion piece appears below. It is reprinted from The Daily Reflector. If you would like to go to the original source, here’s the link:  http://www.reflector.com/opinion/dave-mcrae-health-care-debate-healthy-818558.html.

Dave McRae: Health care debate healthy

Sunday, September 06, 2009

Picture 28The health care debate seems to have encouraged everyone to express an opinion. I think that is a good thing.

Not since the creation of Medicare in the mid-1960s has health care caused such heated discussions. At that time, I was a public health student. Today, I’m chief executive officer of University Health Systems of Eastern Carolina. I’ve found this round of debate no less compelling than the one I followed as a student those many years ago.

It’s not my place to take sides in this conflict. UHS will support whichever route the public and our elected representatives take in reforming the system.

That said, there are some broad principles that should guide this process, and I would like to offer a hospital industry perspective on them.

First, whatever solution our elected representatives reach, citizens should expect broader health insurance coverage. Nearly 50 million people — one in six Americans — live without health insurance. All the stakeholders in the health care industry, including hospitals, physicians, insurers, the government and others, see the need for broader coverage and agree that we need a better way to deliver and pay for care. Whether that happens through the existing employer-based insurance system or some new structure, it needs to happen.

Second, we must address the structural issues that plague the nation’s health care system. Health care grew out of a cottage industry, and we are just applying measurement, best practices and quality improvement concepts that have long been standard in other fields. While health care providers, particularly UHS, have made great strides in adopting electronic medical records, there is still work to be done on integrating the latest information technology. As a whole, our industry also still struggles to make quality and transparency high priorities.

There are also legitimate criticisms of how health care providers are paid. Our current system pays providers for the amount of care they give, not how well they treat illness. Many feel the current fee-for-service system is outdated and doesn’t encourage well-coordinated care. Some argue that it overpays for the wrong services and underpays for more effective diagnostics and medication.

Government must help drive the health care system to a more appropriate payment system. Realigning incentives around outcomes and quality may force painful changes for hospitals, but it will improve the health of our citizens and our country.

Third, we must all work to better fund prevention, wellness and community-based programs. These investments are hard for governments and insurers to make. They only pay off in the long term, in falling numbers of hospital trips and, most importantly, decreased deaths from chronic disease. Heart disease, stroke, diabetes — these leading causes of death in the United States are all imminently preventable. We must do a better job of trying to prevent them.

Supporting these principles will challenge hospitals. In the short term, money to expand health care coverage may come from reductions in the amount government will pay for treatment of Medicare and Medicaid patients. Farther down the road, improvements in wellness and prevention may decrease demand for some hospital services.

Whether the government expands coverage through a public insurance program or some other mechanism, there are bound to be financial consequences for hospitals. But those consequences pale in comparison to the hardships faced daily by people who don’t have insurance or access to good care.

Sometimes, what’s best for the public is not what’s best for hospitals. We at UHS understand that we’ll have to change our expectations to serve the greater good.

But we also urge lawmakers not to cut so deeply that hospitals cannot afford to stay in business or provide the proper staff and equipment. In communities across the country, hospitals are a critical safety net — they’re major employers, and they offer emergency care, diagnostics and surgical services that just aren’t available elsewhere. We are not always the right place for every health care need, but we are always there.

UHS has proudly been that safety net for much of eastern North Carolina. We were here for you yesterday. We’re here for you today. And, regardless of the outcome of this debate, we will be here for you tomorrow.

(Dave McRae is chief executive officer of University Health Systems of Eastern Carolina.)

Post by Dan Dunlop, The Healthcare Marketer

1 comment on “A Hospital CEO’s Perspective on the Healthcare Debate

  1. Jeff Lowenkron, MD

    Mr. McRae has framed well the response to decisions made around healthcare reform. No one would argue that we would love to have coverage for everyone in the country. The question is how to pay for it. There is a belief that the money already exists within the system, but is difficult to find and redirect. Some patients will have to be given less care than they are now given to pay for others to receive care. This will alter some of the sense of entitlement of first dollar insurance coverage.

    There are two fundamental challenges to providing funding in a centralized fashion. The Federal Government can run a deficit and carry debt, while states cannot with the exception of bonds. Additionally, states cannot maintain a surplus beyond a “rainy day fund.” This difference explains why the Federal Government is talking about increasing expenditures $900 billion over 10 years while states are currently cutting programs. Tax revenues are down and pressures on all social programs are up. The other challenge is that many physicians are unhappy with the practice of medicine because of the “interruption” of the business of medicine into the practice of medicine. There is a significant shortfall in supply of primary care physicians relative to demand and this will continue to accentuate. Many have retreated to the “cottage industry” of yesteryear through boutique medicine. This retreat drags with it the patients who have the ability to pay who have the desire to maintain the relationship they have with their doctors. Many of these physicians pass on to their patients the headache of administering to the insurance portion of healthcare payment. It will be very difficult to recruit these physicians back into mainstream primary care without a significant increase in payment and decrease in administrative hassles. Attempts to centralize healthcare payment through the government will not be trusted and attempts to force physicians to accept assignment or else lose the ability to deliver care in hospitals that receive government payment will be met with a retreat to the “cottage industry of yesteryear” by more primary care physicians. It is this fundamental gamble that worries me the most. Many physicians do not seem committed to the hospitals in which they practice and many seem at odds with their patients as requests for services that are not compensated creep into visits with a huge opportunity cost.

    What is missing is a legitimate discussion around aligning incentives. If the decision is to align them around payment, the process will have pains but will ultimately allow for cost containment. Step one is to have a budget and step two is to decide how to spend that budget. There will need to be decisions made to not pay for some things we currently cover. Some decisions are easy while others will be harder. Until we get to the basic level of commitment to a budget and then acknowledgement that living within that budget will lead to competition for scarce resources, costs will go up and care will not improve despite broader coverage.

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