Brian Klepper
Our nation's health care system is facing an economic meltdown of unprecedented proportions. Over the past 20 years, medical inflation has averaged double the general inflation rate. In the 5 years between 1999 and 2004, premiums—where costs converge from throughout the continuum— rose 5.5 times the general inflation rate, 4.0 times workers'earnings, and 2.3 times the growth of business income.
The private sector is increasingly unwilling to pay for rising health care costs. A recent Kaiser Family Foundation report on employer health benefits showed that between 2001 and 2006, the percentage of employers offering coverage plummeted from 68% to 61%, a 10.3% drop over 5 years or a 2.1% annual erosion rate. During the same period, the percentage of employees with coverage dropped from 65% to 59%. And those companies that continue to provide health insurance have steadily reduced benefits and required employees to contribute more to their costs.
The public sector is also responding to increased health care cost, with reduced federal reimbursements for Medicare and cutbacks by state legislatures.
At some point in the near future, as fewer dollars are available for more care, the system could fail: Public hospitals could be forced to close, staffs dismissed, and suppliers not paid. Keep in mind that, at one-seventh of the dollars and oneeleventh of the jobs, health care is the largest sector in the US economy. If health care goes down, the turmoil would likely cascade to all sectors of the economy.
FRAGMENTATION
One of health care's core problems is the extraordinary disconnectedness of its players. Literally millions of health care professionals and thousands of organizations are routinely rewarded for acting in their own interest, independent of how their decisions and actions impact health care as a whole.
Health care's systemic fragmentation and generous reimbursements have created very wealthy sectors. That, in turn, has led to a broad distribution of power among special interests who have strong influence over health care policy. As a result, proposals for substantive change typically threaten the interests of groups that have the power to kill them.
AN OPAQUE SYSTEM
This economic gridlock has been significantly exacerbated by a distinctly different but related problem: Over time, we have failed to create a transparent management infrastructure that allows us to identify problems so we can attack them. Health care's lack of transparency (its opacity) has cultivated an opportunistic business environment that pervades the industry. In other words, each group is free—and has the incentive— to pursue its own interests at the expense of the system as a whole.
One example: In the past 5 years, imaging costs have grown 100%, from approximately $40 billion to $80 billion! Without protocols on the distribution or application of these devices in the marketplace, imaging manufacturers sell their machines to doctors and institutions who, in turn, often prescribe imaging independent of evidence-based protocols. Until recently, many private health plans and Medicare have been asleep at the switch. Without accountability, expensive imaging utilization has dramatically driven up costs, but with no demonstrable improvement in quality.
Self-interested behavior is, of course, an issue in oncology as well. Recent data have clearly demonstrated that cancer drugs delivered in physicians' offices create financial conflicts with quality and cost-effective practice.
One difficulty in dealing with health care's problems is looking honorable hard-working doctors squarely in the face and pointing out that the approaches in their practices are counterproductive. Individual behaviors may not seem critical, but a national orgy of self-interest ends up crushing the system.
LEADERS NEEDED
Over time, my colleagues and I have reluctantly concluded that, despite a lot of ominous handwriting on the wall, the health industry is simply still too profitable and conflicted to collaborate on the changes key to reestablishing health system stability and sustainability. Those changes would mean compromises to short-term profitability. Since the health care sector is accustomed to unrelenting growth, this remains an unacceptable option to the industry, at least until calamity is more obvious. (A hospital CEO recently told me, "Oh, we see the handwriting on the wall. We just think it's intended for somebody else.")
Reform of the system is not possible without leadership—a coalition of leaders willing to rise above special interest on behalf of the common interest, aware that unless the common interest holds, the special interest cannot be pursued, and willing to make the compromises required to save the system. That is why we at the Center for Practical Health Reform have turned to business leaders who are not associated with the health care industry and who understand that the failure of the health care system will have negative effects on us all.
We believe these leaders must possess four key qualities: (1) credibility, eg, the projection of integrity into the marketplace; (2) a platform of power, eg, wealth, corporate backing, or political position; (3) vision—a euphemism for brains—to really understand the problem, its dynamics, and its solutions; and (4) courage, the rarest quality, a willingness to rise above personal interest on behalf of all Americans.
Another part of the solution is the implementation of fully integrated health information technologies (HIT). Unless everyone is on a compatible HIT platform, we cannot identify problems and opportunities. This system will be costly —$200 to $250 billion—but this is a longrange investment and represents only about 10% of the total annual US health care expenditure. This would be a sensible investment. We had a similar large funding program in the first half of the 20th century, the Hill–Burton act, and used that funding to build most of America's hospitals.
FIX EXISTING SYSTEM
We should focus on fixing the current system rather than trying to create the "ideal" system. In the current political environment, idealistic reforms, no matter how well reasoned and well intentioned, will almost certainly meet tremendous resistance from the powerful groups that control Congress. As a result, we've focused our effort on saving and improving the elements of the existing mechanisms that can be impacted without much trauma. At its core, the US approach to health care is approximately right and worth saving. But saving it will require the courage to make fundamental change.
The Center for Practical Health Reform is a nonpartisan, not-for-profit platform for change. The original idea was that the range of health care stakeholders could find consensus on a minimal set of structural change principles, if they understood that the alternative to change is disaster. In short, health care will simply price itself out of the market for a large percentage of Americans.
When we realized that health care interests were not yet prepared to commit to meaningful change, we adjusted our strategy. The Center is now focused on working with regional and national nonhealth- care business leaders. We believe this group can galvanize the larger business community and bring pressure on the industry and Congress for the changes that are essential to re-stabilize America's health care system.
Wednesday, November 1, 2006
