ABQ Journal: Medical Cost Analyst Says Business Has the Power but Not the Will to Force Price Trims

By Winthrop Quigley

The businesses that pay a big share of the nation's medical bills will reform health care, not the politicians and not the medical providers, a national policy analyst told members of the Greater Albuquerque Chamber of Commerce.

The major purchasers of health care, which are businesses, have the power, the tools and the motivation to change the system, said Brian R. Klepper, a Florida-based consultant and writer. What they don't seem to have, he said, is the courage to challenge the health care industry.

"Most business leaders, especially after what the Clintons went through, don't want to take on the health care industry," Klepper said. "Very few people are willing to stand up and take a position."

In light of the $350 million a year the health care industry spends lobbying Congress, don't count on Washington to offer any solutions, he added.

The position business needs to take, Klepper said, is simple: Health care costs too much and delivers too little. The solution isn't that complicated, either, Klepper said: "Impose business principles on the health care system."

'Apoplectic' about costs

Addressing last month's Chamber Regional Policy Forum, Klepper said businesses "are apoplectic" about the cost of care. "It's an astonishing amount of money and absolutely structurally unsustainable," he said. "It's impossible to make this work."

Health insurance premiums are growing more than twice as fast as business earnings, four times as fast as workers' earnings and almost five times as fast as inflation, Klepper said. If Medicare and Medicaid costs keep growing at present rates, they will consume 20 percent of the nation's gross domestic product by 2050.

Several factors drive the cost, Klepper said, describing health care as "an entire industry predicated on opportunism."

Medical providers are paid to provide more care, not appropriate care, he said. "There are lots of examples of excess, of wrong care, of inappropriateness."

Klepper said that 40 percent of the health care dollar is consumed in the industry's supply chain- drugs, medical devices and other supplies. As an item makes its way from the manufacturer through medical providers and distributors to the consumer, the cost of the item can increase 140 percent. Compare that to Dell Computer's 4 percent cost increase through its supply chain, Klepper said.

Only 14 percent of primary care physicians use electronic medical records and fewer use best-practice guidelines, he said.

Data poorly used

The industry generates mountains of data and uses them poorly, he said. The United States spends $165 billion on treatment of diabetes and its complications and yet half of the patients "don't get the basic monitoring they need," Klepper said.

Spending on medical imaging is soaring but "there are no better outcomes" as a result. "The reason is that (imaging manufacturers) General Electric, Philips and Siemens will sell to anyone," he said.

When health care is properly managed, remarkable things happen, Klepper said.

The Sisters of Mercy Health System in Springfield, Mo., eliminated 176,000 medication errors a year when it improved management of its supply chain.

Los Angeles County's health system implemented a disease management system that reduced emergency room visits by 37 percent and in-patient hospital admissions by 30 percent.

Norton Healthcare in Louisville, over the vehement objections of its medical staff, implemented a program to report quality results on every aspect of its operations. There were "enormous improvements" in the system's quality because "it is a law of nature that no one wants to look like a jerk in public."

Look at own business

Employers can begin taking control of health care by pooling the data of the care their own employees has generated. "In all this mess, data provide the best answer," Klepper said.

Mining the data shows where the costs are, which providers give good care and which providers do not.

Employers must insist providers adopt computerization and provide evidence-based care. Medical providers have to be rewarded for quality performance, Klepper said.

If businesses do not act, the entire economy is threatened, he said.

As businesses find they can't afford their health care bills, they stop buying insurance for their employees, and the revenue stream into health care is disrupted. Since health care is the largest single player in the national economy, providing one in 11 jobs in the United States, that disruption "will cascade to every other economic sector."

It is naive to expect Congress or state legislatures to fix the problem absent business pressure, he said. "We have not made a social justice policy decision nationally for 40 years," he said. Political decisions are driven by economics, he said, making health care business's problem.

ABQ Journal: Medical Cost Analyst Says Business Has the Power but Not the Will to Force Price Trims

Monday, November 12, 2007