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Healthcare – Time to Recognize and Confront the ‘Elephant in the Room’

Have you ever been involved with an obvious situation, either personally or professionally, that was largely ignored and going unaddressed? Perhaps a work scenario in which a manager who wields considerable organizational power was impacting the workplace culture in an extremely uncomfortable and unhealthy direction. Speaking up may cause one to lose his/her job or suffer long-term upward job mobility opportunities. Self-preservation is a natural powerful reaction when confronting a seemingly formidable opponent – we simply choose not to act at all.

The fear of speaking up is a metaphor for an ‘Elephant in the room.’

This is happening today in our healthcare delivery and payment environment. We frequently see or experience unacceptable situations that clearly require action to prevent it from happening in the future. As a reader of my blogs, you are keenly aware of the egregious nature of the medical establishment hiding their preventable medical error ‘indiscretions’ in the proverbial litterbox – covering up preventable mistakes that are not meant for public viewing. Yet, without being held accountable for their actions, the medical community will continue to repeat what should be un-repeatable.

The elephant exists in healthcare in a number of ways. Below are just a few prime examples.

Employers are Reluctant

Employers serve as the real payers of healthcare, yet oddly sit on the sidelines exhaustively complaining about the high cost of health insurance and how it adversely impacts their competitiveness in the markets they serve. Unfortunately, most employers are reluctant to bring up the inherent dysfunctional problems because hospitals and medical practices are considered to be ‘other’ large, recognizable community members that are off-limits to public correction. In fact, many business owners are board members at the local hospital, making it difficult to publicly speak up while serving in a ‘distinguished’ role. As real payers, employers can clearly climb into the driver’s seat to collectively initiate sorely-needed changes in how the healthcare establishment behaves. But to do so, they must firmly take hold of the steering wheel to begin the journey. Instead, the employers have historically farmed out this responsibility to the insurance companies.

Insurance Companies Lack Initiative

One can be equally mystified by insurance companies’ lack of initiative when it comes to medical errors. By default, these ‘third-party payers’ assume the purchasing role as an intermediary between the real payers and health providers. More often than not, employers assume that insurance companies are adequately vetting the quality-of-care their network providers are giving to their employees and family members. This is largely not happening. As a paid intermediary, insurers can play a vital role in determining whether their subscribers are receiving the best possible outcomes from the care being purchased through the insurers’ networks.

Because the medical community will not admit their playful litterbox games, an appropriate opportunity for safety-conscious insurers would be to randomly survey their members after they have been discharged from a hospital to learn about their experiences – specifically as it relates to preventable medical errors. Doing so could be a great branding opportunity for innovative, forward-thinking insurance carriers. Over time, when enough patient feedback has been collected and analyzed, insurers can then become a more engaged advocate for employers and their employees when vetting network providers. Why are insurers not performing this difficult but necessary work on behalf of their members? Great question. They should.

Medical Community Touts Economic Strength

The medical community, specifically hospitals, spend a good deal of our[1] money to help perpetuate their economic value in the communities they serve. Recently, the Iowa Hospital Association purchased airtime on at least one local television station to help educate Iowans about the “economic impact” hospitals have in Iowa, including:

  • Number of hospital workers employed in Iowa
  • Benefits hospitals provide to the communities
  • Number of additional jobs created by hospitals

Similar to a certain species of cicadas, which are insects that remain underground from 2-to-17 years before emerging to be seen and heard, the hospital community will annually reveal themselves to promote their substantial workforce and economic growth – but remain curiously silent on the indiscretions buried deep inside the litterbox. Apparently, this marketing scheme successfully elevates their status as the elephant in any room, whether it be in Iowa or some other state. This diversional tactic makes it difficult for others to honestly speak out about the associated problems the elephant causes within our communities. After all, who doesn’t want jobs? No one wants to be ridiculed as a ‘naysayer.’ Unfortunately, honesty may come at a great expense.

Joe Gardyasz of the Des Moines Business Record recently wrote an insightful piece (subscription required) about healthcare jobs in Iowa. Even though jobs in the healthcare sector have surpassed U.S. manufacturing and retail sectors for the first time in 2017, Iowa’s manufacturing sector – at least for now – still outpaces healthcare jobs in our state.

Why healthcare has become the most dominant sector in our country

Other than rising demographic trends of an older population requiring more healthcare services, the most plausible reason for more healthcare jobs is likely due to gross inefficiencies in an inordinately complex environment. As mentioned in my previous blog, “Healthcare Billing Process – The Cost of Doing Business,” non-healthcare industries might typically employ 100 full-time equivalents to collect payment for $1 billion in services, but healthcare employs 770 full-time equivalents per $1 billion of physician services. Keep in mind, healthcare is now a $3+ trillion-dollar industry – which primarily explains why healthcare jobs are soaring past other more-efficient sectors.

Put another way, if non-healthcare sectors wish to tout their economic dominance in their respective communities or state, they would need to become bloated with inefficiencies that would inflate costs, revenue and increase employment opportunities. Thankfully, largely due to powerful market forces that are embedded with price and quality transparencies, those sectors are forced to act efficiently by offering reasonably-priced products and services that are of the highest value. The healthcare industry, it seems, is oddly immune from having to play by these transparency rules. According to Warren Buffett, “Healthcare is the tapeworm of the American economy.”

Through our entrenched relationships (e.g. family, work, business and community), we are too often reticent about changing the status quo when it might possibly ‘threaten’ the comforts of doing nothing. Employers, insurance companies and the medical establishment are each capable of making the necessary changes, but at times, must be ‘nudged’ to do so. The late Stephen Hawking made a great point by writing, “I have noticed even people who claim everything is predestined, and that we can do nothing to change it, look before they cross the road.”

What IS the Elephant?

Regarding healthcare, if each of us fails to recognize, acknowledge and confront the elephant in the room, we too become complicit in this persistent, serious and increasingly costly and harmful problem. If we continue to sit on our hands and do nothing, we eventually enable the elephant to become even larger and more undisciplined.

So what is this elephant in our collective “healthcare room?” John Atkinson of Wrong Hands developed a ‘chartoon‘ about this metaphor, whether the elephant appears in healthcare or elsewhere.

Isn’t it time to begin “eating” this elephant one bite at a time? It starts by recognizing and acknowledging the elephant in the room, and then crossing that road to initiate necessary improvement.

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[1] For the services they provide, hospitals are predominantly recipients of our tax dollars, government-related grants, philanthropic donations, insurance premiums and personal out-of-pocket payments.

An Economic Dilemma – Healthcare Jobs vs. Costs

There’s a growing paradox in our healthcare world: Since the Great Recession hit in 2007, 35 percent of the nation’s job growth has come from the healthcare sector. In the year 2000, healthcare employed 1-in-12 Americans, but now employs 1-in-9, thanks partly to the 2010 Affordable Care Act (ACA). Jobs are critical for any thriving economy, but it appears the U.S. economy has become increasingly dependent on one sector that has proven to be both highly inefficient and dysfunctional.

The dilemma? Maintaining affordable healthcare is not compatible with the health service sector’s job growth strategy.

A recent article in Health Affairs, “What’s Behind 2.5 Million New Health Jobs?” reported that from 2007 through 2016, there was about a 19 percent growth in new healthcare jobs. From this, hospital jobs grew by 11 percent, nursing and residential care by 12 percent, and ambulatory care by 30 percent.

More than half of the $3.4 trillion we spend on healthcare in this country is spent on labor, much of it on those who provide care. However, a growing segment of healthcare jobs come from our increasingly complex ‘system’ that can be described as an administrative nightmare. Data-entry clerks, revenue-cycle analysts and medical billing coders provide busy backroom work to a multitude of payers concerning the procedures that were performed on behalf of patients. Put another way, for every U.S. physician, there are 16 other healthcare workers. Half of those 16 are in administrative and other nonclinical positions. This is becoming a monster of a problem.

According to a report by Organization for Economic Cooperation and Development, administrative costs in the U.S. healthcare ‘system’ are the highest in the industrialized world. While the average global administration cost average is 3 percent, it is almost three times this amount in the U.S. (8 percent).

In Iowa, the Iowa Hospital Association (IHA) serves the advocacy role for 118 hospitals. From this, IHA conducts a frequent report to validate the economic impact hospitals have within their communities, which is presumably performed to counter public concerns or scrutiny about hospital behaviors and outcomes. We are often reminded that “hospitals are the economic engines that employ thousands of Iowans” and “create an enormous economic impact across the state.” In short, hospitals are a vital ‘jobs program’ that provide an economic “multiplier” effect to our communities.

On the surface, the presence of hospital jobs is extremely beneficial to having healthy and productive communities. After all, it does provide a boost to the local economies. But portraying hospital jobs as the “economic engine” in communities may be somewhat disingenuous – if not grossly misguided.

Salaries and benefits for healthcare jobs are essentially funded by those who pay taxes, higher-health premiums and higher out-of-pocket medical costs – all of which consequently result in stunting the growth of take-home pay from other parts of the economy. Having additional healthcare jobs creates a financial void. It reduces monies Americans have available to pay for groceries, mortgages, college tuition and other discretionary items that benefit families – including philanthropic causes. Equally important, local, state and federal governments are hard pressed to find additional money to pay for other critical functions that profoundly affect our communities and the future of our country – namely, our infrastructure and STEM (Science, Technology, Engineering and Math).

The problem with linking healthcare jobs with economic growth is perplexing. If having more healthcare jobs is the end goal because it creates more wealth within our communities, then maybe we should spend more on healthcare and allow the jobs component to flourish. Unfortunately, it’s not that easy. There is an opportunity cost, or trade-off, that will rob other (more efficient) alternative resources within our economy.

Instead of measuring the economic value of healthcare by counting the number of jobs it creates, how about accurately measuring the commensurate value in the outcomes we receive from the jobs we have financed? If we don’t receive greater ‘value’ from the care provided, then why create more jobs – or keep the existing jobs? The arguments made by the healthcare sector, therefore, should not be about job creation and growth, but rather, whether we are using our limited financial resources wisely. If not, we should put those resources to better use. I’m not an economist, but this should spark a basic economic discussion.

Rising employment in healthcare does not correlate with the goal of improving our health and economic well-being. In healthcare, unlike many other sectors of our economy, there are tradeoffs with the amount we can afford. It’s no surprise that the healthcare sector’s lobbying efforts are formidable. According to the Center for Responsive Politics, a nonpartisan research organization, healthcare companies spend millions annually on lobbying efforts to influence government officials and legislators, with the American Hospital Association (AHA) ranking second highest among all healthcare lobbyists (behind the American Medical Association) and fifth highest among all lobbyists since 1998 – a total of $332 million spent by the AHA. In 2016 alone, the AHA spent over $22 million to ‘educate’ public officials. Other health-related organizations, such as Blue Cross and Blue Shield Association, the pharmaceutical industry and the AMA appeared very high on this Top Spenders List.

Despite the U.S. healthcare system being the most expensive in the world, the Commonwealth Fund reports the “U.S. underperforms relative to other countries on most dimensions of performance.” In America, we pay world-class prices for care that cannot be substantiated due largely to lax reporting requirements.

The healthcare sector’s primary purpose is not to be a jobs program, but rather, to safely deliver high-quality care to patients in our communities – and, do so responsibly, efficiently and transparently.

What are your thoughts?

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The Pursuit of Health Information – and Trust

Trusting a Partnership for Health InformationWhen making workplace health-plan decisions, what type of healthcare information is desired by Iowa employers? Do employers know about web-based resources on Iowa hospitals? Who do employers trust to be their primary source for health-related data?

We asked a series of important questions in our 2013 Study. And, you might be surprised by the results.

As you might imagine, the needs and desires can vary greatly based on employer size. Using a 6-point scale, with 6 being ‘most important,’ Iowa employers responded that ‘Cost’ information was most important to have (4.9 score), with the largest of employers (1000+ employees) scoring this a 5.7. ‘Comparing Physicians’ followed next with an overall score of 4.5, while ‘Health Status/Wellness’ and ‘Comparing Hospitals’ both scored 4.4. Healthcare ‘Use’ finished with an overall score of 4.3.

Importance of Health Information to Iowa Employers

As found in the chart below, Iowa employers are unfamiliar with existing web-based resources on Iowa hospitals. Larger employers appear to be more aware of these web resources, but only a very small number of employers reported being ‘Very Aware’ of this on-line information. In case you are curious, some of this information might be found on the Iowa Hospital Association and Iowa Healthcare Collaborative websites. As mentioned earlier, ‘cost’ information appears to be most desired, followed by comparing physicians and hospitals, presumably on quality-related metrics.

Knowledge of Web-based Data on Iowa Hospitals

When employers responded to how optimistic they are on the effectiveness of ‘Medical Homes’ and ‘Chronic Disease Management Programs,’ employers with over 1000 employees were at least twice as likely to be optimistic (43 percent) than smaller employers with under 250 employees. Overall, only 21 percent felt optimistic about these initiatives being effective to improve workforce health. Another 30 percent were not that optimistic and responded that such initiatives will make ‘No Difference.’ Half of all employers indicated that they would need to have more information on both programs before making judgments as to the effectiveness of health improvement.

Primary Care Initiatives in Iowa

So, if organizations desire critical information to make future decisions on workforce health, it begs the question who they desire to be the primary source of this information. This question elicits some very interesting results.

Overall, 27 percent of Iowa employers desire insurance companies to be the primary source of health information. Yet interestingly, the largest employers with 1000+ employees were less likely to desire insurance carriers to be the primary source – only 18 percent voiced their interest. Only three percent of organizations desired the government to be the primary source of health information, which speaks volumes about their lack of appetite for a single-payer system.

Primary Source of Health Data

The preponderance of organizations (two-thirds) voiced their desire for ‘Health Providers’ (hospitals and physicians) to be the primary source of health information to help manage their costs. More questions will need to be asked of organizations in the future as to ‘why’ they desire health providers to be the primary source, but my initial take is simply they appear to trust this source more than other sources.

The healthcare provider community may take some comfort in knowing that a majority of employers view them as a trusted resource. With this trust, however, comes the responsibility to validate and enhance it by providing a greater array of transparent information on costs and delivering higher-quality outcomes. From our 2014 Study, we know that employers expect to receive reasonable costs, consistent quality of care and safe care that is appropriately delivered to patients.

This type of feedback for insurance companies is most assuredly humbling. Yet, it should also re-awaken the pursuit of new initiatives to make inroads on gaining a trust-related partnership with their clients. The silver lining for both health providers and insurance companies reveals lots of room for improvement – and immense opportunities. But opportunities can only happen if relentlessly – and thoughtfully – pursued.

Trust is the currency of commerce. In our healthcare world, we can always use more of it.

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