Tuesday, January 29, 2008

Competiton in healthcare? Now that's an oxymoron.

A most interesting column appeared in the Tuesday, January 29, 2008 Wall Street Journal "The GOPs Prescription for Health Care", by Grace-Marie Turner. A good read and provides valuable information. Ms. Turner is the president of the Galen Institute and editor of "Empowering Health Care Consumers through Tax Reform", University of Michigan Press, 1999.

But and this is a big but, the premise of empowering consumers is that competition in the marketplace will fix the healthcare ills of the US faces some serious questions. On the face of it potentially true. In most markets competition drives down cost, improves quality and diversity of choice.

Healthcare does not operate as a true free-market competitive environment. It is more complex than the private health insurance, workplace, choice debate. The fundamental problem with the healthcare landscape is that until the very basics of regulatory reform are made to impact and make it a true competitive environment, all the tax reforms, HSAs, etc., will not alter the current crisis.

Right now, tax exempt healthcare organizations through Federal and State regulation and Certificate of Need laws, are able to charge higher prices, form cartels to legally block competitors from expanding services or even entering the marketplace and collude. That does not describe a competitive environment. That sounds like a Justice Department probe for anti-competitive behavior, collusion in the marketplace to fix prices etc. We don't accept that behavior in other industries why do we accept that in healthcare?

I am sure that when the explosive growth of healthcare started motives where high, community good meant something and community leaders were trying to do the right thing at the right time. Today's world is fundamentally different that the 60s, 70s, 80s, or even the 90s. Strong bold regulatory action is needed first.

Unless fundamental restructuring of the tenets of the competitive healthcare market takes place, reform under the various proposals are not possible, unless it is universal and single payer. And heaven help us if we go there.

Healthcare market regulatory reform is something that neither party nor the candidates are addressing, except in some of the best political speak that I have seen in years.

Sunday, January 20, 2008

The more things change, the more they stay the same


With the economy nearing recession it is a safe bet all the talk about healthcare reform and national health insurance will slow down. People want jobs and economic security. That debate is beginning to overshadow everything. Politicians are like a 3 year old child's short attention span and they focus on the flavor of the day. Until someone comes up with that private government combo plan for reform, its dead in the water. Look for incremental change that tinkers around the edges but fails to address underlying systemic issue. If real change is going to come it will have to come from employers large and small. As the old saying goes....Money talks and ........, well you know the rest.

Hospital margins

We all know that hospital margins for the most part have been showing signs of improvement the last couple of years. With the growth in spending in Medicare and Medicaid, and CMS realizing its out of control faster than they even thought, reductions are in the works. That will pace more pressure on margins. Also, hospitals have done very well thank you very much, in the past few years with their investment strategies which has supported margin growth. With the current state of the financial markets, some will take a financial bath. Look for losses especially with the stand-alones going forward. Higher interest rates for bond issues as well because of the sub-prime market meltdown, lower margins etc. As layoffs become more prevalent in the general job market more uninsured will be seeking care further increasing bad debt and adding to margin compression. Oh wait, my bad, bad debt is really community benefit as they like to say.

Mergers and Acquisitions

One would predict that merger activity will increase this year and for the foreseeable future with the economy the way it is becoming. The Justice Department will be looking very closely at these transactions. I have yet to see one where healthcare costs were reduced, duplicate services eliminated and big time leverage was gained for increased reimbursement from payers. Doesn't mean that it doesn't happen, I just haven't seen it.

Error rates

Nearly 100,000 people die every year from preventable medical errors. That's like crashing a fully loaded 747-400 every 1.5 days. Now we all know its unacceptable so why do we continue to allow that that in healthcare? Some payers and the government are going to stop paying for never events. A good start in the right direction. The jury is still out on whether or not P4P programs work. Mess with the medical communities money and you will see how fast the error rate and deaths associated with it goes down. Cynical yes, but true never-the-less.

Have a good week everyone and thanks for reading. Have some news or ideas just send them to themichalejgroup@aol.com All will be treated confidently and anonymity assured.

Tuesday, January 1, 2008

Quick Hits and Other Notes

Happy New Year everyone.

Jan, 1, 2008 and another year starts anew.

Check out the poll on Certificate of Need.

Quality Ads

Been seeing a lot of hospital quality ads lately. HealthGrade ratings are out touting we are the best. How many people out there really understand that hospitals and health systems have to pay a lot of money to use the HealthGrade logo and rankings? Not many I expect. Five stars, four stars etc, kind of like choosing from a menu at a restaurant. Wish my doctor had admitting privileges at all those hospitals, then we could pick and choose where to go. Like that is going to happen. I'd rather have info about medication and surgical error rate and malpractice suit results, physician qualifications and satisfaction rates.

Hospital Ad Wars

Always fun to watch hospital dueling in the marketplace with ads. Especially in a two hospital town. Lots of ad dollars and the only ones that profit are the local papers and radio stations. The ads are silly, cover nothing, have no call to action and look the same. My doctor and I make the decision of where to go based on my insurance, what's needed and the hospital she prefers to practice at. Humm..... there I go again thinking that doctors and managed care plans are the ones driving where to go, not hospital advertising. Gee, think they might want to work on customer service and improve how they treat people?

New Hospital Opening
Illinois newest greenfield hospital was to open December, 2007. Rumor now has it that it will open on January 14, 2007, over 5 weeks late. Last one was built and opened over 25 years ago.

How are they marketing leading up to the opening? Poorly at best. It is typical of the old build it mentality and they shall come. What an opportunity passed by. I live in the community and little marketing is taking place. Arrogant and Imperial. Each time I go to work and drive past the place its as dark and quite as could be.

I know lets do a some silly billboards with no call to action or even showing where the hospital is, no radio, one direct mail piece and one newspaper ad. Yep, that will sure draw attention. Think that maybe after spending $160 million plus to build it that it would take a little more than that to raise awareness. A couple of weeks to go and a big thud in the market.

That's it for today. Happy New Year everyone