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If It's Broke, Fix It

Philip Betbeze, for HealthLeaders Media, March 24, 2008

We all know healthcare wastes a lot of money--contributing to our sector's gobbling of ever-bigger pieces of the gross domestic product's pie each year. The problem of the rising cost of healthcare is blasted all over the Internet, newspapers and TV seemingly every day. Long-term, of course, it can't continue this way. Lots of smart people have been saying that for years.

I hosted a HealthLeaders Media Roundtable event here in Nashville last week. Roundtable is our name for an event where our editors bring some smart people to town to talk about a specific issue that's affecting healthcare--in most cases a specific challenge to a hospital, physician practice or health plan. My colleagues and I take turns occasionally putting one of these discussions together for later publication in HealthLeaders magazine.

This time, I had a group of three senior hospital executives in to talk about outpatient strategy in healthcare, a very narrow and very hot topic as hospitals seek to broaden their income streams. It'll be published in our June issue, and we had a great informative discussion that I think our readers will learn from. But no matter what the purported topic of the conversation at events like these, in the end we always end up talking about the cost of healthcare.

This time was no exception. Hospital leaders--at least the ones we most often talk to--don't have their heads buried in the sand on this issue. They're committed to bringing better value to their patients and lowering costs when it doesn't affect patient care. But I think sometimes we editors get a sense that healthcare's problems are more solvable than they are because we're always inviting innovators and high achievers for these discussions. I often come away with the feeling that if we have these kinds of people in place at our healing institutions, why do we have a problem? They're doing the right things. They're avoiding waste at all costs, trying to eke out their 4% to 5% margin each year. They're trying to put the best business practices in place while still trying to carry out their mission to care for those without the means to pay and subsidize their many money-losing operations with the few that happen to make money.

Healthcare spending is a big problem without an easy solution, but the clarion call from all quarters that something should be done to cut costs is growing louder.

There's lots of blame to go around for the unsustainable rate of healthcare cost inflation. Some blame doctors for ordering unnecessary tests and drugs. Some blame health plans for squeezing hospitals and physicians to the breaking point and distributing those profits to their shareholders. Many blame hospitals for doing more harm than good for patients in many situations. Some blame patients who don't seem to have any limits on the amount of healthcare they consume. They're not paying for it, they reason, so why should they limit consumption? And oh yeah, they're too fat and too consumed by their bad habits.

The truth is, all of us are to blame for not getting this situation under control. But it occurred to me the other day that the top-performing leaders in healthcare who are taking risks with innovative solutions to the problem of waste in healthcare don't get a lot of reward for their often herculean efforts. In the business world, the high performers are rewarded handsomely. In healthcare, they might get a few shekels for changing behavior, but the incentives definitely lag the risk badly, and in many cases, the rewards don't begin to pay for the outlays necessary to enhance efficiency. In fact, you can still do pretty well in healthcare regardless of how efficient you are. That's changing, but the pace of that change is glacial, while the steady march to higher costs seems like a raging torrent.

Editor's Note:
Last Chance: We're nearing your last opportunity to enter HealthLeaders Media's Fifth Annual Top Leadership Teams contest. Give your leadership team an opportunity for recognition. The deadline for entries in March 27.


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.

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