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07 Top Leadership Teams Annual Conference and Awards

Rick Johnson, for HealthLeaders Magazine, December 13, 2007
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The second annual Top Leadership Teams in Healthcare Conference and Awards drew more than 40 top leaders of hospitals, health plans and medical groups to Chicago to share winning strategies to crucial problems in physician relations, quality, finance, governance and leadership. In this issue of HealthLeaders magazine, we offer just a few of the highlights from the five enlightening panels.

Keynote Address

A Changing Industry

In his keynote address at the Top Leadership Teams in Healthcare conference, Michael Sachs offered a somber warning to attendees: "You're leaders of an industry that is right in the crosshairs."

Sachs, chairman of Sg2, a Chicago-based research and consulting firm for healthcare business and technology, predicts that changes in the coming years will be forced on the industry and drive down the price of healthcare services. "Inflation and wages are up 20 percent, but what your employees in your organizations are paying for healthcare is up 85 percent," Sachs said. Moreover, healthcare leaders are in the crosshairs not only because of price, but also because of the impression that healthcare quality is not held to very high standards.

Total healthcare spending as a percentage of gross domestic product is out of control, Sachs noted. Today it's about 15 percent of GDP; in 1960 it was at only about 5 percent. He said the government will become more involved in containing healthcare costs.

"The world is changing," said Sachs. "The payments for what you do . the government is going to be moving those down." In addition, he explained that managed care organizations will put increased pressure on hospitals to bring prices down because they are being pressured by employers to bring their own prices down.

"The bottom line is we've got to find a way to bring down our costs," he said.

Sachs and his team at Sg2 are also forecasting political changes that will result in a rising number of insured Americans. Such an increase will drive demand for healthcare services, but at the same time the government will force prices down. This combination will stress the financial performance of all healthcare providers. In the end, Sachs told attendees, healthcare leaders will have to find ways to bring down the cost of health service because price will come down. "We need to think differently about healthcare," he said. "You need to engage physicians to deliver care differently. The time is now."

-Rick Johnson

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