Are You Ready for Healthcare Reform?

David Osborn, PhD, for HealthLeaders Media, December 5, 2008

One thing is certain about the United State's newest change in Washington: We've elected a president—and Congress—who will aggressively pursue healthcare reform at an unprecedented pace.

How U.S. hospitals can prepare for these changes is a top priority for senior leadership teams across the country. So what's the best defense? Understand the issues and prepare your key stakeholders now, before the votes are cast and laws are made.

Here's what we know: It's likely the White House and Congress will enact some reform over the next year or two. President-elect Barack Obama pledged to expand health coverage for more Americans and lower healthcare costs. His plan also includes a mandate to insure all children—a proposal likely to get a lot of attention in the coming months. There are also several Congressional proposals working their way through the system that would expand coverage to the uninsured while attempting to control costs. The only problem? The economy. Just how the government will pay for increased access to healthcare in light of the financial bailout underway is a wild card. Part of Obama's proposal includes using money from the expiration of President Bush's tax cuts for those making more than $250,000. But raising taxes on some Americans may still not be an adequate solution for funding these kinds of programs.

Here's a very real scenario that could play out at your hospital in the near future. New federal programs that increase the number of insured could mean more patients and increased volume for hospitals with less uncompensated care. At the same time, the shortage of primary-care physicians may limit access—even for the insured—so patients may continue to show up at emergency departments to receive the non-emergent care that they need. Add that to a writhing economy and rising unemployment levels, and patients may struggle to cover the portion of the costs for which they are responsible. In addition, the increased competition and cost pressures facing insurers will likely translate into lower reimbursement rates for hospitals, physicians and other providers.

Are you and your team prepared for that? If not, you should be optimizing your processes for reimbursement, aggressively collecting the portion of payment owed by patients, identifying additional ways to lower your costs, and doing everything possible to reduce bad debt levels.

Another piece of Obama's plan that could gain ground in the short-term is a sharpened focus on improving quality and reducing costs. For hospitals, this means more—lots more—transparency and more initiatives similar to the Centers for Medicare & Medicaid Services' Hospital Consumer Assessment of Healthcare Providers & Systems. Providers will be increasingly required to collect and publicly report measures on costs and quality, including data on preventable medical errors, nurse staffing ratios, hospital-acquired infections, and disparities in care and costs.

As you tackle transparency, get your team familiar with a new term: "Comparative Effectiveness." Obama and Congress are talking about establishing a center much like those in the healthcare systems of other industrialized countries. Such centers analyze and provide independent reviews of the comparative effectiveness of therapies, drugs, and procedures so that health plans, hospitals, and public health programs can "spend smarter" on healthcare.

We don't know exactly how this center would operate; however, the movement is a signal that the government wants a bigger role in determining what procedures and therapies provide value worth the cost, and therefore, should be reimbursed by public and private insurers.

Information technology in U.S. hospitals will be key to ensuring that transparency initiatives are effective. Obama's healthcare plan proposes an investment of $10 billion per year over the next five years to move the U.S. healthcare system to the broad adoption of standards-based electronic health information systems, including electronic health records. The plan also proposes to phase in requirements in order to implement health IT.

For hospitals, this equates to more training for caregivers and more costs to invest in the infrastructure.

Given these current challenges and impending reform, you need to ask yourself the following questions as you and your team prepare for what's ahead:

  • What is the impact of reform on my already challenged bottom line?
  • Are there cost savings in other areas that can free up resources for any future investments that may coincide with this reform?
  • How will upcoming reform change how physicians and nurses practice medicine and capture information? How am I preparing them for that change?
  • And, most importantly, how am I and my team staying informed and abreast of the latest healthcare reform proposals and their potential impact?

Change has never been as likely in healthcare as it is now. But it hinges on two critical elements: maintained focus on reform and the ability to pay for reform.

Even though preparing for a huge, fundamental shift to our system may not be the best use of your time, getting ready for the incremental, yet impactful, changes is important. Invest time in your physicians and nurses now to determine how they can best provide care. Measure and demonstrate the outcomes and cost-savings you're achieving, as well. Your hospital will emerge a stronger organization. And if—or when—the votes are cast in Washington, you'll be in line to spearhead the reform.

David Osborn, PhD, is the director of The Health Care Solutions Group in Nashville, TN., a healthcare think tank established by Vanderbilt Medical Center and the Nashville Health Care Council. For more information visit or e-mail David Osborn at

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