Hoping for Repeal is Not a Strategy

I'm up to my neck in surveys lately here at HealthLeaders Media. It's an annual thing in some respects. By that I mean we're putting together our 2011 annual industry survey results right now, but we've also recently launched free monthly intelligence reports that are based on surveys in which hundreds of healthcare leaders give us their opinions and insight about specific challenges surrounding the operation of a successful healthcare organization.

The report I'm working on now regards reform readiness. That is, the level of readiness hospitals and health systems have regarding the new health reform law. There's lots of interesting stuff in it, but on the whole, one broad conclusion from the survey responses struck me: Some of you are pinning your hopes for your organization's long-term well-being on repeal of the Patient Protection and Affordable Care Act.

You see massive additional government regulation, reduced reimbursements, and pressure on your margin for the foreseeable future. Those are legitimate concerns regarding the law. Perhaps you're hoping the results of the election will mean the next Congress will repeal it, and you won't have to deal with it at all. The law is certainly not in any way perfect, and several of its provisions—mainly the long-term viability of the insurance mandate and the accompanying coverage increases—seem programmed to fail as they are currently written. But it is a law. They're tough to pass and tough to repeal.

I'm not saying a full repeal is impossible, but it's unlikely. Furthermore, pinning your hopes on repeal is not a strategy, it's a bet, and the odds are not in your favor.

However, the innovative and forward-thinking among you show yourselves not by ignoring the Act and hoping the regulations that will come with it go away, but by taking the broad themes of what the law is supposed to achieve (making healthcare a cheaper and higher quality service), and focusing on ways to achieve those goals. That, by contrast, is a strategy that doesn't directly depend on regulation or reimbursement rates, and it's one that will serve you and your organizations well, regardless of whether pieces and parts of the omnibus Act are rolled back or not.

On the surface, many of you feel that by improving quality, your reimbursement per unit of service will likely go down. That's one issue. On the efficiency side of the ledger, however, many studies have shown that healthcare still has a long way to go. From electronic medical records to better contracting strategies, improving your institution's efficiency is a winner regardless of the regulatory environment. It's simple math. The cheaper it is for you to provide a service, the more of the reimbursement you get to keep. What's so difficult to understand about that formula?

I realize improving efficiency isn't something the Act even indirectly addresses, except in various demonstration projects, but it's a strategy for dealing with the funding challenges the new law will bring, even if its scope is whittled down by the new Republican strength in Congress.

Impending changes in regulations in such a highly regulated industry can be a tempting excuse for inaction, even if, as a leader of your organization, you're not consciously sitting on your hands. In the larger economy, many explain the high unemployment rate as a function of the uncertainty about various reform attempts from finance to healthcare. Companies don't want to make the investment in people, the reasoning goes, if regulation makes it potentially too much of a gamble to hire people when federal regulations that in part determine an employee's cost seem so capricious and quick-changing. But the fact is that excuse just doesn't fly. The regulatory environment is always uncertain. What's always true is that improving efficiency goes straight to the bottom line.

Look at your processes. Healthcare is complex, true, but its delivery need not be as complex as it often is. Re-engineering processes takes time, and takes people offline for periods of time. But a thorough re-engineering of inefficient processes at an already successful children's hospital showed a five- to eightfold return on investment, and it probably incidentally improved patient satisfaction scores and quality. So there's always room for improvement.

I'll have more on this particular case later, but with that kind of ROI staring you in the face, there's no excuse for inaction simply because the healthcare overhaul that you all thought you were getting now seems like it might blow up under new political leadership in Congress.

Take action now. It's just good business.