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CEOs: Now It's Time to Address Affordability

Philip Betbeze, for HealthLeaders Media, June 29, 2012

For its part, Geisinger has made big investments in reducing waste and duplication and increasing transparency. It spends a whopping 4.5% of its annual revenue on maintaining and improving its data warehousing capability, for example. Though a huge number, that investment pays off for institutions like Geisinger, which make up only a fraction of the healthcare provided in the US each year. Other healthcare providers, including physician practices, hospitals and health systems, have little in common with Geisinger, and Steele knows it.

"We're constantly upgrading," he says. "We couldn't do what we do in value re-engineering without having real-time feedback and this capability."

While calling the Court's decision "an important step forward in healthcare reform," speaking of high healthcare costs and the high variability between regions on health spending, Steele says "the fundamentals are the fundamentals and we're in for a long-term attempt to address this."

The decision will have an immediate effect on politics, of course, says Joe Lupica, chairman of Newpoint Healthcare Advisors LLC in Phoenix. First, he says, members of Congress "woke up Thursday to learn that they passed a massive tax, not some Commerce Clause fee," he says. "That's some strong coffee. Expect some action in response."

Particularly expect some action surrounding the Court's decision to limit federal penalties for states that choose not to expand Medicaid eligibility. Lupica says state legislatures will soon be in the crosshairs of scrutiny, because they will be faced with a real choice over whether to accept or reject additional federal funding in return for raising their Medicaid entitlement threshold to 133% of the federal poverty level. They won't, however, have to risk their entire federally appropriated Medicaid budget.

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