As companies increasingly shut down because they can't get financing, some are abruptly eliminating insurance and leaving laid-off workers with bills for medical expenses incurred before the shutdowns. The trend is exacerbating health and money problems for tens of thousands of people nationwide.
President-elect Barack Obama and his aides are determined not to repeat the mistakes the Clinton administration made 15 years ago in trying to revamp the nation's healthcare system, and that means applying some of the lessons learned. Tom Daschle, Obama's point man on the issue, maintains the efforts to bring about universal health coverage in the first two years of the Clinton presidency took too long. In a book published this year, he urged the next president to act immediately to capitalize on the good will that greets any incoming administration. His speech and recent behind-the-scenes meetings with lawmakers and consumer groups address that point.
It's official. The National Bureau of Economic Research announced this past Monday that the United States is in a recession, and has been since December 2007. Granted, this pronouncement wasn't exactly news to many Americans; it merely confirmed the downward economic spiral many of us have been observing for some time.
If you're a healthcare executive, you've probably figured out that the healthcare industry isn't recession-proof, either. In fact, CEOs from some of the nation's largest corporations painted a pretty dire picture of what the future holds this past November at Business Week's CEO Summit in Palm Beach, FL. Until the bond markets reopen, healthcare organizations are going to have big problems, said Ralph de la Torre, CEO at Caritas Christi Health Care. "We live and die on the tax-free bond market, and right now we're dying." Torre predicted that "as many as 20% of hospitals could close."
There are plenty of opinions on how executives should lead their organizations through a recession. Here's a snapshot of the advice being offered from various sources.
Communicate. I know, I know. Effective communication seems to be at the heart of just about every business improvement strategy. I've never heard anyone in healthcare say, "Communicate less." But as important as a robust communication infrastructure is during calmer economic times, it's even more critical now. Your employees, physicians, trustees, and community have all been impacted by the financial crisis, and many have considerable anxiety. Left unchecked, that anxiety can prompt people to envision far worse scenarios than what is truly the case. Frequent communication from the C-suite is the best way to calm people's nerves and stop rumors from starting.
Help where you can.A former hospital president suggested that hospitals should offer financial counseling to employees and reevaluate employee assistance programs. In addition, hospitals' outreach efforts and preventive care models may need to be revamped to help members of the community—many of whom are already postponing elective surgeries, forgoing medications, and skipping preventive care appointments.
Embrace uncertainty. It seems unusual, but a tough economy actually may be one of the worst times to merely maintain the status quo—unless your organization just happens to be thriving. I realize it's difficult to formulate your strategy in a shifting healthcare market, so it might seem like a good idea to just put everything on hold. And in some cases, building that new hospital wing probably should be put on hold. But a difficult situation can also present an opportunity for innovation and creative thinking.
This blog post offered some suggestions on how to re-energize your senior leadership team. For example, hold a meeting—if you haven't already—with senior leadership to determine which healthcare organizations will fare the best in a prolonged recession and what it means competitively for your facility. Then form a plan of attack.
Take stock. Healthcare organizations should do an honest assessment of themselves. This means engaging all stakeholders in the process—including physicians. It may be uncomfortable to do a 360-degree evaluation, but it can help identify inefficiencies and areas for improvement. For instance, if diagnostic testing is being overutilized—which it probably is—task physicians with ways to reduce unnecessary testing. Likewise, is your organization gaining all of the efficiencies it can from information systems?
Be responsible. While its still important to attend conferences and seminars, executives should set an example about how they are spending the companies dime. An example of what not to do can be gleaned from the auto industry when top executives flew on private company jets to ask the government for a financial bailout.
Be prepared. According to many experts, increased healthcare consolidation seems likely. Organizations shouldn't wait until they need rescuing before looking at potential partners—research other organizations now to determine which ones may be the best fit for you and what your organization can bring to the partnership.
Think globally. Having a clear understanding of the global economy and how other industries are being impacted by the financial crisis can help healthcare leaders determine the best course of action and avoid ineffective and costly mistakes, according to an article in the McKinsey Quarterly.
Focus on the long term. It's easy for senior leaders to get so focused on putting out fires that they lose sight of the long-term plan. Healthcare organizations should already be preparing for the recovery in the midst of this financial crisis, according to this blog post. One way to do that is to solicit opinions from key business leaders in the community and engage employees.
Carrie Vaughan is leadership editor with HealthLeaders magazine. She can be reached at cvaughan@healthleadersmedia.com.
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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 visitwww.healthcaresolutionsgroup.netor e-mail David Osborn at david.osborn@vanderbilt.edu.
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With 65,000 employees and a budget of $707.7 billion, the Department of Health and Human Services accounts for nearly one-quarter of all federal spending, second only to the Defense Department. And in the Obama administration the job is taking on a daunting responsibility: shepherding healthcare reform legislation through Congress. Unlike his predecessors, Thomas A. Daschle, President-elect Barack Obama's choice for HHS secretary, will be given an expanded role to lead the administration's efforts to overhaul the U.S. health system.
Beginning in spring 2009, the University of Pennsylvania School of Medicine and its health system, known collectively as Penn Medicine, plan to launch a Web site that will contain searchable information on all outside activities of its doctors and scientists. "When all of us are up there transparently, it may make us a little more responsible," said Arthur H. Rubenstein, dean of the medical school and head of Penn Medicine. Public disclosure of the ties between its medical staff and industry would include Penn in the emerging trend in response to growing concerns about medical conflicts of interest.