dramatically saved the country from falling over the proverbial fiscal cliff
with a deal struck as the 2013 New Year’s ball descended in Times Square. Health
care benefited with a one-year delay in the scheduled 27 percent cuts to
Medicare physician payments. Meanwhile, HITECH stimulus funds are now flowing
freely to hospitals, many of which are sitting on huge cash reserves built with
the benefit of federal income exemptions. Obamacare remains one year away.
Healthcare finances appear rosy at the start of 2013.
fee-for-service incentives continue to promote wild spending concentrated in the
last six months of life. HITECH efficiencies in healthcare are a mirage. Neither
legislators nor technology has made a dent in the inefficient largess of
American health care. The country can simply no longer afford this system.
leaders need to conceive of some real solutions in 2013 before healthcare really
does go over the cliff. Unlimited fee-for-service payment is not viable and must
be reformed. The healthcare industry as a whole (patients, providers, and
insurers) must realize technology efficiencies that most other industries have
enjoyed for 10 to 20 years. Healthcare entities must become accountable for the
tax exemptions they receive, demonstrating return of those tax savings to
benefit taxpayers rather than sitting on huge cash reserves.
Without real healthcare
industry solutions, Medicare payment to physicians will be dramatically cut. The
federal government will stop throwing good money after bad in search of
technology efficiencies in health care. Hospitals serving large numbers of
patients without insurance will suffer the effects of $18 billion in payment
reductions under the Affordable Care Act from 2014 to 2020. Federal regulators
will vigorously seek recoveries under expanded healthcare fraud and abuse laws.
Eventually, legislators may be forced to reconsider the value of tax exemptions
in the healthcare industry.
The fiscal cliff
episode demonstrates the ultimate problem with American health care: the lack of
effective governance at all levels. The problem extends to all quarters:
Politicians break from the bitter rhetoric only long enough for the
grandstanding delay; hospital executives pad the hospital bank accounts and
their own wallets without effective oversight of their not-for-profit missions;
insurers inhibit technology efficiencies to ensure their own survival; and
patients expect limitless health care without having to pay for it.
To create effective
governance, patients, providers, insurers, and politicians need to exercise
control over health care in a fiscally responsible and ethical manner. All
parties need to participate, and in a vastly different way from how they are
Scott is a founding partner, Withrow,
McQuade & Olsen LLP, Atlanta.
Publication Date: Wednesday, January 02, 2013