Chad Mulvany

A young, charismatic candidate wins the White House by campaigning for change. A central plank in his progressive platform is healthcare reform, which entails providing universal coverage, controlling cost, and leveraging technology to improve the efficiency and quality of health care. Backed by public opinion and congressional majorities, substantive healthcare reform looks achievable. Step back for a moment and ask yourself, am I describing 1993 or 2009?

We know how 1994's attempt at healthcare reform ended. President Clinton relied on Washington outsiders who ran roughshod over the minority party and entrenched special interest groups. Thanks to the "Harry and Louise" ads, public support evaporated, and with it went any attempt at meaningful reform for almost a decade. The question for 2009 is, how will President Obama's attempts at reform fair?

A Different Outcome?

With all endeavors, success depends on timing, and this year the timing looks favorable. A combination of political necessity, public opinion, and economics has breathed a new spirit of inclusion and bipartisanship into the healthcare reform landscape. First, Democrats have learned from history. Political necessity finds the staffs of aspiring congressional reformers meeting with interest groups. By including these groups in the process, Democrats hope to lay the groundwork for compromise and avoid the backlash that scuttled efforts under President Clinton.

On the public opinion front, the Kaiser Family Foundation and the Harvard School of Public Health report that 61 percent of respondents to a recent survey believe that now is the time to tackle healthcare reform, with 43 percent favoring a Massachusetts-style employer mandate (The Public's Health Care Agenda for the New President and Congress, Jan. 15, 2009, www.kff.org/kaiserpolls/posr011509pkg.cfm).

Finally, the looming specters of Medicare insolvency and ratings downgrades of U.S. treasuries within the next 10 years add urgency to the debate. With favorable tailwinds, shouldn't reformers be guaranteed relatively smooth sailing?

Unfortunately, there are plenty of clouds on the horizon. Tom Daschle's abrupt withdrawal of his nomination to lead the Department of Health and Human Services deprives President Obama of an extremely capable and qualified leader. Finding and confirming a replacement for Daschle will sap needed momentum from reform efforts.

Additionally, separate studies by the McKinsey Global Institute and Congressional Budget Office place the cost of inefficiencies in U.S. health care between $650 billion and $700 billion. Given the size of the cuts required from stakeholders, it's hard to imagine employers, insurers, providers, and taxpayers willingly taking their share of the medicine.

Further, the country's economic situation complicates attempts at universal coverage. Proposals that increase the deficit or lead to job losses will face challenges. The size and manner in which the House stimulus package was created have drawn criticism from Republicans-particularly over coverage expansions in the State Children's Health Insurance Program (SCHIP). These early cracks in the façade of bipartisanship do not bode well for the more contentious debates to come.

Moreover, public support for universal coverage is not as solid as it seems. A closer look at the Kaiser Family Foundation/Harvard School of Public Health survey finds only 18 percent of respondents support a Massachusetts style mandate if it results in some job loss. Given the headwinds facing reform, what can providers expect this year, and how should they prepare?

Looking Forward

HFMA strongly supports the efforts of the Obama administration to make headway in addressing the challenges facing the nation's healthcare system, as the administration's areas of focus are closely aligned with key tenants outlined in the Association's September 2008 whitepaper, Healthcare Payment Reform: From Principles to Action. Viewed as a spectrum, universal coverage is the most controversial area and, thus, least likely to see substantial progress; cost control poses challenges that seem somewhat more achievable; and health information technology (HIT) follows as the area with the greatest chance for success due to almost universal agreement about its potential benefits.

Universal coverage. Conventional wisdom holds that proposals related to universal health care will spend most of 2009 in debate, with movement on a bill coming in 2010. However, the stimulus package and the SCHIP reauthorization bill provide the means to expand coverage incrementally in the short term. At the time of this writing, provisions in drafts of the stimulus package could provide an estimated $87 billion in federal funding for Medicaid and $30 billion to subsidize COBRA premiums for the unemployed. The SCHIP reauthorization bill has expanded coverage for more than 4 million children in addition to the 7 million children already covered by the program.

Hospitals should prepare for this expansion of coverage  by evaluating their registration and financial counseling processes. The review should focus on a facility's ability to identify and enroll those who may be eligible for safety net programs for the first time.

Cost control. Although cost control is less controversial than universal coverage, it is still troublesome. Congress's focus in 2009 will be on reducing Medicare payments, specifically physician reimbursement, but the Centers for Medicare & Medicaid Services (CMS) has a number of ongoing projects that provide the architecture for hospital payment reform. CMS's Medical Home and Acute Care Episode demonstrations, along with its emphasis on value-based purchasing, suggest a future requiring closer integration with physicians, detailed cost accounting systems, and an even greater emphasis on quality.

Although these changes are several years off, hospitals should think about their role in a preventive care model and how to structure relationships with physicians to provide coordinated care. Hospitals also need to develop accounting systems that can accurately cost procedures to prepare for episodic capitation. And, finally, hospitals should provide their clinical staff with quality-improvement training. A recent study from the Health Research & Educational Trust finds only 45 percent of nurses and 32 percent of surveyed physicians have received formal quality-improvement training (Hospital Quality Improvement Activities: Issues in Staffing and Training, www.hret.org/hret/publications/content/qibrief.pdf).

HIT.The stimulus package will likely provide funding to advance adoption of HIT, although it comes with a cost. The legislation offers loans and grants immediately, with payments of at least $2 million available beginning in 2011 for hospitals that implement electronic records meeting federal standards. Depending on the version of the bill, by 2015 or 2016, facilities that are not making significant use of approved electronic records will face a decrease in their Medicare payment update factor. Meeting this implementation deadline while realizing quality and efficiency improvements will be challenging.

Hospital CFOs and CIOs need to monitor the regulations as they evolve to understand what is required and quickly identify performance gaps in existing systems. To realize improvements in quality and efficiency, providers should reengineer existing processes instead of bolting electronic records onto current workflows. Studying best practices from early adopters of HIT will shorten the learning curve and increase the ROI of HIT projects.

Get Ready for Change-Now

With the current challenges posed by the economy, it is tempting for hospitals to focus on pressing issues and ignore incremental reforms until they are better developed. However, those that yield to this temptation risk being ill-prepared for a future that is closer than most realize. Further, those reticent to act should recognize that preparing for these reforms is actually an important way to address today's pressing needs for efficiency and customer service.


Chad Mulvany is a technical manager in HFMA's Washington, D.C., office, and a member of HFMA's Virginia Chapter.

Publication Date: Sunday, March 01, 2009

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