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Mr. Straus is active in many charitable and philanthropic endeavors.
Posted on: January 30, 2017
Source: NJ Biz
“We’re going to repeal it and replace it.”
We haven’t heard a politician repeat the same line about health care over and over since …“If you like the plan you have, you can keep it.”
If only health care in this country were so easy.
With the swearing in of Donald Trump as our nation’s 45th president last week, the issue of health care is now firmly on his desk.
Does he truly have the votes (or the mandate) to repeal and replace the Affordable Care Act, the signature program of his predecessor, President Barack Obama?
Does he truly have a replacement? And, if so, is it any better?
Last month, in preparation for President Trump’s first 100 days in office, NJBIZ held a health care panel
at Forsgate Country Club with six experts in their fields. Following are their thoughts:
Can the ACA just go away?
It’s a simple question with complicated answers. Here are the views of our experts:
The elephant in the room is the federal government. With the Affordable Care Act, many people focus primarily on the insurance mandate, but there are enormous and varied innovations that have been adopted and developed under the Affordable Care Act. (Accountable care organizations), (bundled payment care improvement) plans. It’s very hard for me to believe that those are going to go away. I think we need to focus on how that develops and whether that continues under the act.
New Jersey Innovation Institute
If we were thinking about cherry-picking any aspect, it’s the aspect of population health and fee-for-value. There’s no real way to manage those costs, because you need to try to move to a bundle payment or a population payment based on quality to improve the quality that’s provided to the patient as well as the cost-reduction that could be leveraged. I think that’s a bipartisan issue. I don’t think it’s going away.
My organization depends on change to innovate. What are the problems that need to be fixed and how do we fix that with people and processes. Some of that comes from federal funding and others from things that we develop or solve ourselves for the marketplace. We have a client that’s going almost entirely to a bundle payment structure for their entire health system; that’s a radical change in terms of how you think about putting everything together close to that single mindset that you were talking about in terms of one way to pay and one way to collect. So, I think we’re in good shape that way, with what’s coming from a health care perspective, but there’s still a lot of uncertainty.
You see the difficulty in what’s going on. The Congress has been talking for the past six years about repeal and replace, and now that they’ve got the ability to do that, they’re saying they’re going to repeal it, but we’ll delay it for three years and then we’ll figure out what to replace it with in the meantime.
What strikes me is the structural change in the system. I was in Washington recently and was talking to one of the senior attorneys in the IRS. And then I was talking to a physician who manages a practice. They both believe the whole point behind the Affordable Care Act was that they make the system so large and so unworkable that we have to ultimately devolve to a single-payer system. That was the long game to be played. We put this in place, it wouldn’t be perfect, it would need fixing, but it would so radically change the way health care was delivered that the end result would be some form of a single-payer system.
I think what’s important to keep in mind with all these ACA initiatives that affect the provider community, such as bundled payments and accountable care organizations, is that it seems to me that everything is based on historical outcomes and historical spend. So there comes an inflexion point, and I don’t think we’re there yet, when you reach maximum efficiency. And then the question becomes, at what point when you’ve realized as much savings as you can versus historical trends, when do you start rationing care? When does it start impacting bedside care?
We have to start asking those questions. We are the most successful society in the universe, my feeling is we should have the best health care. We want it to be the most efficient, but at some point we come to the point that we can’t save anymore or we’re going to impact clinical outcomes. I think, as it relates to the first 100 days, that should be and I think it will be an important consideration in where we are going the next five or 10 years.
Holy Name Medical Center
It’s unrealistic to think there’s going to be a repeal or a big change. From where I stand, going back to what was before the ACA is really not an option. That’s not a realistic option. The economic fundamentals over the cost of health care both in New Jersey and across the country aren’t going away. It’s gotten way too expensive. It has to change. The Affordable Care Act was the first attempt to do that. I think it will change in some way.
If you really want to save the system, competition is a big, big thing. I’m a big believer of open markets and competition. But there has to be rules and there has to be transparency. And you have to compete on the right metrics. Today, we’re competing on all the wrong metrics, we’re competing on the necessity to have a very expensive computerized system in the office. We’re competing on the accuracy of your coding as opposed to the actual delivery of care and the conversation you are having with the individual. We don’t measure that relationship. Those are the things we have to change. If we don’t change the metrics, and we keep measuring the wrong things and valuing the wrong things, we’re going to get the wrong outcomes. That’s the crux of this transition and what’s going on.
Someone in the new administration has got to step up and start to define what we’re doing moving forward, and not everybody is going to be happy. Trust me, most of my colleagues are going to be furious, because they’ve invested a lot, building these large systems. The payers will be furious. You know you have the right answer when you have the right degree of pushback from all the right sectors. And if you don’t, it’s not balanced the right way, you’ve either gone too much to the provider side, too much to the payer side or too much to the consumer side. Everybody’s got to have skin in the game and if you feel that reverberation from all three sectors, then you know you’re on the right path. We’re not there yet.
Triton Benefits & HR Solutions
One of the things we’ve seen, the president is looking to cut costs. Republicans and Democrats both agree that health spending accounts are the way to go. The whole thing needs to be fixed. Consumerism is going to be very important. Now if I know something is going to come out of my HSA, maybe I’ll think twice about going to the hospital and go to an urgent care because I want to keep my HSA as funded as possible.
(Donald Trump) is very much in favor of this. And you have both Republicans and Democrats both in favor of this. This looks like it’s the one area both areas are in favor of.
The emergence of private equity
The ACA wasn’t created with private equity in mind. In fact, far from it. But with its implementation,
more private equity money is coming into the system, trying to figure out a way to … well, let’s face it, make money.
Repeal? Replace? Our panelists seemed to feel the money people will be involved no matter what the system.
And that the health of consumers, the goal of the ACA, is not a concern.
Here’s the take of some of our panelists:
Triton Benefits & HR Solutions
Goldman Sachs just invested a half a billion dollars into a company called Magna Care; they are developing these apps, thinking about the millennial buyer. If my CPT code calls for a CAT scan for $1,200, I can look at my geo fencing and I can go a doctor that’s five minutes away where it’s $800. So you can take the savings of $400, the carrier gets half of it and the consumer gets the other half. That’s how consumerism is starting to get introduced.
There’s a lot of money on Wall Street that’s going in this direction. There’s a new buyer in town, who’s called the millennial. Let’s get as many of them into this pool as possible, because, let’s face it, it’s their premiums that pay for the older claims. Right now, there are too many loopholes in the system.
We’re now seeing private equity moving into the physician market. Private equity, which is incredibly profit-driven, is buying up multiple physician groups, even across state lines. So, now they’re looking to build up volume, looking to build up ways to build up innovation, drive cost down, deal with the bundled care. Anytime private equity moves into a market, you know there is excess cash on the table, because that’s where they’re looking to get their return, either by driving down costs or increasing yields.
They are aggregating physician groups in individual specialties as well as cross-specialties, and they are mixing in hospitals. They’re building up in a way to extract whatever excess profit there is in the system, either by reducing costs or finding ways to more efficiently spend the money that’s in the system.
Holy Name Medical Center
The opportunity today does not exist on the innovation and the cost side. There is no quality improvement, there is no cost improvement (through mergers). What there is, is leverage, to negotiate better rates in a fee-for-service world. If I can get better rates, I can get better return. If I can leverage physician groups, or hospital systems or any segment of the market, I can get better rates.
Greenwald: In the private equity world, that is efficiency.
Maron: But to the people who are seeking those services, it’s not. Here’s what is it doing: It is either inflating or artificially suspending high prices to begin with. And you should be outraged about it; it’s the thing people don’t talk about. If you want to go to value, it’s an equation that equals cost plus quality. Quality is now in its infancy, starting to become transparent. Seven hospitals received top-performing quality awards. Just seven. There’s real issue there. Where is the cost side of the equation being made public so a consumer can understand the true value proposition?
The demise of the small practice
The Affordable Care Act, at its core, was meant to give health insurance coverage — or, better put, health care
— to the millions who were uninsured or in danger of going bankrupt to pay for service.
Has it worked? We’ll let you decide. But, this point is clear: The ACA, with its endless lists of rules and regulations,
has played a part in the surge of consolidation of physician practices in the industry.
We asked our panelists if we are going to continue to see more consolidation in the industry if there are not major changes to the ACA. You may be surprised by some of the answers.
On the physician side, you are going to continue to see consolidation. A big motivation for physicians going to a larger group is to get rid of the administrative burden of dealing with insurance companies. If you talk to doctors, they talk about how many hours they deal with insurance companies and the paperwork they have to do. That is a big driver, a hidden driver of consolidation on the physician side.
So, on the physician side, you’ll see a tremendous consolidation, which feeds into the innovation, because it’s very difficult to do the innovation with small physician practices. There are large physician groups that continue to get bigger, such as Summit Medical Group and Advocare and others. The result has been deals with those groups and some of the commercial players to try to restrain costs. So, in addition to the government side, you’re seeing these experiments going on, on the commercial side as well.
It is very hard for the solo practitioner to meet the demands of investing in electronic health records, investing in disease management programs and administrative costs, etc. My view is over the next five years you’re going to see the most significant change in consolidation in that physician market.
Physicians weren’t good at setting up infrastructure to begin with, so now that they’ve gotten rid of it, to ask them to disaggregate and go back into these small two- to three-person physician practices and start that all up again by hiring staff and billing systems and doing all that isn’t possible. They’re just not going to do it. You might see sort of a sea change.
You’ve got the current generation that’s marching through the desert, but now you’ve got the new generation of doctors that might come along in 10 or 15 years that say, ‘I don’t want to be part of that big behemoth, I might hang out my own shingle, because now I’ve got technology from Wall Street or other places that can handle the back office so I don’t have to deal with that.’ So, they’ll have the innovations that will allow me to start my own practice, but I think the groups that are together now are not going to be interested in going back to where they were. Now, these things often come in waves.
You’ll see big groups for 20 years and they’ll start to retire and nobody is going to come along and buy their shares or take over their role as an employee. But you’ll have a new group of employees that will say, I want to do things my way, I want to practice the way I want to practice. I don’t mind giving out my quality reports because I think I’m terrific and I want the public to come to me because I’m good, not because I’m convenient.
One more thing
Our panelists had a lot to say. And, we promise, we’ll have more of it online.
But here’s one closing thought on the state of health care today, as in the era of the Affordable Care Act.
Let me throw in a point of optimism. How do we explain the fact that it’s harder and harder to go into medical school? There are still young people who want to go into medicine. They tend to want to work less, spend more time with their families. But they care about their patients just as much as anyone else; it’s just part of the restructuring that’s going on.
New Jersey Innovation Institute
The government’s data is so old, it’s 12 months old or 18 months old, you really can’t do a baseline on how things are going in real time. All the other companies have access to claims within 30 days, so you, as a consumer, can see some comparison in real time. Medicaid is putting the data out in large volumes, but it’s 12 or 18 months old. I think that’s another reason why people won’t innovate: The data set doesn’t give you a real time picture of today — it tells you what was happening 18 months ago.
In our business, we have Medicare Compare. Any consumer can go online and review the quality and outcome ratings of a home health care agency, a hospital, a hospice, a nursing home, etc. Recent studies have indicated that less than 1 percent of Medicare recipients actually know that these websites exist and this data exists. The American health care consumer is a very enabling provider community. I think real change in terms of expenditures and outcomes is not going to happen unless there is an active initiative and financing behind preventative and wellness.
Holy Name Medical Center
What should happen with the Affordable Care Act? There are states, most of which are on the East Coast — Florida, North Carolina, Maryland, Massachusetts — that have been doing some pretty innovative, experimental stuff. The reality is, no one really knows for sure what will work. It is very complex. I don’t minimize that. Probably one of the smarter moves would be to incentivize all 50 states to re-enter into experimental programs to see what works and what doesn’t work. New Jersey, years ago, was one of those leading states. We were the state that created the whole DRG, the diagnostic-related group concept, which took the country from cost reimbursement to prospective reimbursement.
Triton Benefits & HR Solutions
If you have good health, you get a different life insurance rate. If you have good credit versus bad credit, you get a better interest rate. Medical insurance is different. If you eat a five-course meal or go to a gym, you get the same premium. So, no one is getting rewarded today for good health. By having this whole (health savings account) concept and rewarding yourself by taking care of yourself, that monetarily, should benefit that individual.