IBJNews

Health care reform dead; long live reform

Back to TopCommentsE-mailPrintBookmark and Share

Massachusetts’ election of a Republican senator has put health reform legislation on life support. But for the health care industry, reform is a reality that isn’t going to die.

That’s because health care is, quite simply, too darn expensive. And health care providers and insurers realize their path to growing profits will hinge on reducing costs, not simply signing up more of the most-profitable patients.

On top of that, the massive federal Medicare program is projected to be insolvent in seven years. Its administrators already were and are using their ample regulatory powers to create new ways to pay for health care that will, ideally, squeeze out waste.

“The cost issues will still, clearly, be there,” said Dhan Shapurji, an Indianapolis-based Deloitte consultant to health insurers and hospitals. “The Medicare cuts are going to happen regardless of what happens with ObamaCare.”

Since private health insurers, such as Indianapolis-based WellPoint Inc., often follow Medicare’s lead on payment rates, hospitals and doctors have little hope that they’ll be paid more handsomely for what they do.

“They know that there’s no more money coming into the system,” said Bill Thompson, managing partner of Hall Render Killian Heath & Lyman, a multi-state health care law firm based in Indianapolis. Rather, he said, government and insurers are trying to create programs that reward health care providers for figuring out how to save money.

If the government and health insurers weren’t enough, employers weary of spiraling health care costs and employees wondering what happened to their wage increases are demanding lower-cost, higher-quality services from both health care providers and health insurers.

For health insurers, Shapurji said, that means connecting with customers more often than when they process claims or at annual enrollment time.

“They’re getting more sophisticated about trying to look at these customers or individuals in a different light,” he said. “Not just a part of a pool or group, but what are their specific needs?”

Doctors and hospitals will continue teaming up in closer and closer embraces even if national health reform falls by the wayside.

“In order to respond to what the market is demanding,” Thompson said, “they have to be more efficient, they have to coordinate care, they have to have a patient-centric model of health care delivery, all supported by health information technology.”

The costs of that information technology alone—which are also driven by new government demands for electronic health records and reporting, as well as a complex set of new diagnostic codes called ICD-10—will force health care providers to merge.

That merger mania will extend to all parts of the health care industry—insurers, doctors, hospitals and even pharmaceutical companies, said Shapruji. And those that don’t merge will be signing many more affiliations and joint ventures with their peers.

If Scott Brown’s stunning Jan. 19 victory in Massachusetts does derail health care reform, the biggest loss to the health care industry will be the 30 million newly insured customers that health reform would have created.

That means drugmakers such as Indianapolis-based Eli Lilly and Co. won’t get a new wave of people able to pay for their pricy medicines. It also means hospitals will still treat many people who cannot pay their bills and then try to make up the loss by charging higher prices to private health insurers and their customers.

“That knotty problem is going to continue to exist,” Thompson said, adding that hospitals have been developing strategies to start more neighborhood primary-care clinics to reach out to those new customers and to catch their health problems before they got out of control.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Kent's done a good job of putting together some good guests, intelligence and irreverence without the inane chatter of the other two shows. JMV is unlistenable, mostly because he doesn't do his homework and depends on non-sports stuff to keep HIM interested. Query and Shultz is a bit better, but lack of prep in their show certainly is evident. Sterling obviously workes harder than the other shows. We shall see if there is any way for a third signal with very little successful recent history to make it. I always say you have to give a show two years to grow into what it will become...

  2. Lafayette Square, Washington Square should be turned into office parks with office buildings, conversion, no access to the public at all. They should not be shopping malls and should be under tight security and used for professional offices instead of havens for crime. Their only useage is to do this or tear them down and replace them with high rise office parks with secured parking lots so that the crime in the areas is not allowed in. These are prime properties, but must be reused for other uses, professional office conversions with no loitering and no shopping makes sense, otherwise they have become hangouts long ago for gangs, groups of people who have no intent of spending money, and are only there for trouble and possibly crime, shoplifting, etc. I worked summers at SuperX Drugs in Lafayette Square in the 1970s and even then the shrinkage from shoplifting was 10-15 percent. No sense having shopping malls in these areas, they earn no revenue, attract crime, and are a blight on the city. All malls that are not of use should be repurposed or torn down by the city, condemned. One possibility would be to repourpose them as inside college campuses or as community centers, but then again, if the community is high crime, why bother.

  3. Straight No Chaser

  4. Seems the biggest use of TIF is for pet projects that improve Quality Of Life, allegedly, but they ignore other QOL issues that are of a more important and urgent nature. Keep it transparent and try not to get in ready, fire, Aim! mode. You do realize that business the Mayor said might be interested is probably going to want TIF too?

  5. Gary, I'm in complete agreement. The private entity should be required to pay IPL, and, if City parking meters are involved, the parking meter company. I was just pointing out how the poorly-structured parking meter deal affected the car share deal.

ADVERTISEMENT