Health care reform will go on regardless of federal government

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 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 ways to pay for
health care that will, ideally, squeeze out waste.

Shapurji

“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 multistate 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.

Doctors and hospitals will continue merging 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.”

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

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

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}