[Editor's Note: Scroll down for a conversation with three Lafayette health care executives.]
It goes without saying that the health care environment is going to change. Unless you are coming out of a coma for the past few years, you know that much of the debate around what the U.S. health care system should be like stems from political philosophies, individual experiences and the reality that the historical model was not suitable from a financial perspective. Physicians, insurers, investors, elected officials and other insiders have known for decades that the model would at some point in time experience a paradigm shift.
The fact that no one seems to like the current model may actually turn out to be a good thing in the long run. However, this presents a huge problem for the immediate future. The saving grace to all of this is that before physicians start practicing medicine they take the Hippocratic Oath. The one thing that should never change in our health care system is putting the patients’ needs first by the caregivers.
Philosophically, “putting the patient first” seems like a no-brainer. Unfortunately, the current and future reality of heath care makes this harder and harder to accomplish through today’s care delivery channels. The future of health care is greatly dependent on balancing financial resources, continuous improvement, a highly skilled workforce and humanitarian compassion.
For decades the primary stakeholders who are involved in the delivery of health care have been able to mask much of the complexity from the most important person in the process, the patient. Unfortunately, the future of the industry is so complex now that even those within it struggle to meet all of the requirements being imposed on them. The result of this means that the majority of patients are going to struggle to navigate the system and will have less and less direct interface with the physician who wants nothing more than help the patient.
Within Acadiana, we are fortunate to have amazing health care leadership that continues to play a significant proactive role in addressing new challenges. Health care consumers are going to experience these changes — many of them driven by financial and regulatory obligations for caregivers.
In the immediate future, consumers of health services are going to experience what seems to be mass chaos. This is because forward thinking health care providers, commercial insurers, Medicaid and Medicare are all in “survival mode.”
From a business perspective, they have to find a way to absorb millions of new patients into the system, migrate to electronic documentation systems and provide more information to government regulators. And all of this, along with the desire to improve patient outcomes, has to be done with fewer dollars per patient.
Anyone who has gone through a major change realizes that change is not easy and that it often takes a psychological and physical toll on individuals going through the process. Making matters more complex is much of the country remains divided on how and at what pace this incredible transformation should occur, resulting in non-productive political posturing by elected officials (from all political parties) who have ill-conceived perceptions of the health care system.
Caught in the middle of this is the health care consumer, who in all likelihood will at some point in time become a patient. As the industry continues to respond to new regulations and lower financial reimbursement, we will see older physicians opt to shutter their practice and retire earlier. The health care community already knows that there is a shortage of physicians and is increasingly embedding physician assistants and nurse practitioners into patient treatment plans.
This means that when a patient goes to a hospital or doctor’s office, depending on the severity of their visit, they may not have a face-to-face conversation with their physician. Many patients may be taken back and have concerns about this, however it is important to understand that these individuals have advanced training in particular medical specialties and that their treatment plan is reviewed by a physician.
Patients who get admitted into the hospital might also be surprised to learn that their primary care physician (the doctor they go to on a regular basis) will not be “hands-on” with the treatment plan. Instead, a hospitalist will be assigned to them. The hospitalist will oversee the patient’s treatment plan and coordinate with other physicians with the goal of improving coordination of care and helping to expedite when patients can be discharged from the hospital.
Obviously, shorter hospital stays should result in lower expenses for the entity responsible for paying the bill. Additionally, most patients would much rather continue their recovery process in the comfort of their own home.
Many physicians recognize that patients do not like to sit in their waiting room for hours waiting to be seen. However, due to the shortage of physicians, there is a greater demand than supply. In response to this, physician practices across the country are turning to a “premium” service offering known as concierge medicine.
In this model, patients will pay an annual or monthly fee to the physician practice to be seen within a guaranteed time and for increased time with the physician. Obviously, this model will cater to those who can afford the premium service.
With all of the changes occurring within the health care system, entrepreneurs are looking to introduce new, innovative ways to address challenges presented by these changes.
Uber, a San Francisco-based company that has completely disrupted the taxi and “black car” service in metropolitan areas, announced recently that it is going to take on health care service delivery. Uber drastically altered the taxi industry by leveraging a mobile app that connects a passenger with a car in the area at a discounted cost using a stored credit card.
Here is how it works: A person looking for a ride selects his current location in the app, all of the cars in the area see the request coming in, the first driver accepts the request and Uber uses GPS services to show the car en route to the pick-up location. Once the ride is complete, the passenger’s credit card is automatically charged.
Uber plans to leverage its technology to create a “house call” service. It will build a marketplace of licensed physicians who will do house calls. Again, this will come at a premium.
The most unfortunate component of health care is the lack of coordination in billing processes. Patients will continue to see bills from multiple physician practices and will become responsible for even more out-of-pocket expenses because insurance companies will deny services they think were unnecessary. Many times patients do not have a choice in the matter, and are left with the financial obligation.
As health care consumers continue to experience these changes, they need to recognize that it is OK to question what is happening and ask who is who throughout their treatment plan. They also need to recognize that things are changing quickly, which means the people, processes and technology in place today may not be the same next week.
IND Media continues the theme of its “Vision” project (“Imagining Lafayette’s Future Now,” IND Monthly, January 2014) in this issue of ABiz. The parish’s robust economy, enterprising new leadership in various corners and our distinctive culture are the primary factors driving both our short- and long-term success. The role of health care as an economic engine — in much the same fashion as oil and gas — cannot be overstated. But health care’s face is changing, so much so that confusion reigns throughout the industry. To help sort through the complicated maze, ABiz turned to those with a finger on the pulse of the reform measures and trends most likely to affect all of us in the coming years — the top administrators at Lafayette’s three major hospital groups: Lafayette General Health’s David Callecod, Our Lady of Lourdes’ Bud Barrow, and Regional Health System of Acadiana’s Kathy Bobbs.
1. What are the biggest challenges facing the health care community in Lafayette?
Callecod: By far the biggest challenge facing all hospitals is the compliance with the ACA and all of the new regulations and requirements that are being rolled out. It is a tremendous burden for all providers and is going to get a lot worse. At LGMC, our flagship, our biggest challenge has been capacity. We are continuing to see record volumes of all types of patients in virtually every department. We are really focused on increasing our throughput, reducing length of stay and reducing the cost of care in order to create new capacity. One of the most successful ways we have done this is through our turning over control of service lines to our physicians. We have seen dramatic improvements in cardiology with our partnership with [Cardiovascular Institute of the South], our intensivists under the leadership of Dr. Gary Guidry and our surgicalists under Dr. Phil Gachassin. All of these programs, as well as our Cancer Center of Acadiana, bring national best practices and care models to Acadiana.
Barrow: In my 30+ years in health care I believe the biggest challenge remains the same — attracting, hiring and retaining the best and brightest to work in our health care system. It has to be about creating innovative programs and a robust culture to support great people and their families. It has often been said that “strategy trumps culture,” and it does, but only because a strong and vibrant culture unlocks the power of our workforce to better treat those we have been called to serve.
2. What worries you most about the ACA?
Callecod: My biggest concern is simply the value equation it presents for enrollees. I don’t believe young people will participate until year three when the penalty becomes significant. In year one, a typical family of four, making $60k, will typically purchase a Bronze Plan with a $6,500 deductible with a $12k max out-of-pocket expense for about $1,200 per month. With the federal subsidy, it will cost them about $500 per month. With the cost of insurance and the maximum out of pocket, the family is looking at around $12-18k potential expense. At $60k, after federal and state taxes, it leaves very little money to pay the bills. Thus, even with a greater number of “insured,” bad debts at hospitals and physician practices are going to skyrocket because of all the high deductible plans that will predominantly be sold on the exchange. In Louisiana, our problem appears to be two-fold, lack of Medicaid expansion and lack of new insurance enrollees. As of today, a meager 17k people have enrolled in Louisiana. This is far less than the number of people who have had policies canceled. We are going to have a much greater number of uninsured in the coming year in our state.
Barrow: The ACA has made an already too complex health care system even more complex. An overabundance of government regulation stifles innovation, creates uncertainty and may well impede access to care. Even more, I fear that the best parts of the ACA, such as the health insurance exchanges, Medicaid expansion and funding for electronic health records, will be diminished by political gamesmanship.
Bobbs: Currently, overall enrollment numbers are unknown. The ACA’s goal is to provide health care coverage for the uninsured by extending Medicaid to persons with incomes at or below 138 percent of poverty or subsidized insurance coverage for those between 138 percent - 400 percent of poverty. With respect to Louisiana, our state chose not to expand Medicaid. In January of this year, Medicaid eligibility for nondisabled Louisiana adults is limited to parents with incomes below 19 percent of poverty, or about $4,500 a year for a family of four. Adults with no dependent children remain ineligible at any income level. Therefore, without this expansion, we don’t anticipate a significant change in the uninsured population. The success of ACA is largely based on the assumption that young enrollees would offset the medical cost of the medically needy. If young people view the penalty for not enrolling to be more favorable than the cost to enroll, then the system will not have the numbers to support it. Additionally, the rules governing the ACA keep changing, and exceptions continue to be introduced, creating confusion. The introduction of ACA to the general public was met with many challenges. This included long delays at the online site and site security. This created frustration, confusion and a sense of mistrust of the process. Regaining the public’s trust for ACA and addressing privacy concerns will be needed to encourage continued enrollment.
3. What do you like most about the ACA?
Callecod: First and foremost, I am a proponent of change. The federal government, state government, employers and individuals do not have the money now or in the future to pay for the escalating costs of care. Our system is broken. Was the ACA the best solution? No. However, there are pieces of it that I believe will be very effective to change health care delivery. It is moving our focus to wellness, collaboration of all providers and management of the total cost of care. Among all providers, it is going to foster a new level of competition that will without a doubt improve outcomes for patients and lower costs to the payors. Some aspects I like are increased wellness benefits, removal of pre-existing conditions for enrollees and allowing children to stay on plans until 26 (although anecdotally I am hearing that 26 is the new 18 when it comes to children leaving their parents home now!) I am also very excited about value-based purchasing, bundled payments for disease process and accountable care delivery models.
Barrow: Health reform was long over-due, and while I certainly do not agree with all of President Obama’s approaches, I have enormous appreciation that he at least took on the challenge. The ACA aspires to increase patient access, eliminate the penalty for pre-existing health conditions, accelerate technological advances, and add market-based solutions for insurance products for individuals and small companies and to overall reduce the cost curve. No country can afford GDP spending of nearly 18 percent on health care. It has become a hidden tax that makes America’s costs for goods and services anti-competitive in a world-wide economy.
Bobbs: In theory, ACA is designed to provide reforms to the insurance and health care industries to allow for control in rising health care costs and to provide affordable health insurance to all Americans. ACA is supposed to allow for new benefits, patient rights and protections. If ACA can truly succeed in this way, families and uninsured individuals will materially benefit. Hospitals will hopefully experience substantial opportunities under ACA to reduce overall bad debt levels under the exchanges, since most bad debt originates from uninsured patients. If high-cost patients gain coverage under the exchanges, hospitals can reduce one of the most extractable expense categories. However, it is unlikely this will be realized in the short term.
4. Please explain how technology will continue to transform health care.
Callecod: Almost every day, new technologies, in particular mobile devices, are being introduced to help patients monitor their conditions, on their own. These are also providing ways for physicians and systems to monitor patients very inexpensively to prevent readmissions, unnecessary office visits and unnecessary tests. I believe that these technologies will continue to fuel the move of care toward “lower cost of care” settings, such as the home, assisted living, ambulatory care settings and nursing homes.
Barrow: Technology will transform health care across the board. Communication and data technologies such as smartphones, home based tele-medicine solutions, electronic health records and personal health devices will allow health care delivery to be faster, cheaper and more personal. Students at the University of South Carolina Medical School are not taught how to use a stethoscope these days — instead they are schooled on compact pocket-sized ultrasound devices that capture the same findings with added precision. Innovations of the future include the intelligent surgical knife, artificial intelligence, 3D printed drugs, multi-function radiology machines, portable neuro modulation stimulators and so much more.
Bobbs: Technology is going to continue to substantially impact how health care is delivered. Electronic medical records (EMR) is a trend that started in recent years and will continue as technology progresses in the future. Electronic medical records will eventually replace the current paper-based system. Telemedicine uses technology such as the Internet (e-visits) to connect patients and physicians. Telemedicine allows a physician to interact with a patient online in real time, reducing time and expenses associated with a routine physician appointment. Telemedicine is a growing trend that will continue to progress as this technology advances. Consumers now have more access to technology-based, health-related resources than ever before. Web sites, social media and software apps now give consumers power to be an active participant in their own care.
5. For the past four years, health care costs are trending in the right direction, down; in fact, they grew more slowly in 2012 than the economy as a whole — something we had not seen in 15 years. What do you think the numbers will show for 2013 and what trend do you see moving forward?
Callecod: I believe the trend will continue for three reasons. First of all, patients are now more responsible than ever for paying their health care costs, through increased co-pays and deductibles. Therefore, patients are being much more conscious in regard to their decisions on providers and the services that they will receive. Also, nationally, the economy overall, despite the reports from Washington, is not that good. We have and will continue to have “jobless recoveries” in many areas, meaning that more and more people will receive care through Medicare and Medicaid. These payors reimburse far less than commercial insurers, thus the costs will keep going down due to fewer insured patients. Secondly, the trend is driven by payment changes in Medicare, both reduced reimbursements as well as penalties to hospitals as a result of value-based purchasing and HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) results. Also, virtually every state has cut Medicaid reimbursement and moved to a Managed Medicaid program. More care is being delivered to patients in total across our country; it is just being paid for at a much lower unit cost. Thirdly, I believe that we are nationally experiencing the “Hawthorne Effect.” Every paper, radio station, talk news, medical journal is saturated with information of the ACA and the models of care that will exist in the future. I believe all providers feel that we have been enrolled (quite involuntarily mind you) in this grand experiment. I believe that all providers are changing behavior simply because it is now being observed, evaluated and scrutinized at a level that we have never witnessed before. This is causing lower amounts of volumes, referrals and utilization across much of the country.
Barrow: The downward trend will continue as we strive to become more efficient and transparent in our delivery system. As an example, electronic medical records shared among health care providers will offer real-time access to information for better diagnosis and possible elimination of unnecessary tests. Also, I believe the evolution of useful cost and quality data made public in our industry will result in patient empowerment and a more competitive market platform. Finally, as an industry we are focusing on comprehensive and coordinated treatment of chronic health conditions, such as diabetes and congestive heart failure, which will dramatically reduce our national health care spending and improve the lives of our people.
Bobbs: There is a great deal of speculation about the reasons for the trend in slowing health care costs and spending. Most industry insiders believe this slowdown is the result of several factors, including the continuing impact of a sluggish economy. Other reasons cited include more generic drugs on the market that have helped to control costs. Additionally, there is a continuing trend in high-deductible insurance plans, which shifts more of the financial burden to the consumer. With respect to the outlook for future health growth and spending, I believe it will also be multifactorial. Without clear ACA enrollment numbers and implications, it will be difficult to predict the impact on growth. Health care providers will continue to evaluate and improve on outcomes and readmission rates not only as this will continue to be tied to reimbursement, but it is the right thing to do for the patients. Continued increased cost-shifting to the consumer may result in changes in health care consumption and ultimately impact demand. New technologies will improve on the efficiency of health care delivery, and in theory, reduce costs.
6. What area of health care service do you think will grow at the fastest rate within the next decade?
Callecod: I believe that we will see a dramatic growth in primary care, wellness and chronic disease coaching. I also feel that there will be growth in home monitoring and post-acute settings.
Barrow: There will be a significant shift to manage population health, and the need for primary care will grow exponentially. The role of the primary care provider will be the most impactful way to reduce health care costs by managing chronic disease and encouraging healthy living choices with their patients. I see strong growth in home-based solutions based upon rapid advancing wireless technologies. I believe there will be a decreased need for hospital beds and an emerging market of telemedicine and e-solutions that will add great efficiencies to both the delivery and the access of health care.
7. Do you foresee any workforce issue or labor shortage that would impact the ability for Lafayette to remain a hub for health care services and/or expand in the community?
Callecod: In Acadiana we are fortunate to have great schools that have kept our supply of doctors and nurses very manageable. I do, however, feel that we will see issues with our technologists, particularly laboratory, if we do not develop programs now. In the future, hospitals will all be extremely challenged, as there will be a huge number of baby boomers leave the workforce. So, it will not be smooth sailing for any of us in any job category in the next 10-15 years as there will be huge turnover of providers.
Barrow: In recent years, we have been less impacted by unemployment and workforce shortages than our counterparts across the country. If Lafayette retains a healthy economic outlook, relocation to this area will continue. ULL, SLCC and other Acadiana education centers will be ever more important, especially in the nursing and medical technical fields. Even as national workforce shortages in family and primary care medicine are likely, if Lafayette remains a magnet city for commerce, education and health, I like our chances to avoid the shortages many in the country will face.
8. In addition to the area being a hub for medical and health care services, are there opportunities for Lafayette to become a research hub for the health care industry? If so, what is needed to accomplish this?
Callecod: Yes, we are just at the beginning of the realization of this dream. Because of the unique qualities of our community we are a great place for research. When our community demographics are paired with our fiber capabilities, we represent a great laboratory for study. We are a community that is small enough to effectively implement a study, but also large enough that it has significance. We hope to be announcing a number of new studies in 2014, particularly from our research department of the Cancer Center of Acadiana.
Barrow: A health care research hub is a wonderful aspiration, but is a steep climb for Lafayette. Frankly, it may be possible but is not probable. Shreveport, Baton Rouge and New Orleans have a several decades-long head start in this arena with infrastructures that would take us a long time and a lot of funding to replicate. A more productive direction for Acadiana may include sustained focus on crafting a healthy community culture based upon strong school outcomes, growing private enterprises, and the accelerated adoption of new technologies and approaches to health care as they are developed. With a unified focus on the patient, our medical community could be a progressive hub to apply successful research and best practices at a rapid rate.