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Healthcare Leaders Advocate for Efficient, Affordable Healthcare Reform at ACHE of Massachusetts Conference in Westborough

Two hundred healthcare leaders across Massachusetts attended the American College of Healthcare Executives (ACHE) of Massachusetts fall conference, “The Value Imperative: Delivering Better, More Efficient, and More Affordable Care in Today’s Healthcare Environment,” on Nov. 5 at the DoubleTree Hilton in Westborough.

 

Co-sponsored by the Massachusetts Hospital Association, the event focused on the disconnected network of hospitals, diagnostic and treatment centers, physician practices, post-acute providers, payers, manufacturers, and life science companies that comprise the U.S. healthcare system. The featured speakers discussed strategies for creating value in today’s healthcare delivery system, with special focus on optimizing quality, improving the patient experience of care, and making healthcare more affordable.

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According to a report by the Council of Economic Advisors, healthcare expenditures have reached 18 percent of the country’s gross domestic product (GDP). Without significant intervention, that figure is projected to rise to 34 percent of the GDP by 2040. As a result, the demand for value and transparency by government, business, and the consumer has never been greater.

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In his roles as former administrator of the Centers for Medicare and Medicaid Services and co-founder of the Institute for Healthcare Improvement, Massachusetts gubernatorial candidate Donald Berwick, MD said that true healthcare reform depends on transforming the traditional volume-driven, fee-for-service model to coordinated treatment via accountable care organizations, or ACOs.

 

According to Berwick, this revolution of the U.S. healthcare system requires the simultaneous pursuit of thee aims: enhancing the experience of care, improving the health of populations, and reducing per capita costs of health care. One successful example, he noted, is the Southcentral Foundation’s “Nuka System of Care” created, managed, and owned by the native population in Alaska. The primary care-based, home-centric model supporting 60,000 people has resulted in a 50 percent decline in emergency department use, 53 percent fewer hospital admissions, and 90 percent customer and staff satisfaction rates.

 

While Berwick acknowledges there is “pain in transition,” he said that reducing waste, rather than slashing value-added care, is urgently required to bring U.S healthcare costs into a sustainable range for both public and private payers. No longer, he said, can the system support hospital price increases or shift ever-soaring costs to employees. Nor, he noted, can staggering waste through overtreatment, failure to coordinate care, poor care delivery, excessive administrative costs, disproportionate health care prices, fraud and abuse be tolerated.

 

“If we can all agree a bridge needs to be built, we can get there,” Berwick said. “There has never before been a better time, or a more important role, for healthcare professionals to lead the reform and improvement of American healthcare as a system.”

 

Mike Irwin, managing director of healthcare investment banking at Citi, agreed that healthcare reform will succeed when there is true value for the patient.

 

In fact, he noted that there is growing evidence of several future success factors: scale and integration; market essentiality; leading quality and patient safety; aligned physicians; sophisticated IT with high adoption rates; highly efficient cost structures; population health focus; new payment model competencies; reasonable capital access; and progressive governance and leadership.

 

In addition to the “value imperative,” Irwin said that a high level of healthcare integration leads to improved performance and broadened geographic reach. Contributing to a more balanced operating margin is managing cost in terms of supplies, expenses, and salaries, and openness to non-traditional partnerships (i.e., affiliations between for-profit and non-profit organizations providing expertise and added capital) in response to environmental factors.

 

“It’s clear there are a lot of things that healthcare organizations have to do to position themselves to thrive in the new paradigm,” Irwin said, noting that managed care companies can become “your biggest competitor or your best partner.”

 

“While capital needs continue to evolve,” he added, “access to capital will be available for a long time to help you build the new bridge.”

 

Ken Kaufman, chair of Kaufman, Hall & Associates, Inc., said the election of President Barack Obama and the subsequent passage of the 2010 federal Affordable Care Act gave the healthcare industry “permission” to change – and now change and disruption are felt from every direction.

 

According to Kaufman, the business model shift from fee-for-service to fee-for-value is driving remarkable contextual change in both operations and strategy. One result is the entry and aggressive expansion of a-typical competitors, such as clinics within neighborhood Walgreens stores that provide routine care and tests in an efficient, convenient, and affordable manner. Other big box stores, including Costco Wholesale and Target, post outpatient clinic and pharmacy prices online to aid customers in comparing costs.

 

In addition, the persistent effort by employers to transform their health plans from defined benefit to defined contribution plans appears to be driving dramatic changes in both price and utilization. From 2007 to  2012, the percentage of insured employees with high deductible insurance plans increased from 5 percent to 19 percent.

 

With so much competition for the remaining state budget after 20 percent is paid annually to Medicaid, Kaufman noted that the current healthcare model runs against government interest. In addition, the entrenched success of hospitals and physicians under the traditional fee-for-service model blocks the creativity that has led to retail stores’ emergence as substantial players in the healthcare industry.

 

“It’s natural to be reluctant to be first movers, but we may end up not being movers at all,” he said. “Now is the time for all of us to cooperatively get together and move forward.”

 

The conference also featured a panel discussion moderated by WBUR reporter Martha Bebinger. Joining Irwin and Kaufman on the panel were Mairead Hickey, executive vice president and chief operating officer of Brigham and Women’s Health Care; John Polanowicz, secretary of the Massachusetts Executive Office of Health and Human Services; and Michael Tarnoff, MD, corporate chief medical officer of Covidien.

 

About ACHE of Massachusetts

Founded in 1968, ACHE of Massachusetts is a professional association providing executive-level managers of healthcare institutions with opportunities for professional collegiality and continuing education. ACHE of Massachusetts is an independent chapter of the American College of Healthcare Executives and is the premier association in New England for healthcare executives. In 2012, the affiliate was honored with the ACHE Chapter Merit Award in recognition of its membership growth. For more information, visit www.massache.org.
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