SCHWARTZ HEALTHCARE-IT BLOG

Where Quality is Nice, But Profit a Must

"It's a healthcare company with car issues," proclaimed TIME Magazine last month in a story about Chrysler. It's no secret that among the top factors hurting the Big Three automakers (and many of the Fortune 1000) is healthcare costs. Its crippling effect has contributed to foreign leadership in many sectors of U.S. commerce. It has also led to many corporate initiatives such as the Leapfrog Group to address the issue.

Healthcare quality and cost concerns are the hot button issues for consumers, business and politicos.  But it's the cost issue that clearly is the problem and motivation.  If we're lucky, better quality will be byproduct of cost savings.

The successful healthcare IT vendors make sure their provider and payor prospects understand how their solutions reduce costs. Sure the press release headlines are about quality - who doesn't want to make patients healthier?

But in the sales environment it's all about cost reduction. Hospitals get systems to increase efficiency and revenue. Medical groups to reduce the number of FTEs and the DAR with payors. The health plans want claims systems to keep as much reimbursement from docs as possible. Companies want employees paying more premium and getting well quickly to reduce absenteeism (read costs).

Is CDH an answer? The consumer directed healthcare panacea shifts risk, responsibility and costs onto consumers who may or may not come out ahead (or healthier, for that matter.)  It is simply too soon to see categorical results on the CDH experiment; some surveys look gloomy (see my previous post on the Towers Perrin survey.)  Tools to educate consumers are few but are increasing. Hospitals and doctors need a sea-change in their perspective on revealing costs. Anemic HSA adoption will grow slowly over the decade. 

But more than any of this in making CDH work is consumers caring enough to begin with. They won't until forced to pay a larger portion of their medical and drug bills.

I certainly don't have the answers, but it seems that unfortunately government will have to step in and run a variation on national healthcare.  Sure, the doubters' lobbyists are legion. They cite pure cost as an excuse - if the issue is important enough to the right people, it can be paid for (like Iraq.)  If skeptics claim such a program can't be logistically run, look at other huge programs such as social security. My uncle gets his social security check like clockwork every month.

Posted by Shawn Whalen on June 19, 2007 at 2:59 PM
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