Last edited 1:36 p.m., March 20, 2015
How are local health care providers dealing with the lack of Medicaid expansion? Springfield Business Journal Editorial Director Eric Olson sat down with CoxHealth CEO Steve Edwards, Jordan Valley Community Health Center President Brooks Miller and Mercy Springfield Communities President Dr. Alan Scarrow to find out. They talked politics, personal accountability and wellness in this month’s Health Care CEO Roundtable.Eric Olson: In one word, how would you characterize the health care industry today?
Steve Edwards: Opportunity.
Brooks Miller: Vivacious.
Dr. Alan Scarrow: Exponential change.
Olson: That’s two words.
Edwards: He cheated.
Brooks: You gotta choose one.
[group laughter]
Olson: One thing we can’t seem to get away from is Medicaid expansion. Missouri is a state that chose not to expand. Have you given up hope?
Miller: I think we believe there is still opportunity on down the road. I think part of the question centers around a lot of uncertainty. This summer, I think the Supreme Court takes up another issue with the Affordable Care Act and its funding going forward. I think the challenge is going to be what does that next month bring or the next day or the next week? While it’s important for people to have health care coverage and access, I think that coverage doesn’t seem to be taking any strong root here in the state of Missouri.
Olson: Talking with legislators, they don’t expect it will pass this year. For you guys, what’s the biggest downside?
Edwards: It’s $2 billion a year that should be going to our state that’s not. I think we are seeing a “have” and “have not” between those states that have expanded. We are not sending the federal government any money, we are still getting less reimbursement, it’s going to other states. We are seeing early economic indicators that states like Missouri are going to not do well. The economic development of the entire state will suffer for this. I think it’s way beyond health care.
Olson: For Cox, which is roughly 15 percent Medicaid, are you leaving money on the table?
Edwards: We are getting reduced reimbursement; to us that means about $48 million a year. That is reduced reimbursement that was thought to pay for expansion. What’s happening is reimbursement has been reduced anyway. It’s going to the federal government, and we didn’t get any expansion.
Olson: Mercy, have you looked at those?
Scarrow: We looked at it last year and it was close to that amount, but we haven’t looked this year.
Edwards: For us, the bigger challenge is the population that doesn’t have access to care that show up in the ERs. Brooks takes care of them; we take care of them. In the end, because they don’t have access, they wait. They cost everyone more money, which means it costs businesses more money. In a sense, it’s a cost-shifting hidden tax because we have to have more and more money to stay afloat.
Olson: Are your institutions at a point of having to contract employment?
Scarrow: No, we aren’t there. Last year hit us pretty hard. We had about $9.5 million in (nonoperating income), in part due to lack of Medicaid expansion. A lot of headwinds hit us at once. We had to figure out how to drop our cost of care down. We didn’t think Medicaid expansion was realistic. The political environment right now is not going to come up with an answer. We need to think about third options at this point.
Edwards: Gov. (Mike) Pence, from Indiana, who is very conservative, has taken the idea that we can take essentially a liberal program, Medicaid, and make it conservative. The federal government is willing to change right now because they need it to expand. Indiana is being very aggressive right now about modifying Medicaid in a way I think conservative people would like. I think it’s an opportunity for a conservative mindset to reform Medicaid and make it more of a conservative program.
Olson: So, it’s a political issue to you guys. Do you see any other way around it?
Edwards: It doesn’t poll well.
Miller: In Missouri specifically, we deal with a strong population of people who are anti-government. When you throw that into the mix, they don’t want to participate in that ever. That is part of the challenge, the people who would benefit the most, oftentimes want it the least.
Olson: Last month, in the insurance discussion, executives talked about negotiated pricing as something dire for them. The comment was made, “Health care is the only industry where you walk in and buy a service but have no idea until you get home how much it cost. It would be the equivalent of walking into a car lot, purchasing a car and 30 days later you get a bill. Nobody at this table would do that.”
Edwards: It’s more like your car is in a collision, and you have to get it fixed. You don’t know how much it’s going to cost to fix it right away. Then, you have the complexity of insurance coverage, which may or may not cover all that. I think that’s a better metaphor as to why it’s so complex. Add another layer that automobiles are essentially all built the same way – human beings are not, and they don’t respond the same way. What will drive that predictability is when we begin to take risks with payers. We say we will take on this population for this much money. Then we will begin to stretch our resources into the prevention side more. Right now, we are paid fee-for-service and both systems are beginning to take on more risk with things like (accountable care organizations) and bundled care projects.
Scarrow: The cost is only half the equation. The utilization is the other half. You can get a price list – that’s not terribly difficult – but what is reasonable and appropriate care? We talk about utilization being a combination of ethics and quality. The price per unit is a part of the conversation, but what you really want to get to is the per employee cost per year, the PEPY. That’s a combination of unit cost and utilization. That’s the total picture. Whether it’s $10 or $100 per unit, what you want to know is how many units am I going to use? That’s the key.
Olson: Do you think some of this stems from a lack of detailed billing? We know it costs a lot of money for equipment, but at what point is it paid for?
Scarrow: I understand what you’re saying. We need transparency in the cost, there is no question, but in the end what you’re looking at is what is the total cost on that? We can make it as transparent as you want, but how does that help you? Does that give you more value? What you don’t know as an employer is, “How much do I really need?”
Edwards: We could reduce our fees by 62 percent and still have the same bottom line if just one thing would happen – everyone pay their bills. That includes the federal government, the state government and the uninsured. The reality is, we only collect about 38 cents on the dollar. Yet, our bottom line is about 1.5 percent. There are elements of our industry, pharmaceuticals, making 20 percent.
Olson: On the risk sharing you brought up Steve, what does that look like?
Edwards: Health plans try to reduce costs, and they don’t have much control over them. They pay on a fee-for-service type environment. Doctors and hospitals are paid on fee-for-service generally, so there isn’t much incentive to reduce utilization. If we come together, we can manage utilization better. That’s happening all over the country now. Medicare contracts are putting more at risk. Three weeks ago, they announced they would like 50 percent of the contract at risk. It’s the right direction, but it means reorganizing care.
Miller: I would ask, though, where is the buy-in from the patient? We can say you need to have good health care behavior, but especially for the population I serve where the third generation uses the ER for their primary care, where do you get that buy-in? We would all agree, if you are sick and need a surgery, we wouldn’t care what it cost. You want the very best for your family at that time. That’s part of the challenge we deal with. It’s easy to talk about things when you don’t need it. There has to be a buy-in and willingness from the patient to improve. We haven’t had that.
Scarrow: That’s a good point, Brooks. There is a lot of talk right now about health care systems shifting toward wellness systems. Wellness is about your relationships with people, your self-esteem, your exercise habits, nutrition habits. There is not a lot as a health care system we are going to influence there. How far can we reach into people’s lives? Name me a corporate wellness program that has worked. It’s difficult to do. Your health care is only a portion of that. We can’t be everything to everybody.
Edwards: It goes back to the analogy. It’s not that they are buying a new car, we are giving the keys to a drunk teenager and they are coming back and the car needs fixed now. The reality is the U.S. health care system has a higher curve to get over than most of the world because we don’t take care of ourselves. We want a pill and something simple. We want the doctor to make it happen for us.
Miller: Smoking ads on TV were replaced by pharmaceutical ads. If you sit and watch television during the course of an evening, you are going to end up with three or four personal diagnoses. We are educating our population not toward wellness, but diabetes and high blood pressure and take this pill and it will all be OK.
Olson: What’s next in medical device technology?
Scarrow: The next stage really evolves around personalized treatments. If you presume for a moment we are going to continue to protect individual liberty and rights and allow you to go to the grocery store and buy as many Doritos as you want to and stuff your "goob" with them, we are going to have to deal with the consequences of that. If you drink a fifth of Jack every day, that is your right. I’m hanging my hat on the notion that wellness is not going to get us where we need to go. That may not be right. Maybe the culture shifts over time so people are healthier and feel the urgency to change, but I’m suspicious.
Edwards: The most exciting difference will be the most boring technology. The biggest difference that was ever made in health care was soap and water. The next round is in data analytics. It’s getting the population to manage their health better. Data analytics allows you to really understand what drives change. There was a health care futurist in 1990 who said there would be more computers inside people than outside. That’s almost imaginable. Driving my car, I know when my oil pressure is low, but I don’t know when my vitals are off. It won’t be long before we have that sense.
Olson: On the health insurance side, how often do you hear, “I wish we didn’t have networks.”
Scarrow: Often.
Olson: Will there be a day?
Scarrow: That is sort of the insurance companies’ call. I don’t foresee it, not in the near term.
Olson: But you’re in those discussions, right? What’s the temperature on whether that might happen or not?
Scarrow: Somewhere between freezing and cold.
Olson: What has been the greatest upside to the ACA?
Scarrow: It’s been a help financially. There are more people who have insurance today in Greene County than did before ACA. There are still 36,800 adults in Greene County with no health insurance.
Edwards: In the states that have expanded Medicaid, it’s been a great improvement. In five or 10 years, those who did will begin to see positive changes in population and wellness. Those states that haven’t, I wouldn’t say it’s an improvement. There are slightly more people with coverage, but reimbursement has gone down. From a hospital perspective, Missouri hospital bottom lines are falling. We have already had two close and I suspect more are coming. The irony is the red states are giving money to the blue states almost to spite themselves. It’s our own money going to states that have expanded.
Miller: It’s really brought health care to the forefront as an issue of conversation. It’s what has been passed and what we have to deal with and work within.
Interview excerpts by Features Editor Emily Letterman, eletterman@sbj.net.
