Health Care Round Table July 2013
The health-care industry is making sweeping changes to control costs and bring better care to North Carolinians.
What impact will the Patient Protection and Affordable Care Act have between now and next year, when it takes full effect?
Wilson: Health-care reform has been under way since March 23, 2010, when the federal Affordable Care Act became law. It has many components and fully blooms Jan. 1, 2014. But there’s another important date — Oct. 1. That’s when people without health-care insurance will have access to federal and state online exchanges, where they can calculate the federal subsidy they will get, based on their income level, and purchase coverage. We’re focused on that date, making sure the system supports the calculations, purchase decisions and enrollments during that 90-day window. One of the positives of the Affordable Care Act is that about 2 million more North Carolinians will be eligible for coverage after Jan. 1.
How can focusing on quality improve patient care and reduce costs?
Gledhill: Quality, not quantity, should be reimbursed. If you increase quality, you improve clinical outcomes and reduce costs. I see clients doing this daily. A hospital asked me to draft
a contract with a medical-equipment provider. It covered providing home monitoring for patients discharged with a certain condition. That hospital
is going to the expense — without reimbursement — of purchasing the equipment and training patients with the goal of reducing re-admissions, which cuts costs. The equipment allows patients to send clinical data, confirming their condition and that treatments, such as taking medications, are being followed. This way, changes in their conditions can be caught sooner and remedied outside the hospital.
Keene: What’s occurring is a serious and productive transformation of how medicine is practiced. It was under way in the private sector before the Affordable Care Act became law. It’s shifting health-care delivery from volume-driven compensation to value-driven compensation. That’s good because it answers the question of how do we achieve quality, cost and access simultaneously. Ten years ago, I don’t think we had a good answer. But what’s been proven in the last three to four years is that by achieving goals based on the value provided by quality and access, you achieve cost containment. Accountable-care organizations are ones that agree to be transparent and focus their efforts on population-health goals with respect to quality, cost and access. Such an organization cannot conform without the primary-care component. There are more physician-led accountable-care organizations in North Carolina than any other state.
Gold: Accountable-care organizations and their fee-for-quality incentives are changing physicians’ behavior, aligning their interests with those of patients and the business community. We’re seeing that unfold in this state. I’m not familiar with all of the accountable-care organizations, but High Point-based Cornerstone Health Care has contracted with most commercial insurers, including Blue Cross, in North Carolina. Many primary-care physicians in Hickory belong to it.
Wilson: The importance of primary care can’t be underscored enough. Blue Cross and UNC Health Care System developed Carolina Advanced Health, a primary-care, patient-centric 10,000-square-foot medical home in Chapel Hill. It has been open about 18 months and has treated more than 1,000 patients. A team of providers, led by a primary-care physician, cares for all patient needs — mental health, nutrition, chronic disease and preventive medicine. Providers are salaried and rewarded for patient outcomes. A sophisticated algorithm splits savings fairly between Blue Cross and UNC Health Care. At the end of the day, patients are healthier and happier, and professional satisfaction is off the charts. The home has drawn attention from people across the country. Blue Cross will scale and replicate it, either with UNC Health Care or a different provider.
What about health-care reform concerns businesses?
Ebert: There are 400,000 small-business owners in North Carolina, and 95% have fewer than 100 employees. They create 80% of jobs and are probably the most concerned about health-care reform. In-state and out-of-state surveys report that 71% of small-business owners think reform will make hiring more difficult, 77% believe it will make coverage more expensive, and 78% feel it will hurt their business. Reform is increasing uncertainty at a difficult time. The state is still reeling from losing 300,000 jobs during the downturn. Only 140,000 of them have returned. It has one of the highest unemployment rates in the country. Part of what we’re working on as a state and country is moving about $2.5 trillion of capital off the sidelines to spur the economy. It’s a difficult task because the cost of an employee makes companies hesitant to hire, and that slows growth. Health care is one of the most significant and least controllable of an employer’s workforce costs. There’s confusion in the marketplace, and it’s not helped by health-care reform rules changing regularly. Even folks who make a living working in insurance and health care are struggling to understand it.
Wilson: We all have to understand the Affordable Care Act’s impact on the market. It won’t address health-care costs any more than higher-education costs are addressed by Pell grants, which pay for education; they don’t raise or lower its price. It’s surprising how many people believe that the health insurance they select will be free after Jan. 1 — either no cost to them individually or covered by subsidies, which are available, for example, to a family of four with a household income of about $94,000 or less. Who will pay for that help? The money will come from taxpayers, but the Congressional Budget Office says that won’t meet forecasted needs. While we have reformed health-insurance availability, we haven’t addressed the underlying cost, the 85 to 87 cents of every dollar that Blue Cross pays providers for rendering care. Just after I started as CEO on Feb. 1, 2010, I joined my colleagues on travels across the state, listening and talking to people. Every time I visited an employer, large or small, one of the first questions they asked was where to find the best health-care providers. They also asked how much it’s going to cost. They want to contribute to the premiums of an insurance product that directs employees to high-quality, low-cost providers. If their employees want care somewhere else, they are on their own. Employers and individuals have spoken, and the market has reacted, for example, with the creation of Blue Cross’ Blue Value and Blue Select, which offers suggestions of the closest providers with the highest quality and lowest cost. There will be more of that type of interaction.
What are some of the changes being made to control health-care costs?
Keene: The volume and quality of medical and clinical expertise going into achieving efficiency has never been higher. The information technology and collaboration needed to support improvements in decision-making have never been better. That is driving the shift toward quality. Now that we understand that quality care is cheaper, we’re at the cusp of a new era in health-care delivery, a time when insurers and doctors can focus on what each knows best. Doctors and hospitals have always cared about the well-being of their patients, but now they will have the tools and culture to pursue and implement those standards into their practices.
Gledhill: Technology is driving changes in health care. The federal government has spent $13.7 billion helping providers adopt electronic health-record systems. One North Carolina health system has an off-site location where a physician and four nurses monitor its emergency rooms. The remote location eliminates distractions inherent to the emergency room, such as noise and crowds, and allows them to concentrate on each patient’s trend, discovering subtle changes that can lead to better care. Technology also makes for better-informed patients, who have easy access to more information through the Internet. Technology will give health-care decision-makers a 360-degree view of their patients, who will no longer be able to silo their providers. Many will be surprised, for example, when their doctor knows their prescription hasn’t been refilled and asks why they haven’t been taking it. All that data will lead to more evidence-based medicine and higher quality care for a lower cost.
Gold: Primary-care physicians are employers’ friends. They help control and prevent chronic disease in patients — the workforce — and navigate them through the complex system of specialists. When there’s a disincentive for employees to see us, you’re separating the employee from the primary-care physician. Blue Cross’ higher premiums for smokers and high body-mass index levels, which indicate obesity, support physicians because there is a financial incentive for people to reduce unhealthy behaviors.
Wilson: The market is going to drive change faster than the provider community appreciates. There are already conversations about defined-contribution health care happening nationwide. I don’t know that anyone ever envisioned a day when employers would look at health care like they looked at pensions 20 years ago. Employers will eventually be out of
the business of managing employee benefits. A number of national companies are moving in that direction. It’s going to take just one or two big employers that want to cap their health-care costs by making a defined monthly contribution to employees, who use it to buy what they need. The end result will likely be individuals taking better care of themselves because they’re paying every dollar. It’s not a bad idea to have more informed consumers.
How will North Carolina health-care providers prepare for the additional 2 million patients insured through the Affordable Care Act?
Gold: There are many physician assistants and nurse practitioners who will do good jobs filling primary-care roles.
Keene: In 1978, the General Assembly passed laws that will allow physician assistants and nurse practitioners to help meet upcoming demand. The laws don’t list what these nonphysician practitioners can do. Instead, they outline a training relationship between them and supervising physicians. As soon as a physician assistant or nurse practitioner has been taught a procedure by a physician who feels it has been mastered, they can perform
it. The laws guarantee that each individual can practice to the full extent of experience and training. Other states don’t have that luxury. North Carolina’s current system is a good thing. Unfor-
tunately, many people don’t understand why because it’s invisible to the casual observer. There’s a debate whether or not to eliminate physician supervision and the relationship between the medical and nursing boards, replacing it with a list that limits the scope of their work. We shouldn’t do that.
What role will consolidation play in health care moving forward?
Gledhill: There’s tremendous consolidation in the industry. It’s for different reasons than in the 1990s, when it was about managed care and negotiating leverage in contracts. Today, the motives have broader appeal. One of my firm’s clients is a dialysis provider that cares for patients with kidney failure. The goal is for a patient not to progress to that stage because of the high mortality rates associated with dialysis. To improve the health of patients with chronic kidney disease, the provider collaborates with the nephrologist to offer care earlier. For example, if a patient goes to a hospital because of kidney failure, a catheter needs to be inserted. That is expensive and takes three to four days to heal before dialysis can begin. There is a less expensive procedure, but it takes longer to heal. The goal is keeping patients out of the hospital.
Keene: There are a lot of discussions about aligning incentives among health-care providers and how that affects competition. Alignment is not competition. That doesn’t mean it’s bad, but its purpose needs to be examined. It’s not OK if the goal of consolidation is preserving the bottom line. If the goal is the patient — and I’m not saying that should be the gold standard, but that’s a pretty doggone good one to start with — that’s better.
What can companies do to help improve the health-care system?
Wilson: What we are seeing with our customers and advocating for in the workplace is an emphasis on prevention and wellness. A healthier workforce is happier and more productive. Last year, for example, Blue Cross engaged in the 5-ton challenge. We used a competitive process to find 25 volunteers to serve as Weight Warriors. They shared their weight-loss journey through video, blogging and town-hall meetings. The challenge wasn’t mandatory for employees and didn’t cost millions of dollars. Between March and October, 2,200 participants lost 11,301 pounds. We made a big deal of it. It was about caring for each other, making sure lunchtime walks were taken and the salad bar was chosen over less healthy meals. But at the end of the day, it’s up to each person. Blue Cross pays approximately $11 billion in claims each year. About 20% of that — $2.4 billion — is related to unhealthy lifestyle choices.
Gold: I bet the nutrition component is much larger than that because I don’t think we appreciate the extent that diseases are nutritionally influenced. I went to medical school a long time ago, but a colleague who graduated less than 10 years ago didn’t study nutrition. Yet 95% of the diseases we see are related to nutrition. That has to change. I do a lot of nutrition counseling. My patients must swim against the current of North Carolina’s food culture to do what I tell them is right. Employers can help change the culture with what they offer at company functions. A high-fat, high-sugar meal is too much temptation for some people to handle. It can be like putting a bottle of rye in front of an alcoholic.
Keene: If you’re going to meetings, the free food is most likely not what you should eat. Resisting food temptations is a tough challenge but an important one to meet. Even small companies can develop a healthy-living culture. Our 30-person office has a workout facility and regular visits from a nutritionist.
What’s next for the health-care industry in the state?
Ebert: A healthy workforce is critical to attracting companies to North Carolina. It has a dramatic impact on the cost of health care and on the ability to compete and create jobs. The Affordable Care Act
is making everybody look at business differently. Over time, it will make the state and its residents better.
Wilson: I’m excited about the future of health care. It is fraught with challenges, many daunting. Blue Cross collaborates with providers across the state. We’re transforming health care in North Carolina like
we do so many other things. When there’s a big problem, North Carolinians come together and solve it. I sense that spirit of cooperation, collaboration and innovation in the health-care industry. It’s something I haven’t seen before in my 17 years at Blue Cross. It will be an advantage for the state. It took us a long time
to get to where we are, so don’t get discouraged because health care won’t completely change in a year. We are just beginning this journey. If we do it right and work together, we will not only transform health care in North Carolina but also lead the transformation for the country.
This article originally appeared in the July 2013 issue of Business North Carolina magazine.