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Election's over, now what for healthcare?

November 14th, 2012

by Kent Bottles

The most important 21st century challenge for healthcare leaders was not changed by President Barack Obama's reelection. We still have to decrease the per-capita cost of healthcare and increase the quality and safety of the care we deliver to our citizens.

What does the 2012 election mean for the industry?

The Affordable Care Act is law of the land
The most important result of the election is we now know with certainty that the ACA, the permanent statutory law that sets the ground rules for healthcare, will be implemented according to the timetable established by the legislation. The ACA will not be repealed. The healthcare industry, including those who originally did not support the ACA, welcomes the certainty that comes with Obama's victory.


And within the industry there were winners and losers. Immediately after the election, hospital stocks went up and health insurer stocks went down. Investors recognize the ACA disrupts the old business model for insurers that can no longer make money by trying to insure only those who will not get sick. Analysts are predicting industry consolidation will continue and mergers and acquisitions will increase because size will allow healthcare companies to make the necessary investments and cope with increasing regulation.

The action shifts from Washington, D.C., to the states
State governments suddenly become the center of the healthcare universe. By my unscientific analysis of local newspaper articles, at least twenty states already have decided to set up insurance exchanges to comply with the ACA. Many other states were waiting for the results of the presidential election, and a few have decided to let the federal government set up the exchanges for them.

Governors also have to decide if they will participate in the Medicaid expansion. Although many Republican governors oppose the expansion on ideological grounds, they will come under intense pressure from hospitals and providers that stand to be hurt financially unless the expansion occurs. It also may be hard for governors who refuse the expansion to explain to voters why their tax dollars are going to subsidize healthcare for the poor who live in other states. I agree with Ezra Klein who concludes that even the reddest states will ultimately sign on to the 9 to 1 federal-to-state Medicaid funding described in the ACA.

Liberal and conservative governors are both coming up with experimental pilot projects to achieve the goals of decreasing per-capita cost and increasing quality. Oregon Gov. John Kitzhaber (D) has received federal approval to embark on a $1.9 billion Medicaid experiment with coordinated care organizations. Kitzhaber's plan is to slow Oregon's Medicaid growth to a rate similar to the rest of the economy. If it fails, he will forfeit the $1.9 billion federal investment.

South Carolina Gov. Nikki Haley's (R) local experiment does not include participating in ACA-mandated Medicaid expansion. Instead her catalyst for payment reform depends on close collaboration with private companies such as GE, Boeing and Walmart.

The fiscal cliff means less money for hospitals and doctors
I predict Obama will get his grand bargain during the lame duck Congressional session and that the sequestration cuts will not go into effect. Elections have consequences. During a Nov. 11 Sunday talk show, influential Conservative Weekly Standard editor Bill Kristol advised the GOP to accept tax increases on the wealthiest Americans as part of a deal to raise taxes and cut federal spending in the amount of $4 trillion.

The bottom line for healthcare leaders is that we get less money for hospitals and providers no matter what happens with the fiscal cliff. The sequestration cuts are crippling to our industry. The hopefully smaller healthcare cuts in a grand bargain will still be plenty painful.

Data is king; long live data
Healthcare leaders need to absorb the lesson of Obama's innovative and cutting-edge use of data to win an election that many thought favored the Republican nominee because of the economy. We are just now after the election understanding how the Democrats used microtargeting and social networks to build a superior ground game and decisively win the election.

One cannot go to a healthcare leadership conference without hearing a presentation on big data. Representatives from the U.S. Department of Health & Human Services and the Centers for Medicare & Medicaid Services enthusiastically talk about liberating healthcare data and moving from a closed to an open national healthcare data environment. Federal initiatives like Blue Button and Section 10332 of the ACA with its public performance reports do have the potential to transform the American healthcare delivery system.

IT consultants, healthcare legacy experts and numerous start-up companies are offering their big data solutions to hospital and healthcare leaders. I would advise leaders to step back and consider what data solutions they really need to succeed in the new value business model where providers compete on metrics generated by Medicare and private insurers. One wag summarized the 2,700-page ACA with one sentence: "No outcome, no income."

The AHRQ recently summarized data requirements for healthcare transformation, and every hospital CEO and CIO needs to read its report

I am intrigued by the contrarian view that advocates using "tiny data" to succeed in our perverse healthcare marketplace. These IT thought leaders note that the healthcare data executives really need can fit on one thumb drive. Perhaps healthcare nirvana is to be found in "tiny data" not "big data."

The re-election of Obama provides some level of certainty for us to now get down to the hard work of transforming the American healthcare delivery system. There will be five more Congressional elections during the timetable of the ACA and numerous local experiments that will shape where we eventually end up. The goal is clear: decreasing the per-capita cost and increasing the quality and safety of the care we deliver to our patients.

Dr. Kent Bottles is a Senior Fellow at the Thomas Jefferson University School of Population Health.


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