Q&A: Health Reform: Hospital View
This is the fifth and last in a weekly series of interviews with health-care professionals in the area who offer differing perspectives in the debate over health-care reform.
The current health-care reform debate could prove to be "an ideal case study in public policy," according to Charles Frock, CEO of FirstHealth of the Carolinas.
Over his nearly 20 years at the helm of the Pinehurst-based health-care system, Frock has seen "a lot of growth and change." He thinks that two issues -- health insurance coverage and managing costs -- have spurred the current health-care debate.
Frock says it's difficult to opine or speculate on the proposed health-care legislation making its way through Congress until a finalized version comes about. But he does consider determining the cost of expanding coverage at the outset to be of great importance.
Frock spoke with staff writer John Krahnert. Here is an edited transcript of their interview.
Q: Could you tell our readers a little bit about your background?
A: I've been CEO at FirstHealth since 1991, and I've seen a lot of growth and change over the years. Before that, I was at a system in the Tampa Bay area. Before that, at several different hospital systems in North Carolina, after graduating from the graduate program at Duke in health administration.
Q: There are a lot of different opinions on health-care reform. What's wrong with the current system? What has spurred this debate right now?
A: I think the biggest is, back when we had the general election, the time had come when people realized that we needed to cover Americans who are not covered -- that over time, we've had 15 or 16 percent of our population uninsured. Studies have shown time after time that those who are not covered don't seek care at the most appropriate times and, as a result, there are outcomes in their health status that are avoidable and preventable had they sought care and gotten primary care.
So I think the time has come to have as many Americans as possible covered. That's why the push is for universal coverage.
That was an issue, as you may recall, back in the general election. Both candidates -- both parties, I think -- basically came out and said the time has come for the United States, as the last industrialized country not offering something close to universal coverage, to make a concerted effort to achieve that.
So that's what kind of gave rise to it.
Then, as the Obama administration has gotten into it, they've realized it's more than just expanding coverage to the 50-something-million Americans who don't have coverage, but how are we going to pay for it?
And then right behind that is, how do we deal with the cost of health care in general? It consistently goes up faster than the general rates of inflation. That's just not sustainable over time.
So it's two issues: coverage and managing the costs.
Q: What do you consider to be the key elements of true health-care reform?
A: There are a couple of things. One is approaching universal coverage as best we can. Secondly, promoting and encouraging highly efficient, high-quality care. Thirdly, aligning incentives within the health-care community so we're all trying to do the same thing. Fourth, eliminating the barriers to care and the elements that add costs, such as tort reform.
And then finally, make sure that consumers and patients have access to the kind of information they need to make the best judgments they can about where they seek care, how they evaluate different treatments that may be necessary for them to consider and things such as that.
Q: What do you think is the best way to achieve those goals?
A: We're in the Internet age, and so increasingly, information is available unlike ever before. I think what hospitals do, physicians do and health insurers do is now increasingly available, and that's a good thing so people can kind of see that.
The problem is, like with anything else, if you put up too much information and you don't know how to evaluate it, you sometimes can get misled. I just think it's important for everyone to do what they can to realize that's not a single source of information, but just one part of information in deciding what to do about care they might need.
Which goes back to another missing element of health care: We're woefully short of enough primary care physicians to provide what's now commonly called a "medical home," so that you have a physician that you go to on a regular basis that's kind of quarterbacking your health care, that calls upon specialists when needed, knows you and your family as well as they can, so that over time, they really can help you be more personally responsible for your care, but also help you when you have to make decisions.
Q: What are your impressions with the current congressional health-care reform legislation?
A: I really haven't paid attention to it. The bill is 2,000 pages long. The Senate bill, I think, is equally long. I don't know if its 2,000 or 1,000, but it's a lot of pages. I suspect it's not necessarily particularly well-written or coordinated.
After the Senate passes something -- assuming they will -- it goes to conference and then they hash out something. It then, of course, goes back to both sides to vote up or down, and that's when I think most people will start paying a lot of attention.
But it's true -- the devil is in the details. I mean, there's a lot of good intentions in all those bills, and frankly, the Republicans as well as the Democrats care about health care and the American health-care system, and believe in a lot of what's intended to be accomplished by those bills.
But you get down into the details, and that's where you find the challenges. You find the role of special interests, you find various emotional and political issues, whether it's abortion or the so-called "death panels," and this other kind of stuff.
And then there's always the technical elements about how something would be done, and who wins and who loses and all that sort of thing. So I guess until we get to a final bill, it's hard to spend much time opining on something like that.
Q: What do you think about the public option?
A: Again, I speak from a provider perspective. The best way to evaluate a public option is, what public options do we already have? Well, we have Medicare and Medicaid as the primary ones, and of course there are others. There's the VA system, there's military medicine and so on.
Speaking from a provider standpoint, Medicare basically dictates to us how we're paid and what services are covered. It's not negotiable. It's done not necessarily with what's right for patients or what's the best medicine, but it often has political and financial overtones.
A good example is the DRG system. When Medicare was passed in 1965, hospitals were paid costs. The thinking was, "You know what? We shouldn't allow hospitals to make money on this Medicare program, so we're just going to pay you costs." So what happened was, hospitals then didn't have to worry about costs. We could just do the absolute best thing we could possibly do for patients and not worry about the costs because the government paid our costs.
Well, over time what happened is, that became abused, and therefore the costs rose pretty rapidly. So back in the early 1980s, the Medicare system paying hospitals changed from costs to what is called a "DRG" -- diagnosis-related group. And that just means, "For every patient admitted, we'll pay you a fixed amount of money. So you have an incentive to keep your costs at or below that amount. If you can do it for less than that, great, you can keep the difference. If it costs you more than that, too bad. That's your problem. But we've transferred the costs to you. And, by the way, every year we'll update our payment to you by inflation plus 2 percent for innovation and technology."
And that was their promise to the hospital community. Over time, that's been changed to now less than inflation minus a number.
So, the experience of dealing with the government in reimbursement is generally not a good one from a provider perspective. It's not that it's wrong or bad, it's just that historically, politicians seem to be unable to keep commitments. So it really makes those of us on the provider side a little leery of what would happen with a public option.
That's why, if there is a public option of some sort, then it really needs to be negotiated, and something that's not mandated, and something that provides some reasonable level of reimbursement for the services provided.
I don't think the public policy or the public option is the problem per se, it's how over time it would be administered. And that's why it would be important, from my standpoint, that there's safeguards built in so that there's adequate, fair reimbursement that can be obtained for the services that we provide.
Q: What about the tort reform issue? How does that fit into this whole puzzle?
A: That's big, and it's big not because of the cost of malpractice insurance that basically provides the financial insurance for that type of activity, but what's more important is protecting patients when there is an adverse outcome that's unintended.
Secondly, making sure that we do something about the prevalence of defensive medicine -- a general tendency for practitioners to do everything they can so that they can't be accused later of "you didn't do this, or you didn't order that."
It's so ingrained that we build in a lot of extra costs associated with that, and I don't blame our physicians and I don't blame, frankly, our patients probably from expecting it, because often, physicians know they don't need to do something, the patient basically demands it or expects it, and so then it gets ordered.
So that's built in over time, there's a lot of costs associated with that. People have said it could be as little as 2 or 3 percent, some could say it's as much as 10 or 15 percent. I don't know what it is, but I think it's significant.
I think it would be better to have, as we have in bankruptcy courts, a system of specialized courts that rely on outside, objective expertise to make sure that patients who are harmed are kept as whole as they possibly can, dealing with the kinds of things that happen.
Q: What do you think isn't being talked about enough in this whole debate?
A: How it's going to play out in time. When you look at the example of Massachusetts, a relatively small state, they adopted a universal coverage program several years ago, and they cared more about getting everyone covered than how they were going to pay for it. And they, frankly, underestimated some of the costs.
But everyone ended up being for it and it was adopted. It's been successful in that it has reduced the number of uninsured, but now what's happening is all of a sudden the costs have turned out to be more than they thought they would be. And now they're struggling with how to pay for what they enacted several years prior.
One thing that hasn't been talked about, and I think it's a real threat, is what do we do if we broaden coverage, we expand services, and then later find out we can't afford it? How do we deal with that? And there are some who probably accept that as the cost of getting to a fully insured population and then sorting it out. There's others who would say, "We can anticipate this. Let's at the front end try to figure out what's the government's responsibility and what's the individual's and the employer's responsibility."
Q: If you were czar for a day and in charge of this health-care situation, how would you tackle it?
A: I would have a two-tier system. I think there ought to be a baseline of services that covers everybody who's in this country, and it's a core set of services that provides access to primary care and, to some extent, protects people from catastrophic events.
And then above that is the ability for individuals and employers to provide additional coverage for additional services that they value and benefit and want.
But at least everybody has access to emergency care, primary care and protection against catastrophic events, but then beyond that, let employers compete for employees by offering coverage that builds upon a universal plan that's available to everybody.
So, it's kind of a mixture. We have a mixture right now. Medicare is government. Medicaid is government, both federal and state. And then you've got private.
So we already have a mix, a hybrid. I would just assume, have the core set of services provided through government. There could be means testing. There could be obviously some sense of tax support for those who can't afford it. And then above that, people can buy additional coverage and services.
Q: Anything else you'd like to add?
A: I think this is going to end up being a textbook case in public policy when it's all said and done. It's an issue that affects all of us in one form or another, something that is such a big part of our life and our economy. I mean, health care is one-sixth of the U.S. economy, so it's huge.
You look at the political process, you look at the role of special interests, you look at the role of government agencies, you look at the role of the media, you look at the role of people expressing opinion and mobilizing support for their views.
I just think it's going to be an ideal case study in public policy and how we as a society tackle thorny issues that affect all of us. It's just got all the ingredients to have it all there.
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