Value Talks Podcast Episode 10: The Government’s Role in HealthcareApril 23, 2019 / ValueHealth Marketing
Hosted by Travis Tasset, the Value Talks podcast explores a range of topics that matter to people, including healthcare, leadership, and culture. In this episode, Travis and ValueHealth Vice Chairman Dan Tasset discuss the role government plays in healthcare.
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Transcript of Episode 10
Welcome to another episode of Value Talks with your host Travis Tasset.
Travis Tasset: Welcome to the show today, Dan.
Dan Tasset: Thank you Travis, thanks for putting another one together.
Travis Tasset: Let’s start for our audience first and foremost, with – before we get into the topic of the conversation for today, let’s do a little bit of a review and talk about kind of the elements, what we think the basic fundamentals are of healthcare and if we could just talk through that. Then we’ll talk about what the government’s role is in healthcare, but let’s start just building the foundation again for what are some of the major elements and trends that we think are important in healthcare today.
Dan Tasset: There really is two primary that we’ve been investing in and spending our time, efforts and money in, and that is the idea of consumerism and payment reform. And we’re really kind of copying from other industries that have made successful transitions into a transformation of their industries that causes the consumer ultimately to get a higher value for the product or service within that industry. So I’ve done podcasts before on both of those, but just as a quick reminder, consumerism is making sure that the ultimate consumer, in our case the patient, cares as much about cost in healthcare as they do about patient satisfaction, convenience and clinical outcomes. We make sure that they care about the overall value equation.
So the numerator, meaning clinical quality, plus patient satisfaction, divided by cost; so cost is the denominator in the equation. So, consumerism ultimately is, say, just like you purchase every other product or service, when you go out and you shop for a television or a piece of clothing or a car, you always look at not only what is the quality of the item or the service that you buy, how does it make you feel, and then you look at the cost. So almost every other industry competes on value to the consumer and we believe that in healthcare, that improves healthcare for everybody if we focus on improving the value delivered to the consumer. So that’s consumerism.
The second one is payment reform. The healthcare system has for a long time been locked into a fee-for-service world. “I’m a provider. I do this; you pay me for that.” If I’m going to have surgery, you pay a doctor, you pay an anesthesia provider, you pay for an implant or a medical device, you pay for the hospital. You pay for physical therapy and you pay all the different providers but this is basically the only industry that you do that in. If you purchase a car, the equivalent would be buying an engine somewhere or a body somewhere, the tires somewhere else and taking it somewhere else and have it assembled and if it breaks down a month later, the cost is on you. So there’s no guarantee or warranty.
Healthcare payment reform means you’re changing the way healthcare is paid for. Moving away from the fee-for-service into value-based care. Meaning you take – as a provider of healthcare services, you take responsibility for what you’re getting ready to do and you provide not only into a bundled type of a program but also you provide a warranty for that and again, that’s a very simple version. There’s a lot goes into that. Prospective bundled payment is just a little step along the way in the journey and there’s a whole lot that goes into that as well. I just want to remind everybody listening that those are the two major things, consumerism and payment reform, that are driving tenets of everything that we’re doing.
Travis Tasset: So consumerism, payment reform, and you’ve talked in the past also a little bit about competition and innovation, but those elements are the foundation and we have a lot of different kinds of stakeholders in the entire healthcare delivery system. You have providers, you have, you know, individual physicians, surgeons; you have health systems. You have payors, you have employers that you know, perhaps have self-funded insurance plans. So everybody has a different role in terms of how they can help that evolve, but one stakeholder or one I guess part of the system is the government, clearly. So, what is their particular role in helping the healthcare system be the best that it can be?
Dan Tasset: Good question. So in order to answer that, I want to just kind of step back into our guiding tenets. Everything that we’re doing, from an investment of capital, investment of time, is based on the two tenets of consumerism and payment reform but it all has to be working towards, as I said, improving the value delivered to the consumer. “Value” meaning not just the quality of the clinical experience and the outcomes, but also the cost. So everything. We will not invest time, money, anything that we do, if it’s not improving the value delivered to the consumer because in that case everybody wins. Now, so if you look, as you said, at all the stakeholders, government certainly being one of them and that’s what this podcast is about is the government’s role. We have federal, state, local government, right? What does that mean?
So in order for us to improve the value providers deliver and improve the value delivered to the consumer, what must the government do in order to do that? So you have to step back, I think, and you have to look at other industries. I remember my first career was in the accounting business and we were the first firm in the western half of the state to get a computer. The size of the storage, the disc, was almost two foot across and the amount of information that was held on that is a fraction of what would be held on what we hold in our palm of our hand today, called a phone. Yet that device that we had a long, long time ago would cost almost a hundred thousand dollars, just for a bare, base shell. A hundred times more storage today in the palm of your hand costs less than $1,000; that’s improving the value delivered to the consumer. That’s a clear example of doing that.
So in healthcare, how did that happen? If, first of all in the industry, in the telecommunications industry, you can go on and on and on; how did that happen? And it happened because of competition. So the question then becomes, how do we really promote competition in the healthcare space? If we believe that that is a solution for lowering cost, competition, how do we promote competition, and what is the government’s role in promoting competition? And I think that is the underlying basic question and I’m going to get a lot of pushback and resistance from that, in that, “Well, just because it’s worked in other places, why do we think it’ll work in healthcare?” The truth is, the only thing that has significantly caused the decrease in cost and improvement of quality, i.e., a better value prop to the consumer, is competition and there’s a lot of elements to it, but I’ll dive a little deeper here in regard to what that means.
Travis Tasset: So if it’s all about improving the value delivered to the consumer, delivered to the patient, and competition is a main driver of that, then what are the ways in which the government impedes that or can promote it?
Dan Tasset: Right, and I think that is the underlying question. When we’re talking about healthcare reform, we all know that it needed to occur with the Affordable Care Act but the Affordable Care Act got some things right, it actually did, but it got some things wrong. And so when you look at that and you say, “How do we promote and what does the government need to do to promote competition?” then you have to start breaking down different elements of federal and state law today and say, “Well, how is it anti-competitive?” and I’ll just give you several examples that are nearest and dearest to us, but the examples go on and on and on.
So why is it that a health system or a hospital can employ or own physicians, but yet a physician can’t own a hospital? The Affordable Care Act prohibits a physician from owning a hospital. There’s been study after study done and there’s debates that go on from both sides of the argument but clearly that piece of legislation is anti-competitive. It’s to protect the status quo, the hospitals from competition, from other people owning what they own, which is the bricks and mortar of the hospital and operating a hospital. It’s anti-competitive; half the states in the union have what’s called Certificate of Need laws.
Travis Tasset: CON laws.
Dan Tasset: CON laws. You have to go through a CON board, which in most cases are largely controlled by the hospitals in that state, in order for you to build anything new; it’s anti-competitive. You’re going to hear arguments, “Well, it’s because the more that you have out there, you’re trying to meet the demand, so it becomes over utilization.” Studies don’t hold that up. I hear that argument a lot, but that’s not what the data shows. So it’s anti-competitive, it’s plain and simple. Certificate of Need laws in various states are anti-competitive. I can go on and on. Why is it that a physician assistant or nurse practitioner can’t have more authority to do more things or could be licensed to do more things? Anti-competitive. Telemedicine: anti-competitive. You can go on and on and on, all the restrictions.
It’s funny, Uber comes into play and we’ve got all these various states and cities lobbying against Uber and where’s that lobbying effort led? It’s led by the taxi cab industry. So it’s truly innovation and a company that improves the value delivered to the consumer, yet the status quo, trying to keep them out and trying to protect what they already have. The same thing is going on in healthcare. A status quo, trying to- so back to the point, I believe it’s government’s role to be able to level the playing field, make it competitive and remove legislation that maybe started out in good faith to be something else but now has turned into anti-competition. It’s to change those pieces of legislation so that it encourages competition and competition to thrive all over, across the country.
Travis Tasset: Well, it seems today there’s a lot of talk about Medicare for all and the expansion of a- or I should say the transition to – a nationalized healthcare system, single-payor system, government-run. I would think that would be the exact opposite of fostering an environment where you have competition happening.
Dan Tasset: It is, it’s great that you would point that out because if you think about other industries and clearly what is already happening in healthcare, that it would happen at light speed if the government would put in place or eliminate things that are anti-competitive because it’s not the competition in and of itself, by itself or just that notion that really improves a value delivered to consumer. It’s all of the innovation that comes about as a result of competition. “I’ve got to get a better product because I’ve got other people serving here.” “I’ve got to do a better job for the consumer. I’d better get better clinical outcomes. I better think of a way to do this more efficiently. I better think of a way to have a better patient experience.” All of that innovation comes out of a result of competition. So it’s really not the competition itself, it is everything that happens as a result of the competition and every other industry has done the same thing.
But what you bring up, which for me makes the idea of the Medicare for all laughable because what we need in healthcare, if you want to give more people access, if you want to improve the value proposition and lower the cost and give more people access, you need just the opposite of Medicare for all because Medicare for all would stop innovation in its tracks, period. You would not see innovation and so I hear this all the time. Well, if you look at the overall cost of healthcare per capita in the United States and then you look at the overall health of the population, people start putting those together and they say, “We’re really doing a really bad job in this country,” and that’s not true.
We are still considered the place to go to receive the best care on the planet and not only that but almost all innovation in healthcare, as well as a lot of other industries, most of it has occurred in the United States as a result of the free enterprise system that we have. I’ve spent time overseas, I’ve spent time in the UK and Canada, in the prime minister’s office talking to the number one aide to the Prime Minister on healthcare and I know what they’re facing. I know what they’re facing in Canada and they seek to go to the United States and listen to the United States and look here for innovation because innovation in their countries has almost ceased, stopped completely, and that’s probably the thing to me that is almost laughable about the idea of Medicare. There’s a whole bunch of other things that goes along with it as well but that is just the – that would be the last thing that we need while we’re trying to solve this.
Travis Tasset: I mean, the elimination of private insurance, employer paid insurance – I mean private plans have been able to evolve and test new models more quickly. That’s just the truth of the matter. In the political process having one centralized payor, you would think that that would just slow things down completely from an innovation standpoint.
Dan Tasset: It would, no question, but here’s what’s even more interesting about it to me, if you think about this for a minute. Just think about what happens. Okay, so Medicare for all, what are they going to do? Are they going to make it illegal for there to be private insurance? I mean, me as a citizen of a free country, I can’t go buy private insurance? Now, in the UK, the private insurance sector is growing and guess what’s happening in the UK; those now with private insurance have first access and more access.
Travis Tasset: And access to private doctors.
Dan Tasset: Private doctors and better care. So the very people, people like Bernie Sanders, I think, who think they’re trying to help, are the ones that are going to be harmed the most.
Travis Tasset: Because they’re going to be the ones that are stuck in the less efficient-
Dan Tasset: Less access.
Travis Tasset: Less access, longer waits.
Dan Tasset: Exactly. I mean, I was in the UK, I know specifically what they do. You start approaching a certain age and I want a hip replacement. They know that if they restrict access and put it off, that the data shows that in time- the actuarial data shows that they can save X dollars by pushing this off because a certain percent of those people will then, you know, die, and so restriction of access is the only way that they can control costs in that system. So, here and I don’t even know what- you know, I know the different plans and some of the plans actually prohibit the use of private insurance. Okay, but are they going to prohibit- if they’re going to prohibit use of private insurance, are they going to prohibit me from entering into a private pay contract without insurance? I want to do a private pay contract with a primary care physician or a surgeon, specialty care; are they going to prohibit that?
If you prohibit that then you’re basically taking away freedom as a society. If you can prohibit me entering into an agreement with another individual by contract, then that means you could prohibit me from entering into an agreement to buy a home or to lease an apartment; whatever it might be and that ends a free society, in my opinion. Yet, if they don’t do that and they allow private insurance or private contracts even without insurance to occur, you’re ultimately going to end up with a two- or three-system health system and those people that they’re trying to help are going to be the ones that are going to be hurt the worst.
Travis Tasset: Meaning they will get the- the value delivered to them will be of the lowest quality.
Dan Tasset: The lowest quality.
Travis Tasset: The highest cost.
Dan Tasset: The highest cost, lowest quality.
Travis Tasset: The lowest quality, in terms of outcomes and patient experience and satisfaction. I mean, we can say that price is what you pay for something and value is what you receive. What they pay will be high; what they receive…
Dan Tasset: Exactly. It’s just, the whole idea is horrible. The other idea, I think the other concept and there’s many- there’s so many fallacies to it, is that there’s not one size fits all in anything in life, right? So if you expand the expansion- to expand the Medicare program today would not be an expansion of Medicare because everybody is thinking, “Well, if you’re a certain age and you’re qualified for Medicare, you know, pretty good programs,” it doesn’t even make sense. So Medicare generally speaking today, you can tell pretty clearly, is moving away from traditional Medicare into Medicare Advantage.
Travis Tasset: Which is a private forum.
Dan Tasset: It’s a private forum. So you could even do the same thing but when you start taking that concept and say Medicare for all, say Medicare Advantage for all, what that starts looking like is more like the old HMOs of the past. So, a heavily Primary Care Medicare Advantage or heavily Primary Care control. So you control the patient, you know what’s going on but if you think about it for a minute, it’s working and it’s working really well. Most Medicare Advantage programs are working really, really well. So it’s kind of ‘cap the expense’ for the government and you know, the privatization of Medicare Advantage and they’re doing really well financially too; so it’s kind of been a win-win for everybody, even a win for the patient themselves.
But that patient population is, generally speaking, a retired population. So if you look at the Medicare Advantage companies with what they’re doing: “We’ll go pick them up with a van and we’ll bring them over here and then while they’re waiting for a couple hours, we’ve got Bingo going on and all,” you know, all kinds of- and I’m not even exaggerating. It sounds like an exaggeration and it’s not but that’s not the rest of the population.
Travis Tasset: It doesn’t transfer, does it?
Dan Tasset: It doesn’t transfer. It’s not going to transfer and to think so is ridiculous, to think that that would transfer to the rest of the population. So as a result of that, there’s no way that Medicare for all and everybody thinks of this definition of Medicare as feasible and workable because the patient in this country, the people’s country, just won’t accept that and so they’ll start to enter into private insurance or if that is made illegal, unlawful, they’ll start entering into private contracts. Those who have money are going to get the highest quality, the highest value, the highest patient satisfaction, the most convenient, the most access and those that don’t, under this Medicare Advantage are the ones that are going to be hurting the worst and that would be really unfortunate for the entire country. Let alone the very people that the provider community is trying to serve.
Travis Tasset: Well, I think we may do a follow-up podcast about it and dive a little deeper into the Medicare for all: the possible benefits, the challenges that I think we see a lot of but just generally, is there anything else you wanted to add to before we close out this podcast, on just the government’s role in general? You talked obviously about consumerism and payment reform leading the way, to really the tenets in the foundation that drive competition that helped set up innovation, in terms of all delivering better value propositions to the consumers and patients.
Dan Tasset: It is so. The consumer, as you just said, is the key element here. Competition, I believe, improves the value proposition to the consumer, mostly through innovation; entrepreneurship and innovation, but if the consumer does not care about the value equation, in other words, they only care about clinical outcome or the patient experience or how it makes them feel or the convenience and they don’t care about cost, then all the competition in the world and all the innovation in the world probably won’t make any difference. So the government’s role, federal state, is to make sure that we turn the patient into a true consumer, which is some of the things that Obamacare did exactly the opposite.
So, rather than the exchanges and the patient having higher deductible, higher copay, let’s eliminate it altogether and therefore you eliminate consumerism altogether and therefore competition doesn’t thrive and therefore innovation doesn’t happen. So, there’s a lot that goes into that, we could do a podcast just on that but capping HRASA accounts, not allowing HRASA excesses to be cashed out until you reach a certain age, all of that stuff needs to be revisited and changed. So that the consumer is motivated to be a true consumer. In other words, I can use these pre-tax dollars to be able to pay for it and if I save money by being a true consumer, now I can go ahead and get the money out of the account. Rather than have to wait until I’m whatever, 65. You probably know that all those rules better than I do but there has to be a great deal of effort and thought going into helping the consumer to be a- the patient to be a true consumer of healthcare, meaning care about the numerator and the denominator.
So that in summary is it, we have to have consumerism. We have to have the patient care, the government has got to put things in place or eliminate rules that do the opposite. We also then have to have competition and as those two meet, we’ll have innovation and we’ll see a drastic improvement of value, which means higher quality, less cost in the US healthcare system. I absolutely believe this can happen. I believe it will happen. I just think the government’s role is to speed that process along.
Travis Tasset: Perfect. Thank you, Dan. Thank you for your time today. I look forward to talking again. Thank you for listening to another episode of Value Talks. Please subscribe and be sure to leave a review.