36 min
EP346: How Did Health Systems Get Addicted to the Inflated Prices They Charge Employers and Some Patients? 2021 Update, With Peter Hayes, President and CEO of the Healthcare Purchaser Alliance of Maine Relentless Health Value™
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- Medicine
In this healthcare podcast, I speak with Peter Hayes, who is president and CEO at the Healthcare Purchaser Alliance of Maine and a national presence in healthcare strategy, innovation, and a frequent keynote speaker. One thing, among many, that Peter said during our conversation struck me. He said it will take a village to fix what ails the healthcare industry in this country. There are too many interdependencies. This point obviously resonates around these parts because it’s the rationale for the Relentless Health Value podcast. We started this show on the recognition that if you want to achieve anything in healthcare, you cannot do it without collaboration/cooperation/grudging acquiescence of other stakeholders in the patient journey or the payment journey.
And when I say, “You can’t do anything,” I mean you can’t sell anything, you can’t improve patient care, and, most relevant to this particular episode, you can’t contain prices. If we’re talking about health systems (for example, hospitals and the like), they are not going to curtail their price hikes or improve the value of care delivered or safety or infection control really unless patients and employers and CMS and others demand that they do—and unless employers and others do some of the five things that Peter Hayes mentions at the end of our conversation. Spoiler alert there.
For context to this discussion, let’s check in with some of the biggest, most powerful health systems in this country. If I limit this comment to the “nonprofit” ones—and I say “nonprofit” with air quotes because what does that mean exactly?—look, I know there are many health system execs that listen to this show, but there’s some inalienable facts here. And let’s talk about them with the intent of fixing them because nothing is going to get fixed that isn’t talked about.
It’s not my nature to mince words, so I won’t. Many hospitals are, by almost every account, pretty darn inefficient. And they don’t do cost accounting, but then they’ll scream and claim to be losing money when paid the exact same prices for certain services that other hospitals can get paid and make a fair profit. Crappy workflows cost money. Talk to anybody who has watched even the trailer to a Six Sigma course. Another thing that costs money is when all the burned-out doctors quit and you have to recruit new ones, but that’s a topic for a different day. Listen the EP323 with Arshad Rahim, MD.
But there’s also inefficiencies in how many health systems purchase supplies. (Listen to EP281 with Rob Austin for more on that.) Further, paying the C-suite millions of dollars but maybe underpaying or understaffing nurses has consequences. There’s complaints about Medicare payer mixes, but then somehow there’s enough spare shekel to put a waterfall in the lobby. Nonprofit hospitals also don’t pay any taxes, keep in mind, which is a huge financial windfall, especially when they provide vanishingly small amounts of charity care compared to revenue. See the top 10 health system hall of shame in this category here.
Here’s another point to ponder: Amongst the hundreds, thousands, of requests I get from PR firms pitching guests to come on this show, there are plenty from what appears to be a pretty large cottage industry that I had never heard of before. I’ll call it the real estate for nonprofit hospitals cottage industry. From what I can gather by the promo copy, this involves buying up medical office buildings, not paying any real estate taxes, and then leasing out the space. I should have one of these guys come on the show just to shine some light on whatever this apparently pretty common shenanigan is. As Vikas Saini, MD, from the Lown Institute has said, “No margin, no mission” can become an excuse for all kinds of questionable behavior.
So bottom line, we have employers, employees, taxpayers, cash-pay patients whose federal and/or state and/or local taxes are
In this healthcare podcast, I speak with Peter Hayes, who is president and CEO at the Healthcare Purchaser Alliance of Maine and a national presence in healthcare strategy, innovation, and a frequent keynote speaker. One thing, among many, that Peter said during our conversation struck me. He said it will take a village to fix what ails the healthcare industry in this country. There are too many interdependencies. This point obviously resonates around these parts because it’s the rationale for the Relentless Health Value podcast. We started this show on the recognition that if you want to achieve anything in healthcare, you cannot do it without collaboration/cooperation/grudging acquiescence of other stakeholders in the patient journey or the payment journey.
And when I say, “You can’t do anything,” I mean you can’t sell anything, you can’t improve patient care, and, most relevant to this particular episode, you can’t contain prices. If we’re talking about health systems (for example, hospitals and the like), they are not going to curtail their price hikes or improve the value of care delivered or safety or infection control really unless patients and employers and CMS and others demand that they do—and unless employers and others do some of the five things that Peter Hayes mentions at the end of our conversation. Spoiler alert there.
For context to this discussion, let’s check in with some of the biggest, most powerful health systems in this country. If I limit this comment to the “nonprofit” ones—and I say “nonprofit” with air quotes because what does that mean exactly?—look, I know there are many health system execs that listen to this show, but there’s some inalienable facts here. And let’s talk about them with the intent of fixing them because nothing is going to get fixed that isn’t talked about.
It’s not my nature to mince words, so I won’t. Many hospitals are, by almost every account, pretty darn inefficient. And they don’t do cost accounting, but then they’ll scream and claim to be losing money when paid the exact same prices for certain services that other hospitals can get paid and make a fair profit. Crappy workflows cost money. Talk to anybody who has watched even the trailer to a Six Sigma course. Another thing that costs money is when all the burned-out doctors quit and you have to recruit new ones, but that’s a topic for a different day. Listen the EP323 with Arshad Rahim, MD.
But there’s also inefficiencies in how many health systems purchase supplies. (Listen to EP281 with Rob Austin for more on that.) Further, paying the C-suite millions of dollars but maybe underpaying or understaffing nurses has consequences. There’s complaints about Medicare payer mixes, but then somehow there’s enough spare shekel to put a waterfall in the lobby. Nonprofit hospitals also don’t pay any taxes, keep in mind, which is a huge financial windfall, especially when they provide vanishingly small amounts of charity care compared to revenue. See the top 10 health system hall of shame in this category here.
Here’s another point to ponder: Amongst the hundreds, thousands, of requests I get from PR firms pitching guests to come on this show, there are plenty from what appears to be a pretty large cottage industry that I had never heard of before. I’ll call it the real estate for nonprofit hospitals cottage industry. From what I can gather by the promo copy, this involves buying up medical office buildings, not paying any real estate taxes, and then leasing out the space. I should have one of these guys come on the show just to shine some light on whatever this apparently pretty common shenanigan is. As Vikas Saini, MD, from the Lown Institute has said, “No margin, no mission” can become an excuse for all kinds of questionable behavior.
So bottom line, we have employers, employees, taxpayers, cash-pay patients whose federal and/or state and/or local taxes are
36 min