Posted 12:36 am Thursday, February 09, 2012
Speaker Addresses Health Care Industry's Role During Tough Economic Times
By COSHANDRA DILLARD
Staff writer
An expert in health care as it relates to the U.S. economy was on hand Wednesday during a Tyler Area Chamber of Commerce luncheon to share how he believes businesses and health care providers in the private sector should address the crisis.
Kim Slocum, president of KDS Consulting, LLC, told an audience of mostly health care industry professionals that the problem deserved change starting with stakeholders.
He called the state of health care today an “urgency of challenges” and borrowing a quote from Ernest Hemingway's “The Sun Also Rises,” said the crisis has gradually, then suddenly, consumed the nation's economy. Health care spending is the single biggest contributor to the federal budget deficit.
Staff writer
An expert in health care as it relates to the U.S. economy was on hand Wednesday during a Tyler Area Chamber of Commerce luncheon to share how he believes businesses and health care providers in the private sector should address the crisis.
Kim Slocum, president of KDS Consulting, LLC, told an audience of mostly health care industry professionals that the problem deserved change starting with stakeholders.
He called the state of health care today an “urgency of challenges” and borrowing a quote from Ernest Hemingway's “The Sun Also Rises,” said the crisis has gradually, then suddenly, consumed the nation's economy. Health care spending is the single biggest contributor to the federal budget deficit.
“We've been going bankrupt from health care gradually for several decades,” Slocum told a crowd of about 300. “But what has changed and why we have the urgency is that we've now moved into the suddenly phase of this.”
Slocum avoided taking political sides in the health care reform debate, saying it didn't matter who controlled Congress, because the sweeping problem does not have an easy fix that any politician or political party can promise.
Slocum avoided taking political sides in the health care reform debate, saying it didn't matter who controlled Congress, because the sweeping problem does not have an easy fix that any politician or political party can promise.
The solution begins with the private sector and maintaining the status quo is not an option, he told health care professionals. He advises providers to build a more sustainable delivery system that focuses on coordinated care and better outcomes. He said this can be done by adopting new governance models, opting for electronic records and finding other ways to become more efficient.
Bill Bellenfant, a retired Trinity Mother Frances administrator, said Slocum is on target, but says he is optimistic about the state of health care in East Texas.
He said that Tyler is a regional health care center for nearly 2 million people in an area that is bigger than many states. He believes the availability of health services locally is a benefit, rather than a challenge in reigning in costs.
“It gives us an opportunity to evolve to a more cost effective system,” Bellenfant said, noting that local health professionals already were adopting electronic health record systems as ways to become more efficient.
Bill Bellenfant, a retired Trinity Mother Frances administrator, said Slocum is on target, but says he is optimistic about the state of health care in East Texas.
He said that Tyler is a regional health care center for nearly 2 million people in an area that is bigger than many states. He believes the availability of health services locally is a benefit, rather than a challenge in reigning in costs.
“It gives us an opportunity to evolve to a more cost effective system,” Bellenfant said, noting that local health professionals already were adopting electronic health record systems as ways to become more efficient.
LEFT UNCHECKED
The United States spends more on health care than any other country in the world, according to data Slocum provided from the Organization for Economic Cooperation and Development, a group that examines and compares economies in developed countries.
“For the last 40 years, health care costs in the United States have grown at a rate 2 ½ percent faster than the growth of the GDP,” Slocum said. “The United States actually spends 50 percent more of its GDP on health care than the average of the rest of the developed world.”
He noted that the U.S. spends about 18 percent of the gross domestic product compared to 12 percent in other developed nations. That's a $1 trillion difference.
In addition, Medicare and Medicaid by 2050 will represent about 10 percent of the nation's budget, according to Congressional Budget Office figures.
Slocum explained that health insurance is most often tied to employment but private sector job creation is stifled because health insurance — an attraction for workers — is too expensive.
Slocum said health care spending actually reduces the competitiveness of the private sector.
“It's not the feds that are having the problem,” he said. “It's the health care industry that is having the problem.”
As health care spending rises, U.S. officials expect it will completely take over the economy by 2070 if it continues on this path.
The U.S. spends about 7,960 per capita, but has a lower life expectancy — 78.2 — than the leading 16 developed countries, according to Organization for Economic Cooperation figures. The average health care expenditures in other developed countries is $3,233.
Although the U.S. spends more on health care, the utilization of services is lower than other developed countries. Americans visit the doctor about four times a year, compared to six in other developed countries. The length of stay in hospitals is shorter in the U.S. and consumption of prescription drugs are 10 percent below the Organization for Economic Cooperation average.
The nation lags behind other countries in terms of mortality amendable to health care. For example, only half of Americans are likely to continue taking medications as recommended by a physician. That figure is even lower in people with multiple health issues. This results in three times as many hospital visits, about 20 percent more unintentional pregnancies and between 10 and 25 percent more hospital and nursing home admissions. Ultimately, this adds between $100 and $300 billion to health care expenditures.
While reports have suggested the aging population will put an even bigger strain on the economy, Slocum said baby boomers will not impact health care spending as much as predicted. He cited data from the Congressional Budget Office, which suggests the interaction of aging and excess cost growth only minimally impacts the health care problem.
“You hear a lot about this but it's not really the problem,” he said. “Japan and Germany both have much older populations than the U.S. does, but doing much better in the comparison chart in health care spending than we are.”
Medical malpractice/defensive medicine and a lack of insurance sold across state lines also present minimal impact to health care spending, Slocum said.
Disease prevalence, such as obesity, and health care fraud currently have a modest impact, Slocum added.
“For the last 40 years, health care costs in the United States have grown at a rate 2 ½ percent faster than the growth of the GDP,” Slocum said. “The United States actually spends 50 percent more of its GDP on health care than the average of the rest of the developed world.”
He noted that the U.S. spends about 18 percent of the gross domestic product compared to 12 percent in other developed nations. That's a $1 trillion difference.
In addition, Medicare and Medicaid by 2050 will represent about 10 percent of the nation's budget, according to Congressional Budget Office figures.
Slocum explained that health insurance is most often tied to employment but private sector job creation is stifled because health insurance — an attraction for workers — is too expensive.
Slocum said health care spending actually reduces the competitiveness of the private sector.
“It's not the feds that are having the problem,” he said. “It's the health care industry that is having the problem.”
As health care spending rises, U.S. officials expect it will completely take over the economy by 2070 if it continues on this path.
The U.S. spends about 7,960 per capita, but has a lower life expectancy — 78.2 — than the leading 16 developed countries, according to Organization for Economic Cooperation figures. The average health care expenditures in other developed countries is $3,233.
Although the U.S. spends more on health care, the utilization of services is lower than other developed countries. Americans visit the doctor about four times a year, compared to six in other developed countries. The length of stay in hospitals is shorter in the U.S. and consumption of prescription drugs are 10 percent below the Organization for Economic Cooperation average.
The nation lags behind other countries in terms of mortality amendable to health care. For example, only half of Americans are likely to continue taking medications as recommended by a physician. That figure is even lower in people with multiple health issues. This results in three times as many hospital visits, about 20 percent more unintentional pregnancies and between 10 and 25 percent more hospital and nursing home admissions. Ultimately, this adds between $100 and $300 billion to health care expenditures.
While reports have suggested the aging population will put an even bigger strain on the economy, Slocum said baby boomers will not impact health care spending as much as predicted. He cited data from the Congressional Budget Office, which suggests the interaction of aging and excess cost growth only minimally impacts the health care problem.
“You hear a lot about this but it's not really the problem,” he said. “Japan and Germany both have much older populations than the U.S. does, but doing much better in the comparison chart in health care spending than we are.”
Medical malpractice/defensive medicine and a lack of insurance sold across state lines also present minimal impact to health care spending, Slocum said.
Disease prevalence, such as obesity, and health care fraud currently have a modest impact, Slocum added.
WHY DOES IT COST SO MUCH?
More taxation may be one way to finance health care, but Slocum doubts that will ever be an option in this country.
“Since World War II, the U.S. government has never collected more than 19.6 of the GDP in taxation to do everything it does,” he said. “Tax rates would have to more than double to make this problem go away. This is never going to happen, but it shows you the depth of the hole.”
Excessive taxation would be nominally acceptable, Slocum said, if “we were getting good value for our investment.” He explained that the health care crisis is more of a supply problem than a demand problem.
Slocum said, generally, the costs of goods and services in the U.S. are 30 to 50 percent higher than elsewhere in the world, which equals a $1 trillion difference.
In addition, fee-for-service medicine encourages provider over-utilization of services. The market for new medical technologies, fragmented delivery systems, excessive administrative costs and numerous fragmented payers also add to the high cost of health care.
“Since World War II, the U.S. government has never collected more than 19.6 of the GDP in taxation to do everything it does,” he said. “Tax rates would have to more than double to make this problem go away. This is never going to happen, but it shows you the depth of the hole.”
Excessive taxation would be nominally acceptable, Slocum said, if “we were getting good value for our investment.” He explained that the health care crisis is more of a supply problem than a demand problem.
Slocum said, generally, the costs of goods and services in the U.S. are 30 to 50 percent higher than elsewhere in the world, which equals a $1 trillion difference.
In addition, fee-for-service medicine encourages provider over-utilization of services. The market for new medical technologies, fragmented delivery systems, excessive administrative costs and numerous fragmented payers also add to the high cost of health care.
