Since last November – 365 days from the 2012 election
to be exact – at the invitation of various health care
providers, I have been going around the country giving a
"crystal ball speech" about the future and outcomes of
government spending, health reform, and the election. Whether I
speak to an audience in Chicago, San Francisco, New Orleans, or
Florham Park, New Jersey, the most frequently asked questions I
receive are: "What will the Supreme Court do?" and
"Is there any hope that they can get something done and start
to agree in Washington?" The answer I give to the former is my
favorite answer to give: "It depends." The answer I offer
to the latter is "I hope so – and if I didn't
think so I wouldn't keep doing what I do."
In all seriousness, there are four separate but related
questions before the Supreme Court and a number of different
combinations and permutations that can result from the court's
deliberations and determinations. Tens of thousands if not millions
of people are making their guesses and sometime in June we expect
we will know who is correct. In the meantime, I offer these five
examples of the new playing field for those in health care:
We are in a period of fiscal contraction – call it
austerity, compression, retraction, or budget tightening
– these are not times of Congress taking steps to expand
programs or increase funding. As such, it is important to recognize
this fiscal and political reality and modify your expectations,
requests, and approaches to policy makers accordingly.
So goes the economy, so goes provider reimbursement. The
nation's tax base is at an all-time low – meaning the
available pie is shrinking – while entitlement spending
grows, especially within federal health care programs (Medicare,
Medicaid, VA). Using baseline FY 2010 estimates from the Office of
Management and Budget, entitlement spending is approximately 60% of
the budget while non-defense discretionary funding is 15% and
defense spending is 20% (remaining 5% is interest payments). It is
a basic math issue: We cannot balance the budget only paring down
the smaller, non-entitlement parts of the pie. So, if your
interests are in the entitlement slices, expect those –
at some point – to shrink.
Health care has become a "pay-for" for health care.
When I first arrived in Washington more than 20 years ago, most
Members of Congress did not want to pit members of the same
community against one another or pick among their children
– hence the holistic approach to the doubling of the
National Institutes of Health (NIH) budget. Those also were much
better economic times. Now given current circumstances and the fact
that health care spending is crowding out other parts of the
budget, Congress is looking and finding money from within other
areas of health care to pay for things like the "doc
fix." This trend likely will continue ... Indefinitely.
Innovation in care delivery is the key to survival. The days of
paying for volume are over. Patients, insurers, and the government
want value and quality and providers need to respond to the
marketplace. Those leading the field in innovative care delivery
models and real outcomes based, patient-centered care –
that measurably decrease costs – will do well from both
private and public payor perspectives.
Don't necessarily fear the sequestration – some
alternatives could be worse. See items one, two, and three above.
Don't get me wrong – it's bad ... And depending
on where you reside and in which pieces of the pie, it's really
bad ... for non-defense discretionary spending the estimates are
10% cuts across-the-board, and for Medicare (the reimbursement side
of the equation) cuts are capped at 2%, but for many providers 2%
poses a threat to their ability to maintain access to care. But it
could be – and can get – way worse. Taking a
page out of the earlier example of doubling the NIH playbook of
collaborative advocacy, the health community is banding together
with other communities (e.g., energy, environment, education,
transportation) and those in the non-defense discretionary spending
slice of the pie to work together to protect funding.
While the crystal ball remains cloudy with respect to the
Supreme Court, the future of health care spending generally is
pretty clear: public and private payors will want more for less and
somehow, as a nation, we have to get health care costs and spending
under control. The reality of current and long-term fiscal
projections is that the intense budgetary pressures on the country
will have as much – if not a greater – impact
on the future of health care than anything those nine cloaked
justices decide in June.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On September 16, the Centers for Medicare and Medicaid Services (CMS) announced that those accountable care organizations (ACOs) that have been in operation since 2012 have reduced Medicare spending by $817 million thus far.
On October 2, 2014, the Food and Drug Administration ("FDA") released the final version of a guidance document entitled, "Content of Premarket Submissions for Management of Cybersecurity in Medical Devices."