It's been three months since U.S. President Barack Obama, overcoming considerable political and public resistance, signed sweeping healthcare reforms into law. A May CBS News poll showed that 43 percent of Americans now support the new measures, up from 32 percent in March.
Although this is good news for the president, those left to sort out the implications of the bill remain hard at work.
As CEO of Atlanta-based Grady Health System, one of the largest health systems in the U.S., Michael Young has had a front-row seat to the healthcare reform debate. Grady Memorial Hospital is an internationally recognized teaching hospital with a historic commitment to the health needs of the most vulnerable. All Grady physicians are provided by Emory University School of Medicine and Morehouse School of Medicine, reflecting the universities' vital commitment to metro Atlanta and Georgia. While coverage for the uninsured will certainly help his institution, Young and other Grady leaders continue to grapple with decreased funding from Medicare and the dwindling coffers of city and county governments that depend on the hospital's services.
Last week Young and other officials met with DeKalb County commissioners seeking to reduce their $23-million annual contribution to the hospital. But according to a June 10 article in the Atlanta Journal-Constitution, commissioners are not likely to make the move, at least not yet.
Young, who has been tackling tough issues since the day he stepped up to become Grady's CEO in 2008, inherited a medical center that was, as the Atlanta Journal-Constitution put it, drowning in debt and struggling with antiquated equipment and dwindling government aid. Now it may actually turn a profit. A recent audit showed that the hospital brought in about $10 million more than it spent in 2009, remarkable for a safety-net hospital sagging to the breaking point under a $50 million deficit two years ago.
Young is quick to say that the $10 million in question does not represent an influx of cash but is the result of better management of the hospital's funds and facility. With 953-plus beds, eight neighborhood health centers, and nationally acclaimed emergency care, turning around Grady and incorporating the changes mandated by healthcare reform has been challenging.
Earlier this year, Young spoke to healthcare professionals, students and alumni at the sixth annual Healthcare Forum at Emory University's Goizueta Business School. At the time, Young delivered the opening address and discussed innovation in health care and some of the improvements made at Grady since 2008. Last month in a follow-up interview with Knowledge@Emory, Young discussed his views on the healthcare bill, why the Canadian model seems inevitable, and some of the measures that have made Grady more profitable.
Knowledge@Emory: What do you think of the 2010 U.S. healthcare reform bill?
Young: From Grady's perspective, it's a good thing, because we've been doing $300 million a year in free care. If everyone has insurance, we'll catch $150-175 million, which means we'll become a normal cash flow hospital. The caveat is that as more people get insured, our disproportionate share funding [Medicare funding for hospitals serving large low-income populations], which is a big source of revenue, decreases. So we hope more people sign up for insurance sooner than our disproportionate share funding gets cut. On the aggregate level, even though I'm pretty conservative politically speaking, I think the Canadian model with minor tweaks is a much better model.
Knowledge@Emory: Why is that?
Young: Number one, the current U.S. model wastes so much on overhead at the insurance company and provider levels that if we went to a single-payer model, we could take all that overhead out and it would cover several years of cost increases. Number two, the Canadian model is a little more focused on primary care than the current-or even the new-model in the U.S., and I believe in the medical home model [a team-based model where care is coordinated by a personal physician]. One big downside to the Canadian plan is that it takes a long time to get elective surgery. You could change the physician payment model and add a modest bit of infrastructure to get rid of the queuing. For example, the city of Toronto has six CAT scanners and Grady by itself has six CAT scanners. For $5 million, Toronto could install 8 more CAT scanners and eliminate the delay.
Knowledge@Emory: Do you think the Canadian model would fly in the U.S.?
Young: It's got to fly, because if you read the bill, the penalty for big employers not providing insurance is $2,000 a year [per person], and it costs them $12,000 per employee to provide it. The first company that elects to pay the penalty rather than offer insurance will lose its good employees; the second company is going to start an avalanche and it will be a race to get out of the health insurance business. The company will save $10,000; they'll be nice and offer you $5,000 to buy insurance on your own, which won't be enough, and that will expedite the exodus to the government model.
Knowledge@Emory: Some people think healthcare reform in the U.S. will not bring about a decrease in emergency room visits, because most patients in ERs already have some kind of insurance. As the reasoning goes, these patients use the ER because they can't wait to see their primary care physicians (PCPs) or are too sick. Do you agree?
Young: Grady is very different, because only 50% of our patients have Medicaid or insurance. So the vast majority of patients in our ER are uninsured. But at the other hospitals, closer to 85% are insured. Many patients visit the ER because the system is so complex they can't work it. If they know they'll need a doctor's visit, an x-ray, and a lab visit, they can do all that at the same time. And there's a shortage of PCPs in America. Patients often can't get an appointment for two weeks, by which time they're either feeling better or severely ill.
Knowledge@Emory: Do you think healthcare reform will drive down the cost of health care?
Young: No, I think it will drive up the cost of health care in the near-term, because we're going to see more demand as more people acquire insurance, and that will drive up the aggregate cost.
Knowledge@Emory: Won't costs go down eventually as people start to seek care at the beginning of an illness rather than waiting until they are seriously ill?
Young: In the next few years I think we'll see a rise in health care costs, and by 2015 we may see some of these Accountable Care Organizations (ACOs) come together, and they will be taking risk instead of the insurance companies taking the insurance risk. [An ACO is a local health care organization and a related set of providers, such as PCPs, specialists, and hospitals, that are ultimately held accountable for the cost and quality of care delivered, rather than the insurance companies.] When the government did this in 1992-1994, we actually saw a slight decrease in healthcare cost. Over a period of time, as more people enter the government model, you'll see more of these ACOs, and by 2015-17 you'll see a slowing of the growth, but not a flattening, because there are too many baby boomers who will need more health care than they did 10 years ago.
Knowledge@Emory: In your speech at Goizueta, you said, We have Grady patients who call 9-1-1 a hundred and fifteen times a year because to them, the ambulance ride, the ER visit, is free. What have you done to address patients like these?
Young: We actually changed our 9-1-1 system about three weeks ago, so now if you call up and say, I have a toothache, we'll send an ambulance and the paramedics will check you out. If it is just a toothache, we will offer to take you to a neighborhood clinic instead. It costs $128 a visit at the clinic versus $1,500 at the emergency room.
We've also cut our costs by lowering overtime and eliminating agency use by hiring nurses rather than renting them from an agency. It costs $35 an hour to hire a nurse and $75 an hour to rent one. We used to have 125 rental employees. Now we have only 10. We've done operational bread-and-butter things to improve our cost structure, and now we need to move into the world of actual care delivery that these ACOs are betting on.