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The Debate Rages On


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  • | 10:59 a.m. May 7, 2010
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One word came up multiple times in a recent, wide-ranging discussion on the federal health care reform bill among five Gulf Coast industry executives.

Unfortunate.

As in it's unfortunate that medical tort reform wasn't part of the bill, officially called the Patient Protection and Affordable Care Act. Or it's unfortunate that Congress and President Obama passed the bill in its current form, even though several national polls showed a majority of Americans were against it. Or its unfortunate Florida will be hurt more than any state by the Medicare cutbacks.

Even more unfortunate, the panel of industry experts agree, is few people know just what's in the bill.

Still, while Dr. John Steele doesn't know the bill by heart, he does have a good idea of what Americans could be in for under it. Steele, one of the Review's panelists and the co-founder of the largest medical group practice in Sarasota, previously trained and practiced medicine in Canada — home of a publicly-funded health care system.

“I've been through this one before,” says Steele, president of Intercoastal Medical Group. “It's kind of what happened in Canada. Within three to five years, they couldn't control costs so they changed into a single-payer system.”

Steele and the four other panelists met at the invitation of the Review to discuss the bill and its implications on their business, their industry and the greater business community. The panel consisted of Steele; Doctor's Hospital Chief Executive Robert Meade; Pines of Sarasota nursing home President and CEO John Overton; Sue Wise, owner and founder of Sarasota-based Take Care Private Duty Home Health Care; and Andy Wright, chief operating officer of Mercedes Medical, a medical supply company.

The discussion was held April 22, a month after Obama signed the bill. Here's an edited and condensed transcript of the conversation:

Costly flaws?
What are some of the specific flaws with the bill?

Wright: “One of the things we were fighting is a medical device tax. It was 2.9% on the manufacturer's side [in initial drafts of the bill] and it was finally settled at 2.4%, but it will also tax distribution of product. It will be a trickle down tax. It goes into effect next year.”

Meade: “From the hospital perspective, Medicare cuts are huge, as much as $455 billion over 10 years. [The impact] will depend on the hospital and the part of the country. Sarasota has a lot of Medicare patients. At least 75% of the patients at Doctors Hospital are Medicare.

“So how do we make up that difference? Supposedly, we make up that difference based on hopefully more people covered. The bill is supposed to cover 32 million people. In Florida, 4 million people don't have coverage, which is about 20% of the population.”

Overton: “We are facing some astronomical challenges as this rolls out. Medicaid is going to grow substantially in every state because of this legislation. So with more people going on Medicaid, that will be an additional problem for the states to manage.”

Wright: “At first I was against the bill. But a lot of people in my industry were saying it would be good for the suppliers, because by 2014 there will be 30 million more people covered.

“But there could be a number of diagnostic tests that will be severely cut by this [legislation.] So when all is said and done, on the supply side of things patient care may be comprised because how can you add 30 million people into the system that are not covered private and absorb that cost? Something has to be cut somewhere.”

Steele: “Unfortunately, the first group Obama sold out to was the trial bar. I would say 30% of the tests we do are to keep ourselves covered from a medical legal standpoint. And he did not address that. That's a big stumbling block.”

Doctor shortage
The Medicaid population is expected to grow by at least 16 million people under the bill, according to government and industry estimates. But the Medicaid reimbursements for providers, on average, are 20% less than Medicare. Moreover, the bill didn't address the government's payment formula for either program.

How will this portion of the bill impact your business and health care in the local community?

Steele: “One of the issues is the manpower and supply of doctors in primary care and internal medicine. There is a significant [doctor] shortage all over the country and I have a very hard time getting people to come to Sarasota.

“That's partly because of the Medicaid reimbursement. The differential all over the country is based on historical data of what the government has paid per patient per month since 1964. Physicians get paid 15% less here for the same service as they do in Miami and 18% less than Atlanta.

“The payment is done by fiat, it's not by negotiation. We are told what we can charge.”

Meade: “My bad debt and charity care at the hospital has gone up 80% over the last three years. You couple that with Medicare cuts and it makes things very difficult.

“So there's not much you can do to be more efficient, but we focus on making sure we do a good job of taking care of the patient and that we don't have readmissions.

“There are some positive things [regarding reimbursement.] Unfortunately, when the government gets involved, the intentions are good but the way they go about it isn't. They are really trying to drive more reimbursement based on quality. I don't agree with all the parameters they are using to do that and it's a little sketchy as far as how all of that will turn out.

“But readmission rates and infection rates will be looked at. Cutting down on those things will help hospital reimbursements. To some degree, those things are positive.”

Wise: “My hope is in the future people will focus on long-term care insurance as another avenue to back up Medicare.”

Insurance for the inevitable
Long-term care insurance is in the bill in a section called the CLASS Act, for Community Living Services and Support. This part of the bill could require employers to provide partial payment for some type of long-term care insurance to employees.

How will this aspect of the bill impact the business and health care community?

Overton: “Long-term care insurance is a big part of the puzzle that's not really being addressed by senior citizens. Less than 5% of people over 65 have been informed of long-term care insurance and I support the portion of the bill that deals with that.

“[But] there will be an extra cost for businesses. The details aren't clear yet.”

Wise: “When I started 15 years ago, probably about 10% of my client base had long-term care insurance. Right now, we average 45%. It's amazing to me to see how much long-term care insurance there really is out there. It doesn't matter what long-term care insurance you have, as long as you have it.”

Bill Upsides?
Are there aspects of the bill that could lead to positive changes for your business or the industry?

Meade: “One thing that's in this, that's still vague, is pay for performance in hospitals and how that will look.

“There is discussion about minimally increasingly Medicare reimbursement if you fall in the top percentile range as measured by the federal government and having dollars taken away if you don't do a good job. That's something we've been focusing on anyway and it's the right thing to do.”

Repeal unlikely
There has been some political talk about repeal of the bill, especially if Republicans pick up big gains in Congress in November. What are the possibilities of a repeal?

Meade: “This isn't going to be repealed. But I think there will be meaningful changes moving forward to it because obviously this isn't just the way it's going to be.

“I think we need to keep the focus on getting more people covered, but we have to make sure that the tweaks that are going to happen will not be disasters. I think if we spend a lot of time trying to repeal it and sue and all that, it will be a lot of wasted effort.”

Steele: “Everybody in the provider side of the industry agreed that the system is terribly and incredibly broken. And there was only one proposal. So just saying no wasn't going to solve the problem. You have to do more than that.

“I don't see social legislation ever getting repealed. It just doesn't happen. But there are a lot of things wrong about how this was done. It doesn't spread risk well.”

Wright: “I don't think it will be repealed but I think the elephant in the room is the health of the economy. Regardless of what legislation is done, that is the big unknown.”

Preparation a mystery
What steps, if any, has your company undertaken to deal with the bill?

Wise: “I have increased my hiring because there is a bigger market out there for me to hire now, so I can hire better. I have fewer employees now than I did before, but I have more effectiveness.”

Wright: “We have suppressed our hiring efforts. It's a cost now to hire because of the additional fees this bill will cost us. From a small business standpoint, we really question what it will cost us to bring on employees now.”

Steele: “We don't really know what the whole impact of the bill will be. I anticipate we will need a lot more primary care doctors but there is a long timeline before we will see an increase in business. It might take three years.

“So [for now] it will probably cost us money over the next year or so to basically warehouse doctors.”

 

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