Op-ed: A Wake-up Call for Louisiana Businesses

The rising cost of healthcare is a major economic issue, here and across the nation.  Healthcare spending in 2011 accounted for roughly 17 percent of our gross domestic product, or $2.5 trillion. That’s a little over $8,000 for every woman, man and child in America. And the Congressional Budget Office projects it will rise to 25 percent of the GDP in 2025.

Businesses that offer health insurance are also absorbing these staggering increases, and this is cutting into their bottom line. In the United States, some 155 million people get their insurance at work. In a nutshell, U.S. businesses subsidize more than 50 percent of all insured Americans. In Louisiana, the figure is 46 percent.

A number of factors contribute to the rising cost of healthcare.  Medical services top the list. We have made tremendous advances in medicine in this country, but those advances come with a price. Fully 80 percent of health insurance premium costs are tied directly to hospital and physician services and the pharmaceutical products relating to these services.

Not everything that drives up healthcare cost can be attributed to advances in medicine. Much of it is driven by overuse or improper use of medical services, such as going to the emergency room for minor medical problems. Studies show that only 14 percent of emergency room visits are for immediate or urgent conditions, so the majority of care administered in this venue carries a much higher price tag than care administered in urgent care clinics of in doctors offices.

Also, state or federal mandates add cost to healthcare and have a direct impact on our business community. And first to take the hit are small businesses, those with the shallowest pockets.

Regardless of the fate of healthcare reform legislation, we shouldn’t look to the federal government to address healthcare affordability. That will never happen. It is the responsibility of the players in the private healthcare sector to achieve what Washington cannot.

The good news is that market forces in Louisiana are coming together to bring down the cost of healthcare in our state by embracing the patient-centered medical home, an interconnected and coordinated care delivery model centered on quality.

The evidence of cost savings through medical homes is powerful. And it’s important to know that the impressive savings we’re seeing are being achieved by delivering the right care at the right place at the right time, not through the H.M.O. “efficiencies” of the 1980s and ‘90s. In the medical home model, the emphasis is on coordinated, quality care.

Here are some examples:

• The Intermountain Healthcare Medical Group in Utah reported a 39 percent decrease in E.R. admissions and a 24 percent decrease in hospital admissions. Beyond that, the group reported a net reduction in overall per-patient spending of $640, and a $1650 decrease for each high-risk patient.

• A medical home in Minnesota, HealthPartners Medical Group, reports a 39 percent decrease in E.R visits, and a 25 percent decrease in hospital admissions.

• The Veterans Health Administration, using the medical home care delivery system, recently reported a 27 percent reduction in both E.R. visits and hospitalizations, as well as 13 percent lower median costs for veterans.

So, who wins here? Certainly the patient, all parties who pay medical bills –  both individuals and businesses –  and the physicians who, with the assistance of care coordinators and electronic medical records, deliver a higher level of care and are compensated based on quality and positive outcomes, not on the number of services they perform.

Because of successes such as these, Blue Cross and Blue Shield of Louisiana is taking a leading role in embracing and promoting the medical home model. We’re sponsoring a series of summits to educate healthcare stakeholders and the public on the positive effects this revolutionary new healthcare delivery model can produce. Blue Cross also recently announced partnership in the first three medical home delivery systems in the Louisiana private healthcare market.

Physicians are beginning to embrace the medical home in Louisiana, and their patients give powerful testimony to the quality and effectiveness of care they receive through this model.

I know our business community will soon recognize that the medical home can both increase their bottom line and act as a powerful economic engine to move our state’s economy forward. When this happens, I am convinced they will join me in backing this important private sector initiative and let healthcare drive the economic recovery of this nation.

Mike Reitz
President & CEO
Blue Cross and Blue Shield of Louisiana

Sources
National Institute of Healthcare Management (2011 Report)

Medical Expenditure Panel Survey

BCBSLA National Consumer Cost Tool data

Food and Drug Administration