CHICAGO – Healthcare reform efforts must rein in “runaway costs” to have an abiding impact on the U.S. economy, yet there is resistance to such reform because industry players make so much money from the current system.

This was the takeaway message on the economic state of healthcare from two keynote speakers at last month’s 2009 Annual Conference & Exhibition of the Healthcare Information & Management Systems Society.
George Halvorson, chairman and CEO of the Kaiser Foundation Health Plan and Kaiser Foundation Hospitals, said the nation’s current fee-for-service payment model generates $2.5 trillion worth of revenue, but merely sells “pieces of care” to consumers because the system is not efficient.

Healthcare is the fastest growing segment of the U.S. economy, moving toward 20 percent of the Gross Domestic Product, but Halvorson said the United States is on a dangerous path and must lower the costs of the system and improve outcomes.

“We need to fix the delivery of healthcare and move to full (health insurance) coverage,” he said.

Halvorson said only a “systematic” approach to changing U.S. healthcare would succeed. He called for an emphasis on medical best practices, an increase in coordination between caregivers and a more consistent long-term follow-through on each and every patient.

He also said there is tremendous inconsistency in the quality of healthcare in the United States, citing a study by Dartmouth professor Jack Wennberg that revealed a 40 percent variation by region in cardiac care.

Alan Greenspan, former Federal Reserve Board chairman, also spoke at the HIMSS conference, telling attendees that healthcare spending is unsustainable in the current economic climate and that pumping more dollars into Medicare will not solve the healthcare crisis.

"We have to find a way to curtail the federal funding," Greenspan said, noting that information technology may be that way.

“If you cannot solve the overall funding problem, the (global) competitive issue will be quite secondary,” he said.

“There’s going to be a clash invariably because resources are not going to be as ample as they have been.”
With the civilian labor force aging and new, expensive treatments gaining in popularity, healthcare costs are dragging down the economy, Greenspan noted.

Healthcare costs have outstripped general inflation for 20 years, but productivity gains were able to mask much of the problem up until short-term money markets froze on Sept. 15, 2008.

Greenspan said it would be a mistake in any reform debate to discuss entitlement programs as a single entity because Medicare is not a defined-benefit program like Social Security. The latter can be fixed much more easily with extra money, while Medicare is a "moving target" because it's impossible to predict how medicine will advance.

Only a sharp boost in healthcare efficiency can keep these factors in check, he said.
Additional reporting for this story contributed by Neil Versel.