Chuck Lauer: This is the Worst Time for Healthcare CEO Paralysis

I speak to at least one healthcare CEO every day and I have to tell you: From coast to coast, I am seeing something akin to panic right now. Highly experienced, talented and smart leaders, who used to move ahead of the curve, seem completely paralyzed. They are telling me they don't know where healthcare is heading, and many of them are holding off on making any major decisions about the future. That is a mistake.

Granted, the healthcare landscape of today is not a pretty picture. Many hospitals have a flat or declining inpatient census, due to the effects of the Great Recession, and future funding looks problematic. Medicare and Medicaid are projected to have shortfalls of $25 trillion and $30 trillion, respectively, over the next few decades. During recent negotiations of the Congressional super committee, the skies looked pretty dark. The federal budget is still pushing $1 trillion, and our national debt is literally out of sight, a number we can't rationally contemplate.

It will take a stable federal government to solve healthcare funding problems, but all we have right now is political infighting at every turn — and no clear prospect of moving beyond the current game of partisan point-scoring. Here is the scenario as we enter this election year: The Supreme Court will review ObamaCare, the U.S. Senate is up for grabs and nobody can predict where the presidential race is headed.

As a healthcare executive, you have to deal with a lot of the unanswered questions ahead, but the worst thing you can do is just stop and wait to see which way the wind blows. You need to be preparing your institution for the future, because the future will come sooner than you think.

Many executives, however, believe they don't know where to start. Take ObamaCare. Will the Supreme Court strike it down –– throwing out all of its myriad provisions, from expanded insurance coverage to accountable care organizations? Well, I don't think so. My read is that the Court is feeling gun-shy about interceding in yet another presidential election, as it did in Bush v. Gore. Yes, there is a possibility the court will strike down the individual mandate, but I believe they will basically leave ObamaCare intact.

Expect fundamental change
The Affordable Care Act faces more challenges beyond the Supreme Court decision, of course. If we put a Republican president and Congress into office, they will likely take the axe to the ACA. But even if ObamaCare is repealed, healthcare reform is still inevitable. The system simply cannot continue in its current form and still satisfy both parties' concerns about fiscal solvency, quality and availability. With no ACA, changes could still come through other channels, such as the marketplace and the competition it creates. At a time when people are paying much more out-of-pocket for their care, they are becoming more attentive about getting quality care. For example, the Internet has become a key tool in finding out more about physicians and hospitals. The younger generations are going to be even more computer-savvy.

Whatever happens to ObamaCare, accountable care organizations will move forward, in one form or another. In spite of the furor over federal rule-making for ACOs, a lot organizations are looking to join them in one capacity or another. A USA Today survey in late July of executives at 1,800 hospitals found that a third of respondents' organizations were "extremely likely" to become part of an ACO. These organizations are about knitting together hospitals, physicians and post-acute care to manage population health, meet many more standards for quality and share in savings. I don't know exactly what form ACOs will take, but the model of tight integration is here to stay.

Be open to change
There are truly unprecedented challenges for healthcare right now — more than I have seen at any time since Franklin Roosevelt was president. And whenever there are major challenges, a good number of us want to dig in, resist change and be vocal about it. In healthcare, we are world-class in many ways, but perhaps the most refined skill we have is bemoaning the state of our industry.

When President Kennedy proposed Medicare, I was director of communications at the American Medical Association. The leadership of that august organization seriously believed that the sky was about to fall. A lot of doctors believed the practice of medicine would die out. In 1962, right after President Kennedy proposed Medicare in a speech in Madison Square Garden, the AMA rented out the space and the AMA president gave a speech warning of the decline of healthcare if Medicare should ever be passed into law. Well, Medicare was passed a few years later. Although I am a Republican, I have to say that this reviled program turned out to be a reliable payor –– for many years, at least ­­–– and even now, doctors recoil at any significant changes to it.

Then, 20 or so years after Medicare started, DRGs came along. At the time, I was publisher of Modern Healthcare and, oh, what a furor there was among hospital executives. But when all was said and done, hospitals dealt with DRGs and they prospered. Then in the late '80s and '90s came managed care, which was supposed to be the end of everything good in the world. And we dealt with that, too.

New pressures before us
Now we have new problems to grouse about ­­–– such as health IT, ACOs and readmissions policies –– and new challenges to meet.

Readmissions are a perfect example of the stark choice that healthcare executives face today. Lowering readmissions means fundamentally changing a hospital's financial outlook. Hospitals that profited from readmissions will soon get dinged as much as 3 percent of payments if you don't reduce them. But even if ObamaCare is repealed and the readmissions disincentive goes away, which is unlikely, don't expect that we are not going to set the clock back again. The old system of fee-for-service reimbursements that encouraged high readmissions doesn't have a future. We are headed into a new way of managing population health, with payment based on meeting standards for quality of care, patient satisfaction and outcomes.

This new system will require investment in healthcare IT systems that can deal with huge amounts of data. In the economic stimulus bill, the federal government even sweetened the pot by offering substantial incentive payments for hospitals that comply with meaningful use standards. I am amazed about how many hospitals haven't taken part yet. CMS paid out only a small portion of the $2.8 billion in incentives on the table for stage 1 meaningful use in fiscal 2011. Many providers were glad that stage 2 was delayed, but I have to ask: What in the world are they waiting for? If you don't have a robust IT system, you can't compete. You can't manage costs by DRG, by physician, by service line. It's as simple as that.

Yes, the new programs spawned by the health reform and stimulus laws are still experiments. We really don't know whether they will succeed the way they are set up, but we have to try. If people like Mark McClellan, MD, the former CMS head under President George W. Bush, are right, these programs will soon become the new normal in healthcare. They will then be expanded in a much bigger and broader scale. Joining this experiment now means becoming part of a new system of care at the ground floor.

Time to get out of denial

Despite all the evidence, plenty of executives are still wondering whether any of the changes before them will come to pass. I think they are in denial. I think they want to return to the good old days, when life was simpler. But this is wishful thinking. The world has changed and healthcare is changing with it, and whoever lives in this bubble is due for a rude awakening.

Sure, there are a lot of challenges ahead, but there is also an incredible number of opportunities. Despite all the problems we face, healthcare is an industry with a strong future. The glut of babyboomers reaching retirement will need a lot of healthcare. Even though Medicare will probably undergo revolutionary change, It is not going to go away. The payment system of the future will reward value-driven care, not just volume.

This is not a time for the faint-hearted. As with anything worthwhile, there will be winners and there will be losers. But for those who are dedicated to healthcare as a calling and are willing to embrace change, this is a thrilling time. Becoming a success will take all your skills, ingenuity, smarts and not a little bit of luck. But you can survive the test of today, and wind up with more than just a T-shirt for your troubles.

Chuck Lauer ( was publisher of
Modern Healthcare for 33 years. He is now an author, public speaker and career coach who is in demand for his motivational messages to top companies nationwide.

More Articles by Chuck Lauer:

Don't Let Fears About Healthcare IT Mire You in the Past
10 Challenges Healthcare CEOs Can No Longer Ignore

Finding Optimism in Healthcare Change

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars