Chuck Lauer: Finding Optimism in Healthcare Change

It's becoming increasingly obvious to me that healthcare is entering a completely new world, which will involve some pivotal shifts for hospital and health systems. But as I meet with healthcare executives around the country, I am struck by the amount of optimism I see. There seems to be a feeling of acceptance –– a sense that change is inevitable, and we must be prepared for it. Even though hospitals and systems face some very sobering issues (see my thoughts on Medicaid below), I think this is the right approach. Change can be very hard and unforgiving, but in the long run, I believe, it is generally for the better.


Here are a few modest observations on confronting the changes we see before us.

1. Act as if the healthcare law is here to stay. Even though the Patient Protection and Affordable Care Act is under challenge in a variety of ways –– from the courts to the Capitol and ultimately at the ballot box –– many healthcare CEOs I talk to are wisely operating under the assumption that it will survive more or less intact, and they will need to deal with it. Those who think the law will just go away should consider "Pascal's Wager," from the French philosopher Blaise Pascal. He stated that even if you don't believe in God, act as if you did. Being wrong could be catastrophic.


Now, I'm not saying the healthcare law is anything like God. Far from it. But in the next few years a multitude of consequential provisions are due to go into effect, including accountable care organizations, an independent payment review board and an insurance coverage mandate for individuals. Some of these provisions are under intense challenge making for a murky future. Healthcare CEOs are having to chart their course through a pea-soup fog. That means, in part, listening to your gut and realizing that, whatever happens, change is a fact of life. Many wise healthcare CEOs are taking steps to prepare their institutions for the road ahead. They are modernizing their systems so that they can operate on a much more efficient basis, not only saving money but also delivering the highest levels of quality. That strategy always makes sense.

2. Medicaid is under threat. In their battles to cut bloated budgets, many state and federal lawmakers want to slash Medicaid spending, but they need to be careful not to throw the baby out with the bathwater. Even now, some public and private hospitals serving the poor and the underinsured are only just getting by. For example, one prominent hospital here in Chicago that heavily depends on Medicaid has been operating with about four days of cash on hand. Talk about narrow margins! If states continue to ratchet down Medicaid reimbursements, many of these essential institutions will go out of business. Where would their patients go? This is a gut-wrenching problem that policymakers don’t seem to be addressing. Substantial Medicaid cuts could turn into a very real crisis with no happy ending.

3. Medicare must be revamped. All the tinkering being done with the Medicare program these days disregards one fact: this vast program is desperately in need of a revamp. Medicare is in real danger of running out of money. Clearly, something has to be done to make sure it stays solvent, and yet many in Washington are afraid of making the necessary changes. Until that is done, the program will limp along and its future role will be questionable in terms of policies and reimbursements for hospitals and physicians.

4. Hospitals are consolidating. Hospital consolidation is a huge phenomenon that everybody has been talking about. As reimbursements get tighter and federal regulations require more unified approaches to healthcare, many stand-alone hospitals are joining larger systems. They are coming together to pool their resources. This makes sense.

5. Hospitals look to physicians. The impetus for consolidation seems to come down to hospitals' key resource, their physicians. To dominate their markets, hospitals are using physicians as their lead marketing tool. This fact was brought home to me when I recently hosted a panel discussion on consolidation, including Charlie Martin, president and CEO of Vanguard Health Systems; Mike Means, CEO of HealthFirst; Jim Ramsey, president of the University of Louisville; and Don Wegmiller, chairman and co-founder of C-Suite Resources. Their ideas were fascinating, and afterwards they received a standing ovation from many in the audience.


The thinking goes that since hospitals and systems' success will be dependent on referrals, they have to actively recruit physician practices. After all, without physician referrals for tests and surgery and other revenue-producing programs, even hospitals with all the latest equipment and finest nurses and technicians would just be empty shells with no income. Of course, how the trend of hospitals hiring physicians works out remains to be seen, but physician-hiring is progressing at a rapid pace and could continue for some time.


How much change can you take? Based on my own perspective, I have seen healthcare evolving for decades, but it seems the noise is louder now. I believe the industry will go through a reshaping and a reordering process. Despite the many bumps on the road before us, we will end up very different from today. And, I sincerely believe, we will become more efficient and more patient-friendly. Nobody can argue with that.


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.


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