The Attack on Non-Profits

I previously had written on the attack on healthcare with the movie "Sicko" by Michael Moore. Mr. Moore is merely a director who's goal is to shock the public into buying tickets. Healthcare is now up against a more formidable foe, the federal government. The Internal Revenue Service is introducing drastic changes to the way that hospitals must file their taxes. The new form 990 is going to require hospitals to describe the charity that they give to warrant their charitable status. Until now, hospitals have had to do one of three things to prove their worthiness.

1. Maintain an Emergency Room and keep it open regardless of patient's ability to pay

2. Subsidize or give free care to patients

3. Provide an unmet need to the community

Hospitals are being challenged about their tax-exempt status. Executive teams and boards will need to review these new rules to make sure they do not put themselves at risk.

It Just Makes Me Sicko

I'm going to attempt to bring together two of the articles that I read today:

The first was an article by the McKinsey Quarterly, which I must say is a must read for all health care professionals. It gives a great overview of business as a whole and ideas can be taken from the articles about other industries and related to health care. Anyways the article was titled, "Ten Trends to Watch in 2006." Not very current, but useful all the same. Of particular interest to me was trend #6, the role and behavior of big business will come under increasingly sharp scrutiny. This trend didn't take a great amount of foresight, but it is beginning to take hold of the health care industry.

Which leads me to the second article I read today on the Alan Katz Health Care Reform Blog. This article discussed the new documentary by director Michael Moore titled, Sicko. Mr. Moore's goal is "to eliminate private, profit-making health-insurance companies." Mr. Katz discusses in several postings about how Mr. Moore's film is created to mislead the public into thinking that a single-payer system is the solution to the U.S. health care problem.

I have written before about the need for members of the community to come together to help improve the health care system as a whole. It is my opinion that big business and insurance companies are not "bad", and don't need to be attacked in any manner. Health care workers need to fight this label that is being put on them that they are only interested in profits and care nothing for the people. Mr. Moore's work does allow for the discussion to take place on a larger scale, but it is destructive in a manner that brings us farther from a solution.

Interesting Health Care News

Medicare is using a little common sense - click here

Some thoughts on charges and quality - click here

Mission Impossible

Everyone has to have a mission statement. At least that is the conventional wisdom that hospital have taken from the for-profit world. I've been looking at many mission statements from various types of institutions and find many of them lacking. In particular, I looked at mission statement for these institutions.

Johns Hopkins Hospital -
To be the world's preeminent health care institution
To provide the highest quality care and service for all people in the prevention, diagnosis and treatment of human illness
To operate cooperatively and interdependently with the faculty of The Johns Hopkins University to support education in the health professions and research and development into causes and treatment of human illness
To be the leading health care institution in the application of discovery
To attract and support physicians and other health care professionals of the highest character and greatest skill
To provide facilities and amenities which promote the highest quality care, afford solace and enhance the surrounding community.

Google - Google's mission is to organize the world's information and make it universally accessible and useful.

Aetna - Aetna is dedicated to helping people achieve health and financial security by providing easy access to safe, cost-effective, high quality health care and protecting their finances agaisnst health related risks.


When I look at these three statements, I think about how useful they are. If I had to rank them they would be Google as the best and Hopkins as the worst. The reason being is that I believe a good mission statement is short, concise, but not vague. As an employee at Google, I would know what to think about to bring value to the organization. At Hopkins, I'm not so sure.

Interestingly enough, I looked up the mission statement of a hospital in Maryland that I knew was having financial and operational difficulties. The mission was no where to be found. This teaches us that short is better than long, direct is better than vauge, but something is obviously better than nothing.

Cash Buffetology

Use your cash wisely, invest in organizations that provide real value to your stakeholders. Growing a hospital is a difficult operation. Hospitals don't have the margins and cash flows to make big aquisitions. We can't use this as an excuse, but should use it as reason to invest our cash more wisely.

Many people know Warren Buffett as an extrordinary investor, but I look at him as an incredible businessman who knows how to grow an organization. Hospitals should look at Buffett's growth strategies as a means of minimizing risk and running high class operations.

There are two Buffettisms that I think are applicable to hospitals:

1. When others are greedy that is the time to be scared, and when others are scared, that is the time to be greedy. One thing I have learned from Mr. Buffett is that sitting on cash and waiting for the right opportunity is infinately smarter than spending cash on the next hot thing that comes along. Not too long ago, hospitals went on a craze of merging with other hospitals in hopes of aquiring economies of scale. They didn't look closely at how they were using their cash, only that they didn't want to be left without a dance parter.

2. Aquire organizations that have a position in the market that is impervious to price fluctuations. Another business can always slash prices to compete, but not all can provide a service of such value that price is no object.

All investors are instructed to read Buffett's chairman's letters for guidance. Hospitals should give it a try.

Photo courtesy of Forbes magazine

Better Use of Charity Dollars

Last week I attended a golf tournament to raise funds for a hospital in my community. The event was a great success for the hospital which raised over $100,000. Last week I wrote about more effectively using our health care dollars to improve outcomes. It is only my assumption, but I would guess that money raised at events such as this used to fund new equipment or buildings for the hospital to use to improve their care for their patients.

Then I got to thinking...is this really the best use of all of these charity dollars? New buildings and equipment are great and I know they do a lot to advance patient care, but there may be a better return on that investment. I think that it would be more economically advantageous for the hospital to use the money raised through charity to more efficiently and effectively take care of their poor population. This may include funding studies regarding throughput or workspace design. Anything along those lines would not only have an immediate impact on the poor population, improving the health of the community, but would also have a long term return regarding all patients.

Political Reform in Health Care

The basic purpose of any insurance is to provide a safety net incase some unforeseen event occurs in one's life. When insurance works it appropriately, it covers an event that can have a high impact, but has a low probability of occuring. This is where we are going wrong with our thinking of paying for health care.

In today's Washington Post, Steven Pearlstein writes about the democratic strategy for health care reform. He speaks about two of the candidates, Hillary Clinton and Barack Obama. He contrast Mrs. Clinton's approach of attacking the insurance and pharmaceutical companies for making "unreasonable" profits with Mr. Obama's approach of coming up with a solution that satisfies all constituents. While Mr. Obama's approach sounds nice, he still places much of the blame on the pharmaceutical and insurance companies for profiting from health care.

I think the best approach for any candidate to take is not that there are evil constiuencies out there that are preying on the American people. The American people seem to want to comsume a large amount of health care services, and there is nothing wrong with that. What is wrong is with all the money that we are spending as a nation, up to 15% of GDP, we are one of the least healthy nations in the world. Our inputs are producing very little return on investment.

Return on investment is something that for-profit companies know very well. So instead of placing blame on different parties, maybe we should enlist their expertise and help to find a solution that improves the output of our consumption, better health.

Here is some more coverage of Barack Obama's health care plan.

Physicians and Informed Patients

Here is an article posted on The Health Care Blog. I had a few comments about this situation.

When reading articles like this it always makes me uneasy about the job that physicians are doing for the patients. Are they doing what they think is right, or are they doing just enough to not get sued? I think in many cases it is the later.

So what really is the problem here? Is it that physicians are intimidated by new technology? I think that obviously is not the case. Every day physicians come into contact with some of the most sophisticated technologies in the world. Mastering database software is no problem to many of them.

Instead, I look at the ease of being sued by their patients as being the reason many physicians are reluctant to adapt to new technologies. However in order for any of these consumer directed health care plans to work, patients are going to need to use information technologies to inform themselves and their physicians. And physicians are correct, more information for the patients will lead to more documents that can be used in court. Policymakers need to free physicians from practicing in a manner to not be sued and encourage them to use the tools available to improve the health of their patients by limiting liability for mistakes.

Hospital Beuracracy at it's Worst

One of the many blogs that I read on a daily basis is the Freaknomics Blog by Steven Levitt and Stephen Dubner. I always find their articles to be thought provoking which is the same goal I have with this blog.

Anyways...earlier today they posted an article on military advancement. The article explains that in the military, promotion is awarded based on length of service, not on merit. The result of this being those who are strong performers find other careers out of frustration and the middle or low performers are promoted to the top.

I believe that hospitals in the United States operate in a very similar fashion. As an early careerist, I see that there are many individuals that are put into positions because of their seniority in the organization. Ambitious individuals are forced to move around from hospital to hospital to progress through to the executive level. This has to be a large drain on an organization's performance.

GE is famous for its move up or move out culture, creating a highly competitive workforce of high performers. This is not exactly what I am advocating, but I believe that hospitals need to start to move in this direction. Are hospitals in the United States or even the World thinking about and implementing systems that reward positions based on merit?

Healthcare in the '08 Presidential Election

One of the purposes of this blog is to discuss health care and hospital care in the United States and how to improve it to better the lives of all Americans. One of the major topics that will need to be discussed is how we are planning to pay for the cost of healthcare. In the '08 Presidential election, health care is going to be a hot topic. In the coming weeks I would like to highlight and discuss some of the major initiatives that candidates are proposing. Please post comments on the discussion topics so we have have a discussion of the possibilities to change. Here is a list of some of the candidates and their positions.

Democrats
Barack Obama

Hillary Clinton

John Edwards

Republicans

Sam Brownback

Mitt Romney

Tommy Thompson

Behavioral Game Theory

Recently, I read a blog post on the Freakanomics blog that talked about Behavioral Game Theory. This subject intrigued me in its use for healthcare. Game theory is an economic principle which involves making the best choice form among available strategies given imperfect information. This theory could be applied to healthcare policymaking, physician decisions, and consumer directed health plans. I plan to start doing some research on the subject and expand further in future posts. Here is a link to a book by C.F. Cramer titled Behavioral Game Theory: Experiments in Strategic Interaction.

http://press.princeton.edu/titles/7517.htm

The Cuban Clinic Model

I was reading an article in the Miami Herald today on the implementation of Cuban-style clinics for senior citizens. This model is the model all of health care should be implementing and has great growth potential for hospitals.

These clinics involve free exercise classes, free lunches, and access to primary care physicians. Hospitals can integrate this model into their business plan as a means of keeping the community healthy and driving business through primary care physicians.

Place these wellness centers in locations that are convenient to the public such as shopping centers and business parks. Bring people in with these free services and staff a primary care physician or nurse practitioner on site. Finally, negotiate into your managed care contracts a payment for each of these patients that use the facility. The going rate goes about $1,000 per patient according to the Miami Herald.

If you would like to read the full article:
http://www.miamiherald.com/154/story/38715.html

Walter Reed Is Just the Beginning

One seismic shift in the layers of the Earth is the impetus of a tidal wave. That seismic shift has occured at Walter Reed Army Medical Center.

"This is going to be comprehensive; it's going to be vigorous," said Donna Shalala, who is in charge of investigating the care at Walter Reed. The American public is outraged at the conditions soldiers arriving back from Iraq and Afghanistan face in their hospital care. The public holds hospitals to a high standard in quality of their work. However, Walter Reed is having issues with taking care of the families of the poor patients, upkeep of the facility, cutting through bureaucracy to treat patients in a timely and sufficient manner.

They say that hundreds of miles out into the ocean one can't even see a tidal wave forming. The outrage on display now is nothing compared to the outrage to follow. If the Washington Post were to go to any hospital in the United States, what would they find? Would they find the perfectly managed facility that they expect? Hospitals need to prepare themselves to address issues in their facility that they would not want on the front page of their local newspaper.

The tidal wave is just on the horizon, better batten down the hatches.