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Health Care Reform: Views From The Hospital Executive Suite

December 18th, 2013

Pessimism pervades the national dialogue surrounding healthcare reform. Despite fixes to the federal exchange website and marked improvements in enrollment, politicians and pundits continue to assail the Affordable Care Act (ACA), offering grim predictions about the future of healthcare after its implementation. The law, they claim, is an unworkable train-wreck. It will produce a healthcare system with significantly higher costs, lower quality, and bureaucratic confusion.

The public has seemed equally pessimistic. Fifty-four percent of Americans, according to a recent poll, believe the ACA will have a negative impact on the healthcare system, compared to only 24 percent who anticipate a positive impact. Nearly three-quarters expect the quality of healthcare to decline or stay the same, while only 11 percent expect it to improve. More than half expect costs to rise while only 9 percent expect them to fall.

Such pessimism, however, is hardly a credible predictor of the success or failure of the ACA. Politicians, pundits, and the public are largely removed from the inner workings of the healthcare system, so it is difficult for them to form an accurate, 360-degree view of reform. Moreover, most Americans (70 percent) readily admit they know little about the ACA or its potential impact.

A more meaningful source for an appraisal of healthcare reform, and for predictions about how it will fair, would be individuals who are especially informed—people who have spent their entire careers on the front lines of the healthcare system deciding how budgets are managed and how care is delivered—people like the leaders of America’s hospitals and health systems. Healthcare reform is catalyzing major changes for these executives and their institutions. Wouldn’t it be helpful to know if they share the public’s apprehension and pessimism?

Recently, we surveyed 74 C-Suite executives from large hospitals and health systems across the United States. The executives were either part of the University Health System Consortium or the National Association of Children’s Hospitals, and they received emails asking them to participate. Our respondents included 46 CEOs, 17 Presidents, 4 CFOs, 3 COOs, and 4 individuals with other leadership titles. Nearly all of them were managers of large academic medical centers. Their institutions, on average, employed 8,520 workers and had annual revenues of $1.5 billion.

The differences in attitudes were stark. Unlike politicians, pundits, and the public, the leaders of America’s leading hospitals and health systems are optimistic about reform (Figure 1). Fully 65 percent indicated that by 2020, they believe the healthcare system as a whole will be somewhat or significantly better than it is today. And when they were asked about their own institutions, the optimism was even more dramatic. Fully 93 percent predicted that the quality of care provided by their own health system would improve. This is probably related to efforts to diminish hospital acquired conditions, medication errors, and unnecessary re-admissions, as encouraged by financial penalties in the ACA.

On cost control there was similar optimism: 91 percent forecasted improvements on metrics of cost within their own health system by 2020. The vast majority, 85 percent, expected their organization to have reduced its per patient operating costs by the end of the decade. Overall, the average operating cost reduction expected was 11.7 percent, with a range from 0 percent to 30 percent (Figure 2). Most executives believed they could save an even higher percentage if Congress enacted legislation to accelerate the shift away from fee-for-service payment toward models like bundled payments. In such a case, the executives projected average annual savings of 16.0 percent, which, if applied across the healthcare system, would amount to savings of nearly $100 billion per year (Figure 2).

How can such savings be achieved? Hospital executives foresee three strategies rising to the top: reducing the number of hospitalizations (54 percent), reducing the number of readmissions (49 percent), and reducing the number of emergency room visits (39 percent). Other likely sources included reducing costs for medical devices (36 percent) and drugs (27 percent), along with improving back office efficiency (23 percent) (Figure 3). These leaders believe that savings can be found through a combination of greater administrative efficiency, price reductions, and reduced reliance on hospital services.

They also identified a variety of ways the federal government could further facilitate cost reduction in hospitals. Roughly a third of respondents (31 percent) identified setting a specified timeline for transitioning Medicare reimbursement off of the fee-for-service payment system as a policy change that would facilitate cost control. Another 30 percent supported aligning payment policies between Medicare and private insurers, and 28 percent supported separating funds for training and research from Medicare payment and maintaining current funding levels.

Even without further changes in federal policy, hospitals are initiating significant changes aimed at controlling cost growth. Every respondent indicated that his or her institution has undertaken new initiatives to improve care delivery for chronically ill patients within the last two years. They are utilizing electronic health records and predictive analytics to intervene before patients are admitted to the hospital. They are reorganizing their support staffs to enable more effective remote care management, allowing healthcare to move out of the hospital and into the home. They are constructing team-based, integrated systems that enable physicians to focus on value, not simply volume. And many are already seeing positive results in quality and/or cost. As Medicare recently reported, there have already been measureable reductions in the hospital re-admission rate, likely due to initiatives like these.

Among respondents who were pessimistic about the ACA’s impact on the healthcare system, the primary problem identified was administrative complexity. Half of executives who believed reform will not improve the system cited “persistent administrative complexities beyond the institution’s control” as the greatest barrier to their organization reducing operating costs. They were also wary of misaligned reimbursement incentives. One executive cited the “short sightedness of payers who lack [an] incentive to focus on long term patient quality of life and cost because of [the] need to satisfy quarterly returns to shareholders.” Others bemoaned the “lack of payment for coordination services” and the “lack of continuum-of-care reimbursement.”

It is easy to be pessimistic about reforming the healthcare system. Change causes unpredictability and therefore anxiety—and anxiety makes people pessimistic. Indeed, for the leaders of America’s flagship hospitals, it would be particularly easy to adopt a pessimistic outlook. Funding for their research missions has been declining. Support for their teaching mission is under threat. Payments for patient care are facing downward pressure, forcing them to transform their business models. Yet hospital leaders appear to be optimistic about the future of the system.  Even those who were pessimistic were mostly worried about problems that have plagued the healthcare system since long before the ACA—like administrative complexity and misaligned incentives.

Leaders on the front lines of American healthcare appear to believe that the gravest challenges facing the system today—high cost and uneven quality—are surmountable. They expect that by 2020, their own institutions, and the system at large, will be better, both in terms of cost and quality. If we work together to implement sensible reforms, in the near future the healthcare system will be better than it is today.

FIGURES (Click to enlarge):

Figure 1. Hospital Executives’ Views of the Future of the Health Care System


As a result of the passage of the Affordable Care Act and the Supreme Court’s ruling on its constitutionality, by 2020, do you believe the US health care system will be…?

As a result of the passage of the Affordable Care Act and the Supreme Court’s ruling on its constitutionality, by 2020, on metrics of quality, do you believe your health system will be…?

As a result of the passage of the Affordable Care Act and the Supreme Court’s ruling on its constitutionality, by 2020, on metrics of cost, do you believe your health system will be…?


Figure 2. Hospital Executives’ Outlook on Possible Savings in Operating Costs


What percentage of per patient operating costs do you think your organization will have saved by January 2020 compared to its 2012 performance?

Now assume Congress enacts legislation to accelerate the shift away from fee for service medicine towards models like bundled or episode-based payments… By the end of the decade, January 2020, what is the maximum percentage of per patient operating costs that you believe your organization could save compared to its 2012 performance?


Figure 3. Most Likely Sources for Operating Cost Reductions


If your organization’s payers incentivized you through some type of risk-based contract to reduce expenses, what do you believe are the three most likely ways your institution could reduce operating costs?


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23 Responses to “Health Care Reform: Views From The Hospital Executive Suite”

  1. Thomas Cox PhD RN Says:


    I appreciate your appreciation and I appreciate you, even when I disagree with you.

    We can both agree that our current system is broken, without agreeing on how to fix it. That is where we are at the moment.

    We do in fact both agree that the fee for service system provides incentives to providers, and the health care system as a whole, to produce more services.

    We probably even agree that these incentives have led to a system that is unparalleled in the world for being able to deal with many of the problems it created – sort of like how one can get stuck far further from the closest road in a four wheel drive vehicle than in a two wheel drive vehicle.

    We can both agree that fee for service payment systems encourage providers to identify the need for more care and reward the provision of more care and that this, in turn, leads to higher earnings for health care providers.

    We can both agree that our population includes many overweight and sick people.

    We can both agree that the 15-20% overheads common in health insurance premiums are a total waste. I would actually go further and argue that this significantly underestimates waste, fraud and abuse by insurers.

    We can both agree that the current business model has worked very well if the objective is to make profits providing medical products/services, operating a profitable insurance company and producing population health indices that look very bad and indeed producing a population of older, sicker people.

    We can also agree that the model doesn’t work at all well for unhealthy, overweight individuals.

    We begin to have irreconcilable differences after these substantial agreements.

    I, for example, am not convinced that the unhealthy, overweight individual is being disadvantaged by having to pay higher premiums. In fact, to the degree that this person has charted the entire course of their life to achieve their status as an unhealthy, overweight individual I would suggest that their high premiums are entirely appropriate.

    That homage to the private insurance sector acknowledged, I do not believe that most of the people that we would both agree fall into the category of unhealthy, overweight individuals have actually been working throughout their entire lives to achieve that status. Rather, I think that they have simply swallowed, hook, line and sinker, a model for consumption of calories and a disregard for exercise that were largely unconscious.

    Cigarette smoking is a far better example, because many people now developing lung cancer and heart disease are people who believed that cigarette smoking was a relatively low risk enterprise when they began smoking in the 1940s – 1960s. One can argue, and I would, that as long as we do not prohibit smoking, as we prohibit diving off skyscrapers, our citizens have a reasonable expectation that they are free to indulge and that this will not be held against them.

    But even if we do not agree on that point, we both likely can agree that smoking and obesity take decades to lead to obvious illness and treatment. As such, the cumulative effects are going to continue, even if these former smokers and unhealthy, overweight individuals stop smoking, stop over-consuming calories and start exercising up a storm. They will still need high cost care for acute illnesses as well as injuries.

    More to the point, these behaviors and their long term health sequelae, seem clearly beyond the control of physicians. In fact, most patients seem to believe that these issues are beyond their control and they certainly have greater control over their behavior than their physicians do.

    Physicians, unless I greatly misunderstand the Constitution and the Bill of Rights, have not been graced with the equivalent of a feudal baron’s authority over their patients, their patients’ hobbies, dietary or exercise practices. These remain the unique purview of individual patients and if I might be permitted a homage to gun control opponents, with whom I generally vehemently disagree, I think most patients would respond to efforts by their physicians to block them from eating their 3,000 calorie super-sized take out food combos, smoking cigarettes, sky diving, alligator wrestling or otherwise indulging their risk health behaviors that might lead to higher than average need for, and cost of, health care services with statements to the effect of:

    “I’ll give you my burger/cigarette/Slurpee/parachute/Banana Split (vice of your choice) when you pry it from my cold, dead hands”

    The appropriate approach to managing health insurance risk, is life-long coverage and life-long level payment premiums, an approach most approached by whole life insurance policies/premiums. The problem here is not that the premiums for older Americans, who have already made the mistakes that will result in their future, high cost care, are too high. The problem is that these premiums were not spread/collected over the last 5-7 decades while these people indulged in these behaviors. A tax on cigarettes, or a tax on super sized take out food or sky diving jumps, which went into an insurance fund, would be a relatively painless way for people to pay their premiums as they incurred the risks of high future health care costs.

    The cause of this failure to spread the cost of future care across a policyholder’s entire lifetime, is a direct consequence of insurance policies that are based on single years, and are priced for too short a period of time, such as an annual policy period. High premiums, late in life, are a sign of a failure to collect the premiums up front, just as it would be impossible for most people to afford to buy life insurance after the age of 70 because the premiums would be too high.

    The corollary in malpractice insurance is the claims made malpractice insurance policies most health care providers have, that are priced lower than they should be, but which carry with them a time bomb of potentially unaffordable premiums for tail coverage. These high priced tail coverage plans will come as a shock to many health care providers who suddenly discover that their tail policies will cost 10-20 times more than the last year of their claims made malpractice policy.

    Whole life insurance, as I am sure you know, overcharges younger, healthier policyholders in the early years, so that the premiums will remain level throughout the life span of the insured. The same approach is possible in health insurance, despite disclaimers by Steve Jonas that everyone uses their health insurance benefits, as though some people do not die having used few, if any of their benefits either due to illness or traumatic injury.

    The real difference between health insurance and life insurance is not whether people use up their benefits – everyone dies – so every whole life insurance policy benefit will have to be paid off at some point. The differences are two-fold: The timing of benefit payments and the fact that people like to consume health care services where few people aspire to consume mortuary services.

    Full life span health insurance, managed by a national health insurer, would eliminate those inefficient insurers, spread risks across policyholders geographically, occupationally, and by age, gender and time. Risk spreading over time being something that annually contracted health insurance cannot ever achieve.

    So, I would say that we agree on a great deal, but we do not agree that global capitation is compatible with efficient health care systems. You still have the burden of demonstrating that global capitation can ever work in an efficient health care (finance) system and I have no intention of relieving you of that burden.

    However, although you are absolutely wrong about global capitation, you do have the solace that more people agree with you at the moment, though they too are wrong, than agree with me.

    I would also point out that few if any health care providers seem to be interested in explaining to their patients that it is not some remote clerk in an insurance company, or managed care organization, cubicle that is rejecting their claims for benefits, but their physicians, hospitals, nursing homes or home health agencies that are denying these claims.

    Absent such prior disclosures by your globally capitated providers, I think the transparency you offer is an empty promise as is your suggestion that global capitation will guide the health care system toward efficiency.

    Global capitation, unless you come up with a proof of concept, violates the last 250 years of quantitative reasoning. More to the point, it requires something of providers that they simply cannot achieve, absolute control over their patients. Unless someone is going to grant physicians such control over the poor behavior of their patients I think it is monumentally unfair to punish them for their patient’s poor choices.

    That said, I have no problem at all with criminal prosecutions of providers who offer fraudulently unnecessary services and I assume you would agree with that idea.

  2. Steven Cosby Says:

    Re: Thomas Cox

    I appreciate your critique. However, my point is that its the way we provide incentives to providers or more broadly put our health care system as a whole. The more units produced the more one is paid or earns. U.S. has a largely overweight and sick population. I trust you agree with that evidence. Who benefits most directly from an overweight and sick population? …….And all that care is financed through an insurance mechanism, laundered at a 15% to 20% administrative fee. Its been a great business model if you are a provider of medical products/services or insurer, but not for the unhealthy overweight individual paying the high premium.

    I am back to my original assertion: The only way to save the system is through global capitation with ample transparency to the risk taking provider.

  3. Thomas Cox PhD RN Says:


    Actually, it is you who are making entirely unfounded assumptions and ignoring the real problems. Where you assert nearly universally poor performance among “all” providers, I assert that “some” providers act entirely inappropriately. Where you assume the issue is cultural – I assert that the issue is clinical, mathematical, financial and economic.

    Of far greater concern however, is your failure to focus on the impact of capitation like health care finance mechanisms in efficient health care (finance) systems, when, as you suggest: “The focus should be the right care, at the right place, and the right time.”

    My argument addresses what happens when insurance risks are passed to health care providers when NO health care provider EVER under-treats, or over-treats, their patients, the end goal you say you wish to achieve, but have offered no proof can be achieved using capitation-like health care finance mechanisms.

    What capitation does do, is make it impossible for efficient clinicians to continue operating efficiently. The problem, as I have explained and you have yet to disprove, is that the variation in average health care needs and costs in small portfolios of insurance risks (Capitated health care provider’s patient rosters), is far higher than the variation in average health care needs and costs in large portfolios of insurance risks.

    As a result, insurance risk assuming health care providers face high probabilities of financial ruin if they do not make pro-actively make deep cuts in patient care. It is this need to cut care to avoid their risks of poor financial outcomes, not some empty promise about capitation-induced clinical efficiency, that explains why capitated providers cut patient care costs.

    But efficient clinicians, the state we both assert we want to see, cannot make such cuts without failing to provide minimally acceptable care, because they are already using the most efficient and least costly diagnostic tests, the most efficient and least costly treatments and the most efficient and least costly medications. That is what operating efficiently means in your own words.

    If you can actually prove, as opposed to simply repeatedly asserting, that the variation in average costs in small portfolios of insurance risk is uniformly lower than the variation in average health care costs in large portfolios of insurance risks, you have the makings of a Nobel prize in economics, and a Fields medal in mathematics, because you are going to upset 250 years of statistics and probability theory.

    I don’t think you can do that but I would be really interested in seeing you give it a go.

    The alternative is that you keep repeating your unfounded and indefensible assertion that capitation-like health care finance mechanisms can actually work in efficient health care (finance) systems. Unfortunately for you, time is your enemy because your assertion is incorrect.

  4. Steven Cosby Says:

    You are making the giant leap or assumption that providers do the right thing. More care is better care. And therefore less care is automatically wrong. The lot of all physicians and our medical industry is engaged in excessive care, not because they are corrupt as you propose but the culture evolves to over treat and over prescribe. The focus should be the right care, at the right place, and the right time. Our providers are considered the decision makers of our care. But to have that authority leads to great abuses. Enormous abuses. If we are going to place the provider up on the pedestal we must make them accountable. Or in other words, all of us have to be in that sweet spot of balancing opposing objectives: cost vs. benefit. Let the provider be there, pay a primary care doctor $6k/year/patient or $15,000.000/year let him be responsible for all care. Let him select the best Rx with the best specialists that produce the best outcome. Better than an insurance professional doing it.

  5. Thomas Cox PhD RN Says:


    I can certainly accept the notion that some health care providers furnish excessive care and commit fraud in order to earn higher profits under fee for service payment systems. Of course, I also understand that the same providers will fraudulently provide inadequate care, to earn higher profits, when paid through capitation like health care finance mechanisms. Criminals are criminals. Switching from fee for service to capitation won’t change the behavior of criminals.

    The core flaw in capitation-like health care finance mechanisms is that small insurers are terribly inefficient insurers. Inefficiency means wide swings in loss ratios in small portfolios. In short, small insurers frequently fail to achieve their profit goals, incur operating losses and become insolvent. Large insurers rarely fail to meet their profit goals and almost never become insolvent unless very poorly managed. When that small, inefficient and now insolvent insurer, your health care provider, runs out of money, they can no longer provide any care for you or their other patients.

    But, there is a silver lining, all insurers can actually see their trends as they are unfolding. So, a health care provider who sees that they are in danger of losing money, for their calendar fiscal year, by October 1, can start withholding diagnoses and treatments from their patients between October 1 and December 31. Fee for service providers would never stop treating patients because they make more money when they do their jobs. Only capitated health care providers have a disincentive to do their jobs.

    In fact, the most astute risk assuming health care providers will quickly realize that before their fiscal year even begins, they can determine how much less care, than assumed in their capitation payments, they need to provide, throughout the year, to have specific probabilities of earning profits of 0 – 20%; specific probabilities of incurring operating losses or specific probabilities of becoming insolvent. These astute providers will simply cut back on patient care by whatever amounts they need to be sure they will earn profits, avoid operating losses or insolvency at year end.

    The problem is that each insurance risk assuming health care provider has to make these Draconian cuts in patient care to have a decent chance of achieving their reasonable profit goals. The aggregate effect of all these individual choices is reduced system capacity and decreased quality of care.

    The most criminal health care providers are comfortable with both fee for service and capitation because they do not care whether their patients are hurt as a result of excessive, or inadequate care, as long as they earn high profits.

    But unlike fee for service payment systems, where most providers will furnish adequate care and only a small number of patients will be harmed by excessive care, capitation is so inefficient that all providers have to cut back on care in order to be sure that they will not lose money at year end. As it turns out, being a tiny, extraordinarily inefficient insurer is a very bad financial move for anyone and a really bad situation for patients.

    So, between the two, the most inefficient payment mechanism is clearly capitation, not fee for service. You can monitor a fee for service payment system for fraudulent billing very easily. Providers actually submit statements that they have provided care under fee for service. Monitoring a capitated health care (finance) system for inadequate care is nearly impossible. Providers get paid for delivering uncertain types and quantities of care and only the provider actually knows whether the care that was needed was provided because if they do not diagnose a condition they do not have to treat a condition. Worse still, most analysts will conclude that less care is more efficient care so almost nobody is even looking for inadequate care.

    So yes, I really do appreciate the statistics. Small insurers errors in estimating population loss ratios are very large. Large insurers errors in estimating population loss ratios are very small. We should not let health care providers be small, inefficient insurers because they cannot manage insurance risks as and become increasingly inefficient clinicians as their legitimate concerns about failing financially rise.

    So, as a really simple example: Let’s say you have an incredibly efficient capitation system. It pays each provider enough, on average, to earn profits of 5%, over a year. Half of these providers will earn lower profits than expected and half will earn higher profits than expected, even when all the providers are efficient clinicians.

    The underpaid providers are not going to be satisfied because they worked harder and earned less than they expected, perhaps even losing money and becoming insolvent. The overpaid half earn undeserved higher profits than expected, for providing less care than they were paid to provide.

    Fee for service payment mechanisms handle such changes in epidemiological patterns quite fluidly, moving assets where they are needed as the needs of patients change. Capitation payment mechanisms make the wrong payments nearly 100% of the time.

    Yes, I absolutely agree that we should have efficient health care (finance) systems. The first step in that direction is eliminating inefficient, capitation-like, health care finance mechanisms that lead to less care, more expensive care, higher premiums and poorer population health outcomes.

    Here are some articles you can read that should help you understand the impact of portfolio size on small insurer operating results:

    Cox, T. (2011). Standard Errors: Statistical Consequences of Health Care Provider Insurance Risk Assumption. In JSM Proceedings, Section on Government Statistics. Alexandria, VA: American Statistical
    Association. 5180-5194.

    Cox, T. (2011). The Impact of Size on Success of Health Insurance Companies. Nurse Leader, 9(5): 38-41.

    Cox, T. (2011). Exposing the true risks of capitation financed healthcare. Journal of Healthcare Risk
    Management, 30: 34 – 41.

    Cox, T. (2010). Legal and Ethical Implications of Health Care Provider Insurance Risk Assumption. JONA’S Healthcare Law, Ethics, and Regulation, 12(4): 106-116.

  6. Steven Cosby Says:

    Thomas Cox:

    It is well understood that health care providers are dispensing unnecessary care. Its expected if we pay per unit. Capitation removes that incentive. The difficult thing with insurance premiums is the pricing trend. With your statistics background I trust you will appreciate this. Medical trend has had a compounding effect on your premium. If we can only reverse this trend by dispensing less, more effective care….that’s the holy grail.

  7. Thomas Cox PhD RN Says:


    You say: “Capitation and transparency are together the only salvation for our system. I am doubtful that we will do the right thing.”

    So how about explaining how capitation works in efficient health care finance systems?

    Near as I can tell “capitation” and “transparency” are at opposite ends of the spectrum of truth-telling. Capitation makes health care providers their patients’ health insurers. The less they do for their patients, the more money they make. How come physicians aren’t boasting about this to their patients? Wouldn’t that be transparent?

    So, let’s assume that we are talking about Joe Provider MD and according to many studies the optimal size for a primary care physician practice is about 2,000 patients. You want to capitate them. How much are you going to pay, per patient, per month? $50, $75, $100, $200, $500?

    So let’s say you are generous and give them $500/month, $6,000 per patient and a total of $12,000,000. They run their entire operation with that $12,000,000. Let’s also assume that this covers all their costs and will let them earn profits, at year end, of 10%. That is really generous. but what the heck. It is only funny money.

    If they only provide half ($5,400,000) the amount of care expected ($10,800,000), they add another $5,400,000 to their anticipated profits of $1,200,000 for a total of $6,600,000 for the year. What is efficient about that? Their patients just happened to be healthier than expected – probably has nothing to do with Joe Provider.

    Now, suppose the costs are just 20% higher than expected ($12,480,000), something not at all uncommon in a small portfolio of insurance risks. Now the provider doesn’t even break even. I do not know about you, but I don’t want to be going to see that physician the last week of their fiscal year when their staff have left, the phones aren’t working and the utilities were turned off for non-payment..

    Physicians, hospitals, nursing homes and home health agencies shouldn’t be in the insurance business. That ought to be a given for any sound finance system.

    Now, as to the minimum medical loss ratio issue. You won’t find me arguing in support of it. The obvious solution is a national, risk-retaining insurer. The loss ratio for a national insurer will be closer, in a probabilistic sense, to the loss ratio for the population than any collection of smaller insurers’ loss ratios. We wouldn’t need to impose minimum medical loss ratios if HMOs and insurers weren’t cutting patient benefits to increase profits.

    I suspect the difference between us is that I have actually worked in health care and done insurance and reinsurance rate making and reserving. So I understand what insurers and health care providers can do and what they cannot do.

  8. Esmeralda Says:

    There are inherent biases in this article that should be disclosed before you form an opinion.

    First, Ezekiel Emanuel is hardly a un-biased writer. I agree that it is more than just his familty ties to Rahm Emanuel that makes him biased, he (in his own right) is an outspoken advocate for universal, single-payer healthcare – look him up. If you search for Obama’s past speeches as a Senator, you will find that he envisoned the ACA as a “transitional” system that would prepare the nation for single-payer, universal heatlhcare within 20 years (he didnt think the nation would accept single payer all at once). So, he has a vested interest in this “interim step” called ACA.

    Second, 74 C-Suite Executives is hardly a large enough sample to speak for the entire nation’s hospital executive pool.

    Third, and maybe most importantly, look at the sample pool. Most of the executives came from UNIVERSITY hospitals (most Children’s hospitals ar also academic). Academia has always had a bias towards universal, single-payer healthcare. I’d be curious what the results would be if the sample were broadened to more corporate-owned hospital executives.

    I cannot imagine that there isn’t more outcry about the readmission penalty. Yes, hospitals shouldnt push to discharge those who are unstable and should provide case management to avoid being discharged into a unhealthy environment, but they also should not be held responisble if a patient is non-compliant with their care-plan and ends up readmitted because of it.

    Just my 2 cents.

    Esmeralda, Hospital Management.

  9. Steven G. Cosby Says:

    RE: Thomas Cox

    ACA does not make insurance more affordable or efficient. I think we can both agree on that. However, a national program that is efficient is absent as well. Medicare is a horrible example, its basically an ATM to the US treasury. Its “pay and chase” method leaves a lot to be desired and its abuses in overutilization in the aggregate make private insurers look mild. Our providers have been horrible stewards of our health care system and don’t expect the insurance company to look after your best interest.

    Please study the MLR regulation. Insurers will now only retain 15 to 20% of the premium dollar. As perverse as that arrangement is on containing cost the driver of premiums remain health care costs.

    Capitation and transparency are together the only salvation for our system. I am doubtful that we will do the right thing.

  10. Doug Marquardt Says:

    Well, it looks like the fringe 3% of respondents who believe the world will end if Obamacare is implemented are the same dudes commenting, along with the typical hyperbole. Anyone who thinks an “indigent single mother with children” owns a $5,000 Apple computer (try one-fifth of that price for most Apple Computers) instead of a $400 Windows-based laptop is using crazy hyperbole and should be ignored.

    The ACA will result in significant and sustained demand in health care jobs similar to the demand for programmers that began in the late 90’s. I rode that employment wave and its a v-e-r-y good thing for American workers to have demand for their skills that exceeds supply. In this case, it will be for jobs that cannot be outsourced. Our people and our economy will be healthier because of expanded health care. But that’s something wealthy conservatives don’t want in this country – anything that decreases the gap between rich and poor.

  11. Thomas Cox PhD RN Says:


    As I have said very often with regard to Ezekiel Emanuel, it isn’t his family link that is a problem, it is his affiliation at the Wharton School.

    If you want to understand, and explain to others, how insurance works, how to deliver the highest possible policyholder benefits at the lowest possible cost, as opposed, for example, to wanting to hire a team to obfuscate how insurance works, and create a scheme to maximize insurer profits, cut benefits to the lowest sustainable level without public outrage and make sure that policyholders pay the highest defensible premiums, your last stop would be the Wharton School.

    What America needed was a team to explain the mathematical principles that underlie efficient insurer operations, a concentrated effort to explain those principles to consumers and voters, and especially to members of the Senate and House, and unfortunately to a President who either didn’t want to know, or does not care.

    What we got were specialists in maximizing insurer profitability and perpetuating a myth that competition between insurers leads to higher benefits and lower costs.

    No surprise that premiums are rising, benefits are falling and our health care (finance) system is taking another big step on the road to catastrophic failure.

  12. Brent Frame Says:

    One of the authors of this biased article is Ezekiel Emanuel, one of the “creators” of Obamacare, and brother of Rahm Emanuel (former Obama chief of staff). This article had an agenda before it was even written.
    Could we please have unbiased and neutral covering of this topic!

  13. Thomas Cox PhD RN Says:

    Steven: You say:

    “Our economy never had an issue distributing insurance products. Insurance agents are plentiful on Main St. America. Or, one could go directly to the insurer.”

    Only problem with that is that it is a system that isn’t working for close to 50,000,000 Americans. Good reasons too. Bloated expenses, inefficient insurance risk management due to small insurer size and excessive emphases on claims denial. So bottom line add uncertainty about whether your insurer is actually going to honor their promises, high costs for inefficient insurers and low benefits. A national health insurer can cut costs, increase benefits and cover everyone for far less, in aggregate payments, than hundreds of private insurers.

    When a system has a failure rate of 15.9 percent I’d say it is time for a change. It only took a few days for the people at CMS to start dealing with their system malfunctioning – the private insurance industry hasn’t dealt with their failure rate over decades. Why? Because they don’t see 50,000,000 Americans without health insurance as a personal failure – but they should.

    The problem isn’t that the PPACA went too far – it is that in a senseless attempt to secure Republican support, the framers of the PPACA never tried to really explain how insurance works. Instead they gave up the soundest possible argument – that a national health insurer is more efficient than any other alternative.

  14. Tom Whalen Says:

    I am biased as I am the CMO for a Health Network, but I find it puzzling that such a survey of C-Suite health executives would not include the leading physician in the C-suite. If they were indeed surveyed it is all the more puzzling that none would respond.

  15. Anon Says:

    When were these data taken? What is the survey period?

  16. David Coghlan Says:

    Recently? What is meant by recently? If this poll was taken before the implementation of Obamacare, my guess is that hospital administrators would like to change their answers.

  17. Michael Johnson Says:

    That 54% of these hospital and health system executives say that reducing hospitalizations would be a likely way they could reduce costs if paid under a risk-bearing contract raises in my mind a troubling question: Are they currently admitting patients they don’t really believe need to be admitted?

  18. leetocchi Says:

    No wonder health reform is doomed…

    The first table shows that individual CEOs think their health system will do better than the country as a whole on cost and quality. They believe in their leadership to weather the storm and bring the ship home safely. In most cases that’s why they are CEOs, and they see opportunity in change. The tell is the 35% who say the country as a whole will be worse off or the same. The improvement in quality of care of 93% for their own institutions is not based on financial penalties imposed by medicare, but by the hard work being done to actually improve quality and by teaching to the test to get HCAPS and SCIP right for the inspectors. The government should be concerned about the cost of those programs and unlike any other government program the cost (for both the government and the industry must be accessed before more good sounding rules are forced on industry).

    The enthusiasm for bundled payments by hospital administrators is obvious…another pot of money to divide and they figure in competition with physicians they can win that battle.

    The third table has all the answers. Where will the savings come from reductions in everything. For individual players that is the answer, but for the country as a whole we are supposed to be adding 30 million more people to the insured rolls and reductions equal RATIONING. So, no wonder the politicians, pundits, and patients are pessimistic. The experts have spoken they are going to reduce cost and improve quality by their hard work and reduction in services and personnel. The country will spend more for less. Hence the negative view of the ACA.

  19. JD White Says:

    Spoiler alert-

    Aggregate healthcare utilization and costs can ONLY go up over the immediate feature – it’s an inelectable result of 1) demographics, 2) obesity epidemic, 3) decrease in number of provider hours per provider when salaried/pay-capped, frustrated physicians retire early, 4) lack of increased outpatient capacity to compensate for less care delivered as inpatients, 5) expanded insurance coverage demand (if you have any doubts about this, look to Massachusetts where all these phenomena are playing out…in a state with the most favorable provider/patient ratio in the nation!).

    How can we improve health indices AND decrease inpatient days, readmissions AND Emergency Department utilization – i.e. they ALL go down? When the obesity epidemic is out of control, driven by advertising, food conglomerates and corn/sugar subsidies…the amount of care required, esp. when boomer demographic tsunami is factored in , is going to go up appreciably…and we are nowhere near HIT implementation/rollout to the point where we can leverage this data analytically….

    Who/where will care be delivered? There is no primary care capacity to soak up all these patients’ needs, nor are there enough trained medical personnel outside the hospital to provide it…do we really think we can provide care digitally/through the web/apps/cellphone? This defies common sense. Also left unsaid in this article is not only are drug companies going to be male less, but DOCTORS will make less also ((they already are as practices are being bought up, and they are placed on reduced salaries) This will only DECREASE the number of provider hours available as docs clock in and out like any salaried/hourly worker; at least under fee for service, they could expand contact hours as they would get PAID to do so. This “analysis” is very superficial (deliberately so?).

  20. Robert Lewis Says:

    So 70 percent of Americans admit they don’t have much knowledge about the ACA, yet 54 percent believe it will be detrimental to the healthcare system overall. So what we are really measuring here is the media’s tremendous influence in American culture because if the majority of Americans know little about ACA, how can they offer an educated response either way? They’re clueless.

    So these surveys don’t tell us much other than the nation’s perception of Obamacare. I guess we will just have to wait and see whether or not it’s ultimately a success or a failure.

  21. Rosemary Gibson Says:

    While a subset of selected C-suite leaders may be bullish on the future, the reality on the ground for doctors, nurses and pharmacists who work in the same institutions may be quite enlightening. What might we learn if a similar survey were conducted of the people taking care of patients and educating residents to see what they think?

    This summer I spent a week with a group of enormously dedicated physicians, nurses and others who work in academic medical centers and have been among the top leaders in the country incorporating quality and patient safety in clinical practice, research and training. They are being told to expect 20-30% cuts in the coming years.

    While opportunities abound for ridding of waste, demands for higher productivity — do more in less time — in systems that have yet to be designed for safety, are incompatible with patient safety and high quality care.

    At a recent health care meeting in Washington, I showed a video clip of the “Chocolate Factory” scene in I Love Lucy as a metaphor for what is happening in health care — with the resultant workarounds to make it appear as if the line is running smoothly when, in fact, it is not. Patients are falling through the cracks despite the often heroic efforts of the most competent clinicians. The conference participants resounded vocally, recognizing the reality of their work every day.

    Last week, an internal medicine residency program director described how his hospital cut his GME administrative budget by 20%. In addition, numerous faculty have had their time spent educating residents cut to 1% so they can bring in more clinical revenue. They are right to ask how much can be taught in 1% of their time. Resident learning and supervision go out the window.

    In sum, a survey of the people on the ground would complement a top-down survey of selected C-suite leaders to have a glimpse of the present and future state of patient care.

  22. Thomas Cox PhD RN Says:


    “Roughly a third of respondents (31 percent) identified setting a specified timeline for transitioning Medicare reimbursement off of the fee-for-service payment system as a policy change that would facilitate cost control.”

    So let’s think about that. Suppose we move off fee for service payments. The capitation-like replacement would be a fixed fee for a specified condition that would include a bundle of expected services. If this payment exceeds the current level of payments under FFS, the payments would cost more, in the aggregate than ffs, hardly a worthwhile result.

    So, we can assume that the non-FFS payment is at most the average of FFS payments for identical conditions.

    So, if we pay health care providers the average amount, half the payments will be less than the amount providers should receive to profit from their services at expected levels. That can’t be good.

    How about the other half of providers receiving the fixed payments? Well those are the providers whose costs to care for patients are lower than anticipated in the fixed payment so they reap huge profits because they aren’t providing the anticipated level of care.

    There might be a handful of patients for whom the fixed payments and the costs to provide care are exactly aligned, but the almost all providers are paid either less than the amount they ought to recive for the care they render or are paid more than they ought to receive for the care they render.

    Tell me again, how is a payment system that distributes the wrong amount of money nearly 100% of the time superior to Fee For Service? And this assumes that the capitation payment is set at the average value of services – If the capitation payment is lower than average, even more than half of providers get paid too little although some providers will still stand out for earning high profits, most will not.

    If this nearly 100% inefficiency at allocating resources where needed weren’t bad enough, it is just the tip of the iceberg. The real problem is inefficient insurance risk management in small portfolios of insurance risks. Because small portfolios have higher standard errors than large portfolios, the year to year variation in aggregate costs at the provider level are far greater than the year to year variation in aggregate costs at the insurer level.

    Because they become inefficient health insurers, fixed payment assuming health care providers either make huge profits when patients cost less than expected or suffer huge losses when patients cost more than expected. All fixed payment systems really accomplish is dis-aggregating insurance risks and destroying the benefit insurers bestow.

    So if these executives like such a flawed system are they really any better informed than the general public and pundits?

  23. Steven G. Cosby Says:

    “A more meaningful source for an appraisal of healthcare reform, and for predictions about how it will fair, would be individuals who are especially informed—people who have spent their entire careers on the front lines of the healthcare system deciding how budgets are managed and how care is delivered—people like the leaders of America’s hospitals and health systems”

    You are proposing that these individuals are not the exact ones exploiting the existing system. The sicker we are the more health care we will consume. You completely ignore that healthy lifestyles are subsidizing the bad lifestyles. The most valuable choices that people can make about their health do not involve the health care providers at all. ACA is bad policy for so many reasons. For example, I have a number of clients that are extremely healthy. Their rates are increasing dramatically, 30 to 70 percent. These are real numbers that we are seeing to subsidize the ones that are unhealthy largely due to lifestyle choices.

    The insurance exchanges (individual and shop) are marketing and distribution models. Nothing more. Our economy never had an issue distributing insurance products. Insurance agents are plentiful on Main St. America. Or, one could go directly to the insurer. The idea that an indigent single mother with children will log on to her $5,000 Apple computer through her high speed internet connection and enroll in insurance is more than out of touch with reality.

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