Corporate America Helped Create the Healthcare Mess

 

      In the mid-1950s and early 1960s, major employers like General Motors, IBM, GE and others decided to offer many new free or low cost benefits to reduce their need to pay higher wages. One of the favorites was healthcare benefits.

Corporate executives and the healthcare professionals encouraged these programs since most of the labor force was young and in good health so the cost to provide the services was low and it was able to defer expenses to the future.

In addition, the healthcare professionals were delighted to provide the services and not require their patients to pay the bills. Insurance and other organizations grew to provide these services and maintain the programs and keep costs as low as possible.

However in the 1970s the situation changed. Many American companies, including the giants were aggressively attacked by foreign, primary Japanese companies and became more aware of the increasing healthcare costs. GE for instance didn't even recognize how much it was spending on healthcare since it was delegated to the decentralized departments and divisions and there was no corporate level oversight. It initiated a study and found that it was spending in excess of a billion dollars and so it centralized the programs and deceased the costs.

In addition many of the giant companies moved their manufacturing to the Far East and didn't provide healthcare in these emerging countries. Many other companies went bankrupt and even their pensioners lost their benefits. Finally the workforce began to age and this increased the cost of healthcare benefits.

By the late 1990's healthcare became a target for corporate cost reduction, the benefits declined and cost to the employees increased. Suddenly the medical and other healthcare providers recognized that the free lunch was over and they began to seek other ways of financing their expenses. This is when the Federal Government became even more involved and used Medicare to control costs by continuing to decease the fees they paid to the providers and other insurance companies began to uses these fee schedules to determine how much they would reimburse the providers for services offered.

Today the situations is coming to a boiling point with the introduction of the Affordable Care Act, commonly called Obamacare. This is forcing all of the healthcare providers to recognize they must change the way they do business and become more "business" oriented.

In our next blog we will focus on change #2- the increasing control by the Federal Government.

Visit www.enabledoc.com to learn more about current trends and ways to deal with them.

 

 

 

 

The Good Times are gone.

It’s a whole new world

      A few decades ago, health care was relatively simple. Patients went to the doctor when they needed help or to have their annual check-up. The health care practitioners graduated from medical, chiropractic or dental schools, served their internship and residency and opened a practice. Their practices were often one or two person organizations focused on general practice or specific specialties and relied on referrals and word of mouth for their business development.

      Individual patients paid for their own care or used their employers’ health care benefits. Prices were reasonable and everyone was content with the situation. Governments focused on providing the licenses to practice medicine and to assure that quality standards were set and met and that there was as little mal- practice litigation, as possible. The pharmaceutical, the medical systems and equipment companies focused on product development, creating new solutions and contributing the health and safety of the population.

      In simple terms, the health care market was predictable and successful in improving the health of the country.

Significant Strategic Changes

      But the good "olde days" have disappeared. It is a whole new game and the healthcare professional game. The changes have been a result of many factors. These have changed how healthcare is provide, its changing cost structure and how all of the healthcare professionals must change how they provide and manage their services.
Let's take a look at all of the change agents and then discuss how they impact the practice of quality healthcare.

The key changes are:

1. Corporate America has changed in size and type.
2. Federal Government has increased its influence and regulations.
3. Technological and Science has improved the quality of healthcare and significantly increased its cost
4. Malpractice litigation has increased the cost and complexity of providing services.
5. Consumer Changing Demographics and Expectations
6. Changing Healthcare Professional Mix
7. New Competition

So we will start in the next blog to discuss each of these key changes and how the healthcare providers must respond strategically.

 

More information about changes can be found at www.enabledoc.com.

 

    

Healthcare Professionals MUST become strategic thinkers and leaders.

 

      A few decades ago healthcare was relatively simple. Patients went to the doctor when they needed help or to have their annual check-up. The healthcare practitioners graduated from medical, chiropractic or dental schools, served their internship and residency and opened a practice. Their practices were often one or two person organizations focused on general practice or specific specialties and relied on referrals and word of mouth for their business development.

      Individual patients paid for their own care or used their employers’ healthcare benefits. Prices were reasonable and everyone was content with the situation. Governments focused on providing the licenses to practice medicine and to assure that quality standards were set and met and that there was as little mal-practice as possible. The pharmaceutical, the medical systems and equipment companies focused on product development, creating new solutions and contributing the health and safety of the population.

      In simple terms, the healthcare market was predictable and successful in improving the health of the country. I would like to discuss the major changes that have occurred and how they will require that all successful healthcare professionals MUST learn to be strategic thinkers and leaders, while maintaining their professional skills and capabilities.

 

Bill Rothschild, Rothschild Strategies Unlimited LLC

 

Visit www.enabledoc.com to learn how enabledoc can help you become more strategic and efficient.

 

 

The Healthcare Mess started in the 1950's

      The Healthcare Mess started in the 1950's when the BIG industrial Unions( UAW, Electrical Workers Union, Teamsters and other AFL/ CIO unions) and the Giant Industrial Companies ( GM, GE, US Steel etc) decided to substitute wage increases, which has an immediate bottom line impact with benefits, like Healthcare, Pensions, Vacations, which has a longer term impact.
      The Giant Industrial companies recognized that Healthcare would be cheap for at least twenty years, since their workforce were young, the cost of medicine, doctor visits were not that expensive. They really didn't care about the longer term since they would be retired and didn't have to worry about the cost of healthcare in the future.
       In addition there were an abundance of young doctors, because they received a free education from the GI Bill and there were inexpensive easy to use diagnostic equipment.
       The patients were use to FREE or low cost healthcare and didn't worry about going to the doctors for simple things like colds, rashes. The doctors were happy since they could just practice medicine and not worry about running a business and prices they charged.
      The result was a system that was a form of SOCIALIZED medicine, but it was paid for my the companies and not the patients or the doctors.
      This ideal situation encouraged the healthcare industry, such as the equipment manufactures (GE, Siemens, Hitachi) to invest in more expensive and sophisticated equipment such as MRI, CTs and others and to discard the cheaper X-Ray equipment.
      In short everyone was happy...the patients got free care, could select their doctors from a large pool, get access to improving drugs; the healthcare practitioners could do what they want..."practice medicine"; the companies delayed increasing costs since the benefits didn't impact their bottom line at the time.
      In my next blog... I will provide a strategic analysis of what changed in the 1970 to 1990's.  The happy days started to become "less happy, but still okay".

If you want more information about the current healthcare situation visit: www.enabledoc.com.

Bill Rothschild...Rothschild Strategies Unlimited LLC---now focused on enabling the healthcare professionals become strategic leaders.