Nov 11, 2013
I saw this article in Forbes and wanted to share it with you. It describes many of the frustrations we are experiencing and the difficult changes that await our industry.
Let’s make every effort to keep KSB’s focus on the patient as we make every attempt to comply with a complex environment.
Healthcare Is Turning Into An Industry Focused On Compliance, Regulation Rather Than Patient Care
In 1961, President Dwight D. Eisenhower advised Americans to “guard
against the unwarranted influence by the military industrial complex.”
He said that “the potential for the disastrous rise in misplaced power
exists and will persist.” President Eisenhower’s words proved prescient
as Congress and the President were engrossed in a trillion-dollar
debate over the growth of military defense spending over the
half-century since that farewell address.
Today, we are engrossed in a similar struggle on the domestic side of
what economists call a “guns vs. butter” debate. The passage of the
Affordable Care Act didn’t create a medical-industrial complex.
However, it drew attention to and hastened the growth of a mega-trillion
dollar industry that seems more interested in advanced technology,
federal regulation and personal data collection, than in the doctor’s care and life-saving treatment of patients.
One area that is perpetuating this viewpoint of healthcare is Health Information Technology. For instance, electronic health records (EHRs) are widely used in Europe and
are being implemented at a rapid pace in America. About two-thirds of
all medical practices currently have an EHR or a derivative medical
registry. The stated purpose of an EHR is to help physicians improve the
quality of care and coordinate multiple sources of a patient’s clinical
information. To some extent, the EHR helps the physician make better
patient care decisions, but the central question remains: how much
better, and at what cost?
The RAND Corporation recently reported
on the concerns expressed by physicians regarding EHR: the majority of
physicians are frustrated with the costly and complicated systems that
have yet to deliver on the promise to improve efficiency. Many like
aspects of EHR but consider the usability, interoperability and
functionality of the systems huge barriers. The confusing array of
record systems, combined with a mob of over-anxious technology
consultants is nothing short of a 21st Century “gold rush” for patient
data. To make matters worse, more and more federal regulations are
further complicating patient record keeping.
For example, the way doctors record a patient’s medical problem or
disease is going to drastically change next year, and is yet another
area reinforcing this medical-industrial perspective of healthcare. The
Classification of Diseases version 10 (ICD-10) contains 141,060 code
sets used to report medical diagnoses and inpatient procedures. That’s a
712 percent increase over the 19,817 code sets in the currently used
ICD-9 version. With the stop and go implementation of the ACA and an
unending deluge of administrative changes in Medicare payment, 141,000
new codes could not come at a worse time for our doctors. As we have
noted before, physicians are already spending 22 percent
of their time interacting with insurers on formularies, claims,
billing, credentialing, pre-authorizations, and quality measure data.
The workload can only increase with the new codes.
The windfall of government regulations has given rise to
over a dozen associations devoted to “compliance” with all of these
rules and regulations. In fact, these associations hold numerous
workshops nationwide on various regulatory compliance issues. The
Health Care Compliance Association alone has over a dozen different
workshops on the myriad of government rules and regulations and offers a
“compliance certificate board” or CCB. There are, in fact, more pages
of regulations for Medicare than in the Internal Revenue Service code,
and the Medicare regulations are more complicated. As President Ronald
Reagan stated so felicitously, “The nearest thing to eternal life that
we will ever see on this earth is a government program.” Physicians
would certainly agree!
Indeed, regulation and over-regulation by the Federal government has
spawned a whole new industry on compliance. To the extent that
increased red tape and intensive record keeping contributes to improving
healthcare and saving lives, our medical-industrial complex will
continue to grow and prosper.
Unlike President Eisenhower’s administration 52 years ago, it is not
industry that poses a leviathan-like problem; it is our own federal
government. A recent Forbes article
outlined the devastating impact the ACA’s 2.3 percent excise tax will
have on our medical device industry. The tax applies to all medical
devices, ranging from bedpans to heart pacemakers. The problem with
this tax is that it could stifle innovation and discourage entrepreneurs
from entering an industry with significant start-up costs. The most
devastating part of the tax is that a 2.3 percent tax on revenues equals
a 15 percent tax on profits for a typical company. When combined with a
35 percent corporate tax and individual state corporate taxes, the tax
rate for the industry will approach or exceed 50 percent in most
states. Low margin companies will be gone.
The answer to providing universal coverage to our population through
the ACA or through the private sector is not to stifle small business
enterprise, but to create a nurturing environment that produces private
sector jobs that support our doctors and care-givers, rather than
crushing medical practice with ill-concerned regulations that only
benefit regulators, not doctors and patients.
To this end, we believe that a Center for Administrative Simplification
should be created by the Federal Government, or better yet, a private
foundation. The central goal of this Center would be to scientifically
assess the cost and benefit of these myriad regulations – and keep
what’s working and fix what’s not. We estimate that the savings achieved
from this exercise would go far in balancing the federal budget deficit
and may help to refocus how healthcare should be viewed.