Sunday, February 05, 2006

McNulty on Management and Health Care Costs

Recent postings on the high cost of health care and management’s responsibility for doing something about it brought the following comment from Tom McNulty, former colleague and CFO of Henry Ford Health System in Detroit, now retired:

I am somewhat concerned about the lack of understanding on the effect of the economics of health care expense on those that are charged with the stewardship of directing it (health care executives). You made two observations that beg for further discussion. One was about the decisions made by the palliative practicing MD who utilized his compassion and knowledge to allow the proper treatment for a person at the obvious end of life. The other physician wanted to continue to DX and Rx in order to prevent possible repercussions from family or peers. The second was the comment about insuring that everyone should have health care coverage as that would lower the cost.

I note that expanding coverage is nothing more than the cost shifting that has been going on for the last 40 years since Medicare was passed in 1965. It was then decided that the Federal Government should only pay cost for the program but it took almost 15 years before they could figure out what cost meant. By that time they had caused such a significant burden on the providers of the care, by deciding to pay considerable less that the average cost for the services, that the providers had to shift cost to the other payers( commercial insurance companies, individuals and self-insured companies ) who would then pass these on to the purchasers( individual, corporate or self-insured). It caused the whole method of allocating the real cost and controls to be a mess and impossible to decipher.

The real approach to how all of health care can be addressed rests with the approach that allows doctors to practice medicine without the fear of the trial lawyers and federal oversight personnel from financial, audit and regulatory agencies who do not contribute any value added to the process (but still need to maintain oversight on quality, appropriateness, malpractice)

The thought that the professional health care executive needs to be more concerned with the structure of the cost of the deliverable, the need for and responsible use of such services and the courage to address them, is laudable but I am afraid that the challenge will not be taken up. In that lies the real problem. We need the champions from industry to lead the real effort and not defer to the Political Policy Farce and federal pressures

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