Health Care

Schafer: Best way to cut health care costs is keeping people healthy

Want to cut wasteful health care costs? Great, we all do.

Whose revenue in the health care system do you propose to take away first?

This conflict is well known among people who hope to bring change to health care — that one person’s runaway and wasteful costs are someone else’s core business revenue. It’s why our health care system, which no one of sound mind would design today if they started with a clean whiteboard, is so resistant to change.

“I recognize that current businesses want to protect their current revenue stream,” said Craig Samitt, a physician who took over as CEO of Blue Cross and Blue Shield of Minnesota and its parent company Stella in the summer of 2018. “I don’t know if I necessarily want to take that away. I just don’t want them to grow at the trajectory that they are growing.”

In about seven years, Samitt said, medical costs in Minnesota are projected to double.

This is the background of a big story that blew up over the summer, as the Minnesota Hospital Association (MHA) released an 18-page letter addressed to state officials asking for an investigation into Blue Cross and Blue Shield of Minnesota, with example after example of the company’s denial of claims for care provided at hospitals.

It included attached memos on BCBSMN letterhead covering policies for things like colonoscopies, a common exam. As of this year these procedures were generally not going to be reimbursed by Blue Cross if they take place in a hospital setting rather than a much cheaper ambulatory surgery center.

The MHA also pointed out that it was unaware of any efforts by Blue Cross to inform its own members of this new approach.

The MHA included examples in its letter of providers following the proper process for seeking prior authorization from Blue Cross for a procedure, a fairly common process, and never receiving a decision. That’s a poor service problem, not evidence of a fundamental disagreement over what’s proper spending for patient care.

We do need organizations like Blue Cross working on cost containment and health care spending effectiveness, but it would be better if they didn’t go about it in such a clumsy way.

Samitt said the word “denounced” seemed fair for the treatment his organization received during this period. “Parts of it we own,” he said, meaning the communications from Blue Cross or implementation of some of the new approaches to containing costs.

Yet Samitt also said he was disappointed that this conflict blossomed into a big story. Changes in things like approval for colonoscopies were portrayed as moves Blue Cross was interested in doing for its own selfish reasons, like simply to save some money.

“You don’t have to go to a hospital to get a colonoscopy,” Samitt said. “You can save hundreds if not thousands of dollars and go to an equally high-quality facility a mile away. That’s the role we play” in the health care system.

One of the interesting points in a recent conversation with Samitt is how he characterized the costs of providing care, calling them “sickness costs.” The other place to spend money is in the patient’s life, to prevent illness.

An unplanned stay in the hospital is not a good thing, even though it generates a lot of revenue for the care provider and even if the patient receives terrific care and eventually recovers. It still represents a kind of failure of the system.

“What makes this conversation hard is that different stakeholders in the industry are rewarded for different things,” Samitt said. “We have to realize there are stakeholders that benefit more when people are sick. And there are stakeholders, and I would say we’re included, that benefit when people are well.”

He recalled how, several years ago, a for-profit hospital system, which he described as well respected, made news by describing one factor that had led to a disappointing quarter: Not enough of its customers seemed to have gotten the flu that year.

“That is not what our industry should stand for,” Samitt said. “I’m happy to take the blame for why people aren’t getting the flu.”

Samitt, who has worked in various roles in integrated health systems as well as for insurers, can’t remember when he first begin predicting that the health care system would soon have a crisis. That’s the day when the government, employers and consumers collectively decide they have no more money for health care.

So far he’s been proven wrong, as more money always appears. Last year health care costs for Minnesota businesses and their employees increased about 9.6%, while average weekly Minnesota wages are growing at not quite 2.3%.

There are a lot of factors rolled into the forecast of a doubling of Minnesota health care costs, but the main one is simply higher prices, Samitt said, for prescription drugs and hospital services. And if we soon are spending twice as much on health care, what won’t we be able to spend money on?

“I don’t want to spend future resources to build more hospital beds,” Sammitt said. “I’d rather spend future resources to build programs that keep people out of the hospital. I worry that this trajectory to double means that we have double the hospital beds seven years from now. We don’t need double the hospital beds.”

Samitt, who is in his mid-50s, said he wants to make sure he’s played a role in making health care better before he retires. Since he came to Blue Cross last summer, and after the experience of public controversy this summer, he’s even more committed to the notion that the health care system is unsustainable without fundamental change.

“If we are not going to help change the paradigm,” he said, “I don’t know who will.”

 

lee.schafer@startribune.com 612-673-4302

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