March 15, 2013

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Leavitt: Healthcare Reform is Economic Reform

Devin Felix

March 15, 2013

When it comes to healthcare reform, innovative business men and women have a huge role to play in solving the problems currently facing the United States. That was the message former U.S. Secretary of Health and Human Services Mike Leavitt conveyed to about 450 attendees at the Association for Corporate Growth's Intermountain Capital Connection Conference Thursday.

Leavitt, who has also served as head of the Environmental Protection Agency and was governor of Utah for three terms, delivered the conference's keynote speech, in which he addressed the changes that will come about due to the Affordable Care Act, commonly known as Obamacare.

Though the conference focused on a broad range of business topics, Leavitt chose to focus his keynote address on healthcare reform because it is the most important issue facing business today and in the near future, he said. Businesses need an economic climate in which they can prosper, and changes in the costs of healthcare will play a significant role in determining whether they can.

“I believe that health reform is no longer just about healthcare,” Leavitt told the conference attendees. “It is actually now about economic reform. Health reform will become economic reform.”

Leavitt said projections show healthcare premiums are likely to increase substantially as the most significant provisions of the Affordable Care Act begin to take effect 2014. The increases will likely be largest for young people — possibly more than 100 percent — as their costs are increased to cover requirements within the law designed to reduce costs for more elderly and ill people.

Leavitt said bringing those costs down will require a “general contractor,” an entity that can bring about significant changes in the way the business of healthcare is conducted. To be effective, that contractor will need to have seven characteristics:

  • The ability to change patient behaviors.
  • A strong brand, because the market for health coverage will shift away from a business-to-business model toward a business-to-consumer model.
  • Capital.
  • The ability to aggregate large numbers of people, which enables insurers to keep costs down.
  • The ability to assess and manage risk.
  • A “clinical footprint” — an established network of clinics and care facilities.
  • The collective IQ to handle the complexities of the issue and bring about changes.

Leavitt said he identifies four potential groups that might be able to fulfill that position: a series of multi-specialty clinics and doctors, a hospital or network of hospitals, insurance companies and some other potential “strategic aggregator.”

Currently, each of those groups has some, but not all, of the seven characteristics that would enable it to bring about meaningful change and reduce healthcare costs, Leavitt said. That means the coming years will present tremendous opportunity for innovative business people to create new companies that possess all the necessary characteristics or reform existing companies. Utah, with its emphasis on business and its base of skilled business people, could be at the forefront of that process, Leavitt said.

“The good news here is that we are very innovative group of people, collectively,” he said. “The people in this room may have as much impact on the outcome as the 535 people who sit in Washington,” Leavitt said.

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