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The Shifting Healthcare Landscape

Healthcare in Utah
The innovations, trends and challenges shaping Utah’s healthcare industry

Last fall, Utah Business hosted the first annual Utah Employers Healthcare Summit. The event brought together healthcare providers, carriers, employers and institutions to discuss the seismic changes that are reshaping healthcare as we know it. The summit featured multiple sessions and compelling keynote addresses. Here, we bring you some of the highlights from the day-long event.

Before the Bingham Canyon Mine experienced one of the largest human-caused landslides in history, technical experts used sophisticated systems to monitor ground acceleration in the area. Engineers knew the slide was coming, and mine officials used those warnings as a signal to move employees and equipment, which ended up saving lives and millions of dollars in collateral damage.

Speaking at the Utah Employers Healthcare Summit, Rich McKeown, CEO of Leavitt Partners, uses this analogy as he discusses the landscape of healthcare in the United States.

“[The Kennecott officials’] anticipation, their reaction, their willingness to participate and engage in this discussion and thoughtfully approach the way they did is a model that I think we need to approach healthcare,” McKeown says. “There are weak signals, there are some strong signals, but there are emerging signals that are telling us how to react and what we ought to do.”

McKeown co-founded Leavitt Partners with Michael O. Leavitt, former Utah governor and former U.S. Health and Human Services Secretary. McKeown served as Leavitt’s chief of staff in Health and Human Services. Although the status of healthcare reflects uncertainty, McKeown says that with focused awareness, leaders can take these warnings and steer programs in the best direction. He cites several pressures for leaders to monitor that directly affect healthcare.

Economic

Americans have always demonstrated a charitable spirit. In the 20th century, public policy began reflecting that attitude with the creation of Social Security and eventually Medicare and Medicaid. These entitlements are underlying components that alter the way healthcare is funded.

“Over the course of time, we have exercised this ideological compassion. We’ve institutionalized it and it’s created a very significant financial cliff for us,” McKeown says. “There’s a financial reckoning and this financial pressure is one of the underlying pressures we’re beginning to see.”

Other economic factors include the national debt, which exceeds $18 trillion, and the federal deficit that is expected to reach $474 billion this year. Add in an aging population and the growth of health insurance premiums, and it all signals a fundamental weakness in the economy.

“Our borrowing habits in the nation have changed from the creation of infrastructure to consumption, and borrowing for consumption can never lead to prosperity,” McKeown says.

Demographics

It is estimated that by 2030, one-third of Americans will suffer from chronic disease. Obesity rates continue to climb, creating a culture of illness and high medical expense. Aging baby boomers are moving out of the workforce and living longer, but not necessarily healthier, than any generation before.

Millennials and their children will carry the burden of the country’s healthcare needs. Salt Lake City has the second highest density of millennials in any city across the country, and the way they access medical care is evolving

“This new population of people are changing the way they are interacting with the healthcare system,” he says. “Demographics are a huge component part of this that is changing the face of healthcare.”

Affordable Care Act

McKeown says the Affordable Care Act did three things: it expanded access to healthcare, it increased insurance regulation and it established minimum benefits.

Eligibility for Medicaid is expanding and insurance carriers are obligated to cover certain procedures as well as eliminate the denial of insurance because of a pre-existing condition. Additionally, dependents under the age of 26 can be covered by a parent’s policy.

While the ACA has been mostly unpopular, “we’re beginning to chip away at the rough edges,” says McKeown. Hundreds of pages of regulations attempt to clarify and guide the program but several unintended consequences have arisen as a result of the act.

Insurance premiums have increased, which McKeown says caused employers to reduce workers’ hours in order to avoid paying for insurance. Also, companies hire fewer people as they cap their employee numbers to stay below federal limits that mandate insurance coverage. Many large organizations no longer cover spouses or partners.

Additionally, volatile fighting around the ACA has created lasting political partisanship.

The Supreme Court

Several lawsuits have been filed with the Supreme Court to determine if the ACA is legal. The court ruled the ACA was a tax and not a mandate, while still declaring the act constitutional.

There continue to be legal challenges to the ACA and each decision is watched with anxiety by people on both sides of the argument.

Another ruling lets states opt-out of expanding Medicaid. With almost half of the states choosing not to expand Medicaid in 2014, millions of the nation’s poorest people were left without access to medical insurance. States can choose to accept federal funding that would allow them to expand Medicaid eligibility for three years, but then the funding would shift back to the states. Many states have accepted these federal dollars, but others are still facing the decision of Medicaid expansion.

“It’s a perfect storm of legislation. You have a group of people, typically described as on the right, saying the federal government will not be able to live up to its match over the course of time,” McKeown says. “The other side said, we have this window to be able to give access to people who need it most. From a fiscal perspective, or from a human perspective, we have this dynamic collision that is playing out.”

Move toward value

Patients want to have input in their healthcare. Doctors are learning to listen to patients’ wants and adapt a health program based on their needs.

“We’re moving our way toward medical care organizations that provide better quality services, provide lower cost services and engage patients in the process more profoundly,” says McKeown. As an example, he says, one study showed older people were going to emergency rooms because they were lonely and wanted someone to talk to. It was costing insurance companies lots of money.

Carriers determined it was cheaper to hire someone to go out and visit these seniors in their homes, to talk with them and make sure they were taking their medications. It wasn’t long before the company noticed a drastic drop in unnecessary ER visits.

McKeown calls it the beginning of accountable care organizations, where groups of medical providers, including doctors and hospitals, work together to provide Medicare patients a higher level of care.

“We’re going to change the system from one where providers get paid for every medical widget they provide,” he says. “…In my opinion, it will be the golden age as soon as we make this transition.”

Employers

Because of high costs, health insurance has moved from being a benefit to a boardroom decision. Many employers find they cannot increase wages and pay high premiums. They can’t hire full-time workers because they can’t afford to offer insurance—but they can’t remain competitive to attract skilled workers without paying increasing healthcare premiums.

“The inability of employers to increase wages because of expanding healthcare has been driving them crazy for the last decade,” he says. “…Employers, talk to your brokers and understand exactly what options you have, because between co-ops and private exchanges and insurance carriers there are a developing set of new options.”

Even with these pressures, McKeown says there is room for optimism. Healthcare is moving toward a value-based system that will be better for everyone. Life expectancy in the United States is climbing. Medical and pharmaceutical advances continue to create new treatments for disease.