Is Universal Healthcare Inevitable?

I had two events last night that left me leaving with very sobering thoughts on the state of the US health systems.

First meeting, Greater Cincinnati Employers Group on Health included a star-studded panel of Deborah Allison, Risk Manager, City of Cincinnati Kathryn P. Director of Payroll & Benefits, TQL, and Jeff Walton, SPHR, SHRM-SCP, BCC Walton, HR Director, Cincinnati Zoo & Botanical Garden.?

They provided very practical advice on how mitigate high-cost claims, but also everyday tactics to monitor employer benefit spend – the necessary reports, segmentation of spend, and always being advocate for your employer and employees in seeking more details and alternative solutions to keep the escalating costs more manageable.

In the second meeting, Cincinnati Healthcare Professionals Network was a two-person panel of Bill Banks VP, Managed Care/Revenue Cycle St Elizabeth and Matthew Robben Co-Founder & CTO of Serif Health .? They touched on a range of topics from medical pricing, financial structure of hospitals, insurance spend, and the hospital price transparency rule from 2021.

My Thoughts:

1)????? The attendees and members of the Greater Cincinnati Employers Group on Health are doing yeoman’s work that probably gets too little recognition, but on the other hand, a lot of grief. To be clear, this is solely my observation and my opinion only from someone who has great deal of empathy .?

There are macroeconomic circumstances that are out of their control (escalating healthcare costs, new medical breakthroughs (GLP-1’s) that are $$$) that make their role challenging.?

I can only imagine that each year (for the last few years) that their job has only received more attention, has become more challenging, and has become a high-wire act of managing cost for C-suite while balancing employee satisfaction while juggling multiple actors to assist them in an evolving healthcare ecosystem.?

At least Sisyphus had only one boulder to contend! ??I applaud their efforts and their optimism.? You are making a significant difference!

?2)????? ??Ahead of the Cincinnati Healthcare Professionals Network , I fell into a rabbit hole around hospital price transparency from a LinkedIn post.? I found this website, which helped me fully grasp the task of Matthew Robben and Serif Health .?

I used the aforementioned site to get pricing information on a local hospital - Mercy Fairfield.? ?Well, in return, it downloaded an Excel file that has 175 columns of variety of codes and insurance plans pricing on 61,000 SKU-level codes.?

As a sample set of the granularity, there were 16 rows of just for “ALLOGRAFT BNE”.? As a consumer of health, this level of detail is simply ... useless.? I appreciate the Price Transparency Act set forth in 2021, but “C’mon man!”?

Kudo’s to Matthew Robben for developing the Rosetta Stone to make sense of myriad of ICD-10 data amidst all of the insurance variations for us healthcare consumers to understand.? What a daunting task!

?3)????? In a conversation at Greater Cincinnati Employers Group on Health I heard concerns of hospitals and the price increases that they are pushing to commercial insurance.? Ironically, I received a lot more clarity on this issue from Bill Banks at the Cincinnati Healthcare Professionals Network meeting.

Although not explicitly conveyed in the panel, this is my very simplistic summary and overarching concern with healthcare spend.?

Aging Population

US hospitals really have some significant challenges ahead of them for the next 10, 20, 30 years with our aging population.?

As our population ages, many aspire to retire.?? With retirement, commercial insurance from an employer is no longer available (unless they supplement beyond Medicare).? As such, many will rely on Medicare at age 65.? According to census data, the 65 and Older population will grow from 17% in 2020 to 25% by 2060.

The Math Problem of Hospital Patient Insurance

These statistics are foundational to the math problem of hospitals and their revenues.? The statistics below may not be precise, but are directionally accurate.

There are three major insurance components for a hospital's revenue - commercial, Medicare and Medicaid.? In 2020, in terms of patients entering a hospital, 36% were commercial payer, 47% Medicare payer, 13% Medicaid payer, and 4% other.

From a revenue perspective, commercial insurance represent well over 50% of hospital revenue!?? This is important to understand. ?To add a finer point to this topic comes from this study.

Private payers’ payments, by contrast, are much higher than hospitals’ costs. Between 2000 and 2018, private payers’ payments rose from 116 percent to 145 percent of hospitals’ costs, whereas Medicare’s payments fell from 99 percent to 87 percent of hospitals’ costs.

Going forward, the number of patients entering a hospital with commercial insurance will decline to 25% while Medicare increases to 57% per the panel talking points. Again, these are estimates, but I am sure directionally accurate.

Here’s the rub – hospitals rely heavily on commercial insurance for revenue.? As the US population continues to age, more people will go onto Medicare – which creates financial challenges for hospitals, as Medicare does not meet the expenses of the hospital.?

Considering this dynamic, I am hearing through conversations that hospitals are asking for huge price increases to commercial insurers to make up the revenue shortfalls due to Medicare becoming a larger and larger component of their revenue (which less than expenses)? ?

As I showed in this article, I am not sure how much more employers can simply take on costs.? Eventually, costs will either be put on the shoulders of employees or headcount reductions and higher productivity will be sought out of their business model.? Also, this could mean significant structural changes within hospitals to adapt and reconfigure to the aging population and spending circumstances.

Finally, this story from Ann M. Richardson, MBA just adds to the concern of hospital revenues and the push of leadership for surgeons to upcode at the University of Virginia School of Medicine and UVA Health.

Today, I am not sure if the path of Universal Healthcare is avoidable.

Joseph W. Sunderman is an Intelligence Analyst/Strategist that is a student of understanding the Current State of the US Health and its impact for the next decade. I developed the thesis over several months for Directions Research Group, which can be found in the project section of my profile.

In the past, Joe spent seven years at medical device giant Ethicon (division of Johnson & Johnson) with the most recent role as US Regional Manager of Strategic Insights and Pricing.? In his seven years at JNJ, he received recognition for his servant leadership, where he was a stand out in performance by being a top 10% recipient of Encore and Inspire Awards over multiple years.? Dozens and dozens of accolades from contributors to senior leaders for his collaborative work.? Prior to Ethicon, Joe has had a wide variety of experiences in medical claims, banking, publishing, and retail.? He began his career at Schaeffer's Investment Research as a financial analyst, where he was ranked by Bridge Information Systems as one of the top 10 market analysts for three straight years for his commentary and stock picks found in Schaeffer's Daily Bulletin. Joe has been published in the Market Pulse Journal and Chartpoint and his market comments have been printed in the USA Today, Wall Street Journal, Barron's, Investor's Business Daily, Dow Jones News Wire, and Reuters. Also, Joe has made appearances on Bloomberg television.