EP279: COVID-19—How Did Health Systems Get Addicted to the Inflated Prices They Charge Employers and Some Patients? With Peter Hayes, President and CEO of the Healthcare Purchaser Alliance of Maine

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Let me explicitly state an implicit theme that’s been running through a bunch of the latest Relentless Health Value podcasts talking about if and how the COVID-19 pandemic could possibly serve as a flash point in the health care industry—a flash point where egregious and self-interested financial pursuits take such a toll that politicians notice.

Why do these legislators notice? Because the patients (also known as voters), the ones that we all serve, begin to break under the weight of a system that inappropriately enriches some of its purveyors.

In this health care podcast, I speak with Peter Hayes, who is president and CEO at the Healthcare Purchaser Alliance of Maine and a national presence in health care strategy/innovation and frequent keynote speaker. One thing, among many, that Peter said during our conversation struck me. He said it will take a village to fix what ails the health care system in this country. There’s just too many interdependencies.

Take, for example, some of the biggest, most powerful health systems in this country. Most are, by almost every account, pretty darn inefficient in how they purchase supplies, how they pay their CEO millions of dollars, and how they put a waterfall in the lobby and don’t pay any taxes.

Look, here’s my point—and it’s both an uncomfortable time and a great time to make it. I want the doctors and the nurses and others who actually provide care to be heroes and fairly compensated for their hard and dangerous work. But that should not, and maybe even cannot, happen within the context of a larger system that is anything but fair to patients. So, this whole upcoming conversation that I have with Peter pertains to the business decisions that many huge health systems are making and have made. It does not pertain to the “scrubs,” for the most part, who are doing the best they can and should be exalted—except to urge you guys to organize, please.

But why should health systems change their often wildly inflated and secretive billing practices if employers just pay whatever the bill is no fuss, no muss? Short answer: They won’t. It’s not like no one in the health system noticed that the CEO is getting paid, like, 10x what the average worker makes. It’s not like no one noticed what has been sacrificed in patient care or infection control or technology to spring for that kind of green. Health systems operate the way they operate because someone wants them to operate that way. Follow the money and you can figure out who.

So, it’s going to be up to someone else in the village to make it untenable for them to continue to do these things. It’s going to be up to another party to slow that roll.

You can learn more at purchaseralliance.org. You can also connect with Peter on LinkedIn.

Peter Hayes is president and CEO of the Healthcare Purchaser Alliance of Maine and formerly a principal of Healthcare Solutions and director of associate health and wellness at Hannaford Supermarkets. He has been in innovative, strategic benefit design for the past 20+ years. During the past several years, Hannaford has received numerous national awards in recognition of the company’s commitment to working collaboratively with health care providers and vendors in delivering health benefits that are focused on value (high-quality efficient care). Hannaford Supermarkets has been successful in this arena by focusing on innovative solutions for patient advocacy, chronic disease management, and health promotion programs. Hannaford was recognized by receiving the National Business Group on Health Platinum Award for the health promotion and wellness programs three years in a row. These programs, along with health care delivery strategies, contributed to a flat trend line over five years.

Peter has also been involved in health care reform leadership roles on both the national and regional levels with organizations like the Center for Health Innovation, Care Focused Purchasing, and Leapfrog. He’s also cofounder of the Maine Health Management Coalition (now Healthcare Purchaser Alliance of Maine) and has been appointed by two different Maine Governors to serve on Health Care Reform Commissions to recommend public policies to improve the access and affordability of health care for Maine citizens.

03:36 Why employers are spotting the margin from commercial pay. 05:20 Public pay vs commercial pay, and why profit for a hospital has to come from commercial payers. 05:51 Inefficient costs in health systems. 07:22 How the health care system evolved this way. 09:12 “If you’re a business, a manufacturer, you actually do cost accounting. … Hospitals don’t use cost accounting. They really don’t know.” 12:00 The amount that taxpayers are actually subsidizing hospital systems. 12:24 Cost shifting and how this is affecting employers and employees. 14:45 How a hospital could increase its employer prices by such a large magnitude. 17:19 The perverse incentives that have made health plan premiums what they are today. 22:11 The case for the bundled payment program. 23:35 How purchasers shopping around for benefit designs can transform health pricing and make hospitals more willing to move from fee-for-service to bundled payments. 24:54 EP257 with Karl Bilimoria, MD.25:46 Employers outside of the health care industry vs the health care industry, and how this plays out in state and federal legislature. 27:26 What else employers can be doing. 29:09 “Instead of being market takers, [it’s time] to be market makers.” 29:47 What employers can be doing at the local level. 34:30 Employers can find a transparent health broker by checking out Health Rosetta and Validation Institute. 35:17 “If we don’t do something to have the market work, it’s going to be done to us.”

You can learn more at purchaseralliance.org. You can also connect with Peter on LinkedIn.

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