The University of Virginia Health System will need to dramatically cut costs to adapt to a post-Obamacare world, Dr. Richard P. Shannon, UVa’s executive vice president for health affairs, said yesterday.
As the Daily Progress reports, Shannon briefed members of the Medical Center Operating Board:
Republican plans, written to replace the Affordable Care Act, likely would favor a market-based approach that forces insurers into a price war. Though it may lower insurance costs for consumers, it would mean lower reimbursements to hospitals that could add up to hundreds of millions of dollars over several years, Shannon said.
“Take it all together and I think you can predict there will be enormous pressure on cost in the health care enterprise over the course of the next iteration of the Affordable Care Act,” he said. “The honest answer is we have to get more efficient and we have to get more productive.”
Shannon highlighted some of the tools the health system might use to drive down costs. Artificial intelligence might be used to diagnose some types of cancer. Big data can help doctors predict health problems before they arise. Telehealth can extend healthcare into outlying rural areas. Last year, UVa made 11,000 health visits; Shannon wants to increase that number to 60,000.
The UVa Health System will have to change, as market pressures wipe out hospitals that fail to adapt, he said. “You’re going to see hospitals disappear. The question is, who are the 50 percent who are going to survive?”
Bacon’s bottom line: I wouldn’t want to be a hospital in a post-Obamacare world, but as a health care consumer, I find Shannon’s analysis heartening. As a nation (and a state) we need to shift our focus from who pays for health care, invariably a win-lose proposition involving wealth transfers from one group to another, to a focus on productivity and innovation, which will drive down costs for everyone. If we want to make health care more affordable and accessible, we need to make it less expensive.
Shannon approaches the challenge from the perspective of what UVa can do to drive down costs. Virginia policy makers need to think about what the Virginia health system can do to drive down costs. And that might require thinking previously unthinkable things.
First, if emerging federal policy relies upon competition to drive down costs, state healthcare policy should do so as well. Not just competition between insurers but between all kinds of delivery platforms, from hospitals to independent, ambulatory surgery centers. If Congress passes the kind of legislation Shannon anticipates, it is imperative that Virginia repeal the Certificate of Public Need (COPN) regulations that protect hospitals from competition.
Second, we must come to peace with the prospect of some hospitals going out of business. Frankly, many rural hospitals may no longer make economic sense. In their place, we might well see more clinics, more nurse practitioners, more outpatient surgery centers, more telemedicine, and more travel to regional hospitals for complex procedures. If done properly, the result could be better and cheaper health care for rural Virginians.
Michael D. Williams, UVa’s Center for Health Policy, also told the medical center board that a big cost saver could be the sharing of medical information to avoid duplicate tests and scans. Reforms to patient-privacy laws and more effective data sharing could reduce redundancy. By necessity, some of those data-sharing reforms will come from the federal government, but Virginia should be looking at what can be done on a state level to foster the efficiencies.
Shannon has given the warning. Big change is coming. Will Virginia be prepared?
(This article first ran in Bacon’s Rebellion on January 31, 2017)