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Health industry commits to reducing costs. No, really!

A loose group of health care organizations, vendors, and providers, including hospitals, pharmaceutical manufacturers, medical device makers, physicians and labor organizations, will voluntarily reduce US health care spending by $2 trillion over the next ten years.
According to a White House release, “”Over the next ten years – from 2010 to 2019 – they are pledging to cut the growth rate of national health care spending by 1.5 percentage points each year – an amount that is equal to over $2 trillion.”
The announcement yesterday comes ahead of a busy week on Capitol Hill, as the health care debate starts to come out into the open. It is clear evidence of the health care industry’s all-time high fear level – fear that this time Congress and the Administration may actually do something to control costs.
Here’s how Politico put it “The coalition represents industry, hospitals, pharmaceuticals, medical device makers, physicians and labor – organizations that disagree on other areas of Obama’s health care proposals.
But by working together on cost containment measures – one of the less contentious pieces of reform – the coalition is also sending a message to Congress ahead of a debate this week on financing a massive overhaul that major players in the system can find savings on their own.”
The Politico piece went on to quote a senior administration official “These are sophisticated entities, and they would know better than to make a commitment that was not feasible…So I have every confidence that in doing this that they have analyzed some of the specific steps they believe they could already take and other steps they would be more likely to take as part of overall health care reform to get a comfort level where this kind of reduction was achievable.”
Wow. Now that’s some breathtaking naivete. On the level of “they’ll greet us with flowers and candy”, Mr Rumsfeld’s famous quote about the Iraqis’ reaction to our invasion. What, were Emanuel, Orszag, Sibelius, Biden et al out of the office (it was a Sunday)? Who was the senior administration official, Bo?
Forgive me if I’m wildly skeptical. The industry will self-regulate overall growth in health care costs? How’s that going to work? How is this committed group of for-profits and labor going to police each other? WIll there be deep cuts in pharma and no cuts in labor costs? How are they going to agree to split the health care pie? How they will measure health care spending and assign ‘share’ to each coalition member?
This is pure PR, nothing but bald-faced political posturing by a bunch of scaredy-cats terrified that someone will finally hold them accountable. By setting the measurement standard at ten years, they are putting off the evaluation of their results far enough in the future that the individuals leading this effort will be retired, in other jobs, or promoted – so someone else will have to explain why the ‘industry’ failed to meet their commitment.
It is merely an attempt by these companies, labor organizations, and providers to give their political allies a tool to use in the coming Congressional debates, a tool to demonstrate the deep level of commitment on the part of the industry to solving the health care crisis without government regulation. This does show how afraid the health care industry is of actual regulation with teeth, how scared they are that they will not be able to compete with a governmental health care plan option (while they simultaneously hoot at ‘getting health care from the folks who bring you the DMV’).
This isn’t just a big-business driven effort – it is also supported by labor. Health care unions are deeply concerned that health care reform will actually result in closure of redundant and inefficient health care facilities and cuts in reimbursement.
Please. Let’s get serious. Seventeen percent of the US economy is not going to regulate itself. If you believe it will, then you believe in the Easter bunny.

2 thoughts on “Health industry commits to reducing costs. No, really!”

  1. “Can I get an amen from my brothas? Hallelujah! Yes the day of judgement is soon upon us. The heathen enemy named Inevitable Change shall be smitten. Rapture is nye!”
    “Follow us for we have seen the light! We will lead the way. Please just keep filling that offering plate with network discounts that aren’t; non-profit facilities being so devastated by the current payor system that they only recognized #100Million in net revenue last year.”
    “Lest we not forget the TPA’s – those poor ERISA fiduciaries of plan costs. Forgive them their sins. They do not know a better way. So concerned with their market image or their one large employer client being ‘bothered’ by potential provider upset that they fail to perform their mandated duty of plan cost containment by challenging reimbursement on obviously overcharged and perhaps fraudulently submitted claims…yes, blessed be those impoverished souls. Let us pray.”
    As overheard from the sunday sermon of Reverend K to the congregation of the Really BackWoods Make Them Believe Anything So We Can Keep the Money Rolling Really In assembly!

  2. Didn’t we learn a lesson from the recent debacle in the Financial Markets…if you ask the ‘big players’ to self regulate themselves, you are taking the ‘police’ off the streets. Industry ‘self regulation’ does not work…just look at the economic mess that the world is in now, if you need an argument to see through this! Greed will always triumph over fear…or sadly morals!

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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