Tuesday, May 12, 2009

Health Care's $2 Trillion Promise

Health care trade groups descended on the White House with lofty promises. Representatives included the American Medical Association, American Hospital Association, America's Health Insurance Plans, Pharmaceutical Research and Manufacturers of America, Advanced Medical Technology Association and the Service Employees International Union. Consider the following trade group's ability to deliver on their promises:

American Medical Association-There are roughly 800,000 physicians (including residents) practicing in the U.S. AMA data shows America has 815,000 licensed physicians. Their last annual report shows they represent 29% of U.S. physicians.

The American Medical Association is a national professional association of physicians with approximately 240 thousand members. Membership dues revenue decreased $1.7 million in 2007, down 3.6 percent, with declines in both federation and direct membership.

American Hospital Association-There are 5,708 hospitals in the U.S. The AHA represents "close to 5,000 hospitals, health care systems, networks, other providers of care." They didn't break down the specific number of hospitals. When I worked in hospital administration, many for-profit hospitals didn't join the AHA. They stuck with their for-profit advocacy group, the Federation of American Hospitals. Here's what the AHA had to say about the commitments made in the White House meeting:

Early news reports that the AHA and five other national health care organizations pledged to reduce health care spending by 1.5 percentage points annually over the next 10 years were inaccurate. The group actually committed to helping achieve the administration's goal of a 1.5 percentage point reduction over the span of 10 years. AHA President and CEO Rich Umbdenstock noted that the $2 trillion in savings is a general estimate and can be achieved in multiple ways and across all sectors, public and private. Saying blunt cuts are not reform, he called on the administration to knock down the regulatory and legislative barriers that impede hospitals and physicians from working together to improve care for patients.
As trade groups, the AMA and AHA are unable to make firm financial commitments for their members. It's good political theater, providing cover for Congress to enact such savings into law. The NYT cited the production directors.

Dennis Rivera, coordinator of the health care campaign of the Service Employees International Union, led efforts to bring the industry groups together, with help from Nancy-Ann DeParle, director of the White House Office of Health Reform

Service Employees International Union-President Andy Stern said employer sponsored health insurance was "dead and not coming back." Unions stand ready to serve as group health insurance purchasers for employees. How will the shift be orchestrated?

Nancy-Ann DeParle-She served as private equity underwriter (PEU) for CCMP Capital Partners. CCMP purchased health care companies. Nancy-Ann sat on the board of nine for-profit health care companies. Her 2007 board compensation was nearly $550,000. That doesn't include board pay from private companies or her PEU pay.

Theater is good, but it helps to know the background and capabilities of the actors. I hope this helps in that regard.

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