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Sessions Focus on Health Care Crisis and Reform

By Sarah Y. Keightley
News Editor

Health care, a hot topic with President Clinton on the verge of announcing his new plan, was the focus of two interactive sessions during last weekend's Industry Summit. All the panelists agreed that the U.S. health care system is undergoing a crisis and needs national reform.

In "Health Care Crisis," the session chair Ernst R. Berndt, area head for economics, finance, and accounting for the Sloan School of Management, opened by saying that there is a "diversity of interest in health care." The diverse membership of the panel, which included representatives from medicine, industry, academic, and insurance, supported Berndt's statement.

Uwe E. Reinhardt, James Madison professor of political economy at Princeton University, said that one dimension of the crisis is cost. In the 1970s, health care costs increased rapidly in all developed nations, he said. By 1980, most of these nations -- except the United States -- had geared the growth of health spending to the growth of their gross national product. According to Reidhardt's graphs, if U.S. health spending were to increase at its current inflation rate, by 2000 it will be 18 percent of our GNP, by 2050 it will be 49.6 percent, and by 2100 it will be 81.5 percent.

Toward the end of the session, Berndt noted that the speakers focused on two themes: cost versus benefit analysis, and reform that is already occurring outside of Washington.

Benefits versus cost

The panelists agreed that the high cost of health care was detrimental, but that quality needed to be maintained while reducing costs. Stephen L. Brown, chairman of John Hancock Mutual Life asked, "We need to find a way to measure benefits, as well as cost. ... But will lower cost lead to a sacrifice of quality?"

The main problem is that the cost of health care benefits is using up purchasing power, said Jerome H. Grossman, chairman of the New England Medical Center and professor of medicine at the Tufts University School of Medicine. It is the "largest drag on economic growth" for individuals and companies, he said. "Regardless of what comes out [of the government], change will go on because we can't tolerate this rate of [inflation], and the idea we're moving to makes sense," Grossman said.

We need to reward and sanction performance that has quality and efficiency, Grossman said.

Care deliverers should restructure and reorganize around patients' needs, Grossman said. Fifty percent of the money spent on health care is not necessary, he said. A lot is spent on administrative work, he continued. "It's not that we're giving too many MRIs, rather it is the time spent writing, scheduling."

"The problem with health care is that there is no standard by which providers and customers can measure quality," said John W. Brown, president of Stryker Corp. "High quality health care at reasonable costs is what we want. ... To get better control of cost we will have to get better control of quality."

In most major purchasing decisions we choose carefully, but there is very little customer research in health care spending, John Brown said.

Another complaint with the current health care system is that because most people receive their insurance through their employers, they are not covered when they are between jobs or do not have jobs.

"Employees have unsurance of insurance," Reinhardt said.

Insurance company's view

John Brown called health care "the single most complex issue this country has ... tried to reform." He noted that there is a singling out of villains. Because the "Clinton administration has identified insurance companies as villains. I'm concerned," he said.

Stephen Brown was troubled by how everyone who has "day-to-day interest" in health care spending, such as doctors and insurance companies, were excluded from making the reforms because they were considered to be a part of special interest groups. "The United States has a higher degree of societal problems which helps drive up cost," he said.

Insurance companies support universal access to medical care. However, they do not support limiting consumer choice, "arbitrary and capricious price controls," or mandatory health insurance purchasing plans, Stephen Brown continued. They want "reform on a platform of openness."

Reform through industry

Most of the speakers concurred that a U.S. health care revolution is inevitable and that some reform has already occurred through industry.

"Something is going to happen from the Fortune 500 companies rather than the government," said John Brown.

Robert S. Galvin, manager of health care and medical services at General Electric, explained how his company has already taken action. In the United States, the employer became responsible for health care cost about 50 years ago, he said. In the late '70s and '80s, there were double-digit increases in health care spending, he continued.

GE decided to be a "smart purchaser for health care" and look to another GE department to see how they purchased their goods, Galvin said. GE's solution was to use managed care, such as a health maintenance organizations, where patients pre-pay and can only see a specific group of doctors.

According to Galvin, because 50 to 60 percent of diseases are preventable and related to risky behavior, such as smoking, the components of the GE health program include: prevention, like fitness center and wellness programs; programs for high pressure detection and cholesterol screening; and a 24-hour health line staffed by nurses that employees can call.

The program is "hard-headed and soft hearted," Galvin said. The key is "rewarding the best supplier with volume."

Second session has same message

At the second health care interactive session "Resources for Medical Care in the 21st Century," panelists made predictions similar to the first session panel.

Samuel O. Thier, president of Brandeis University, said he was certain the system will change. For reform, "We need to be sure quality is excellent while controlling the cost. Also we want to reduce provider disbursement, control liability, and administrative expenses."

Former Massachusetts Governor Michael S. Dukakis said that the United States is the only country that does not require a primary practitioner to refer the patient and act as a guide. Instead, most people see specialists. "A lot of people in this country are very spoiled," he said. Reform "will require patience." Health care reform will affect many groups, he continued.

"There will be an enormous impact on the insurance companies," he said. "The larger ones will survive, but not necessarily prosper. The small companies will go out of business or be merged unless they change their ways." "There will be an impact on the pace of drugs and equipment development since a lot of [health care] money goes into research," Dukakis said. "The kind of money that has made [medical technology] possible isn't going to be there."

"There is an expectation in this society which will take 20 to 30 years to change," Thier said. "This is restricting access to high technology."

Dukakis added, "There is going to be an impact on the legal system in the country, such as malpractice limits."

"We will also have to confront ethical and moral issues such as premature infants and the elderly," he said.

Furthermore, there will be implementation problems and political problems, Dukakis said. The health alliances that the Clinton administration is proposing are going to have a lot of political and economic clout, he said.

Dukakis said he supports much in Clinton's plan, but is "wary of [the health] alliances" because of their economic clout.