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Health & Hospitals

Memorial Health President and CEO Addresses Local Impact of Health Care Reform

11/13/2009 - Phillip S. Schaengold, president and CEO of Memorial Health University Medical Center, believes in the power of health care reform.

“In America, we have the best health care in the world, but we don’t have the best health care system,” he told an audience of more than 100 local business leaders at HunterMaclean’s Critical Issues Forum, which took place at the AVIA Hotel on Nov. 12. “It’s the health care system that has problems we have to deal with. And that’s what we’re trying to remedy.”

Schaengold addressed the local impact of health care reform, focusing upon the recently-passed House Bill 3962, also known as the Affordable Health Care for America Act, and on the proposed Senate Bill 1796, which has yet to be voted upon.

Because the Affordable Health Care for America Act eliminates pre-existing medical condition restrictions and prohibits insurance companies from rescinding coverage, he said, companies with young, healthy employees could see their health insurance costs rise, while companies offering “Cadillac” health care plans could see their costs decrease. In addition, companies currently offering cut-rate insurance policies to employees may incur additional costs in order to deliver coverage that meets the Act’s established standard of “essential benefits.”

“Comprehensive reform is needed, but not every business entity – including hospitals – will be affected equally,” he said.

He expects that regional hospitals like Memorial Health will be negatively affected because they will experience a reduction in Medicare and Medicaid disproportionate share payments, which compensate hospitals for the higher operating costs they incur in treating a large share of low-income patients. At the same time, Schaengold believes that many area residents will continue to use hospital emergency rooms as primary care facilities, regardless of health care reform successes on Capitol Hill.

Additional impacts on local businesses will likely be felt in the coming years, he said. Health care reform depends heavily on taxes and fees, which Schaengold predicts will be absorbed by employers and employees. “There are a whole host of fees on insurers, device makers and labs in the current legislation,” he explained. “These fees will be passed on to the consumer and to businesses insuring employees.”

In his discussion, Schaengold said that the United States currently spends $2.2 trillion for health care, which accounts for an estimated 60 percent of the Gross Domestic Product. Without an overhaul of the current health care system, that number is expected to rise to $3 trillion by 2012, he said.

Costs tend to be driven up by everything from hospital expenses and increased demand from consumers to fraud and abuse. Schaengold estimated that 40 percent of all health care costs are not related to illness or disease, but rather to operational inefficiency, non-compliance and other issues.

“We are in crisis,” he said. “We’re not making progress in reducing costs.”

In an effort to bring down health care costs, he emphasized the need for tort reform, rapid adoption of medical information technology, and encouraging healthy lifestyle choices from a young age, in addition to health care reform.

“I believe there is a need for comprehensive health care reform, but it should be built on a foundation of pragmatic considerations,” he said. “We need insurance coverage that is affordable, portable and effective.”

In addition, he underscored the need to expand medical residency opportunities for future primary care physicians and to fund new health care clinics that can take the pressure off hospital emergency rooms.

“Who is going to take care of this new group of insured citizens?” he asked. “We need to increase funding for training of additional physicians. We have not solved the access issue simply by moving people from uninsured to insured.”

Ultimately, Schaengold advocates a return to personal responsibility, where employees don’t expect health care to be a “free” benefit or perk. “It’s going to be a process,” he said, “to get back to the consumer having some responsibility for the cost and also for lifestyle choices.”
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