What Can Post Acute Care Learn From Howard Dean's Health Care Predications

Aug 5th 2013


Yes, he was a U.S. presidential candidate front-runner in the 2004 election, a three-time governor of Vermont who was thrust into office after the death of his predecessor, and a very capable doctor. But this is really about his view as an active board member of Extendicare and a former health care innovator who was first to accept block grants, creating universal health care for all children, that makes his predications more interesting to reflect on.

Here’s what you need to know, or the ‘news you can use.’ Governor Dean’s talking points were:

  1. Brutal Decade Ahead:  Dean believes LTC has a brutal road ahead in the U.S. that will be a challenge to survive because there will be medical malpractice problems in many states, along with MCO raiding Medicaid, corporate oversight being overzealous, no real seat in ACO frameworks, very tired assets, ALF Medicaid funding expanding, etc., all of which will force a large percentage of skilled nursing closures. We  are stuck in the middle, we are a hybrid, and this is the roughest ride ever. ACO will get control and then where do fit in? Are we running out of time?
  2. End of Employer-Sponsored Health Care:  The recent Obama Care legal ramifications really are telling us this is the end of employer-sponsored HC because consumers will buy good insurance related to deductible, limits, costs, etc. with $2k penalty per consumer. Employers will force exchanges and set up programs to move them out, all low-end businesses will move to exchanges, etc.  Once heath insurance is taken direct to consumers, all relationships will change.
      • Two points to remember… he acknowledges that Fortune 500 organizations can afford to operationalize wellness and do it well, but that it’s not a reasonable value proposition for most employers going forward.  Secondly, consumers can buy health insurance well, historically, based upon their personal needs better than an employer, and the HC exchanges can offer deeper discounts once closed networks are established.
  3. Post Acute Diversification is Too Slow and Very Challenging:  He is concerned that LTC talks a lot about service line diversification but there is still too little of a percentage for the sector to have adequate leverage that we need for a real seat at the table unless they can increase the materiality quickly. But this is easier said than done.
  4. ACO Will Win as a Closed Vertical Network Offering Discounts Through HC Exchanges:  He sees the recent trend of  insurers and payors buying actual HC providers daily continuing to accelerate. This can be validated by Humana’s purchase last week of American Eldercare, a nursing home diversion company. Managed Care may be the bully now, but he believes ACO will take over once they are a closed system with vertical care model linked to HC exchanges where discounts could be 25% for consumers to use that system only. HC exchanges will run late, and the federal one will be even later.  However, once live, people and underwriters will keep rebidding, driving down costs quickly.
      • Large, established hospital systems are mostly non-for-profit, so they have less financial pressure and can think long term more than publicly-traded insurers. They also have access other funding sources and are more mission based, so they can accept lost leaders as needed.
  5. HC Policy Should Be Called “Cost Containment” Right Now, Not Triple Aim:  This is not the old HMO rebellion where customers complained to the doctors so much that they revolted, but a time where transparency wins the day and HC is so costly people are aware this the third wave of HC policy called ‘cost containment.’
  6. HC Reform Is Not Going Away:  He was disappointed that Obama Care was so government-led versus industry-led. There were more balanced models available and now with only half of the states on the fence with Medicaid expansion, or creating a state-sponsored HC exchange, we can find solace by reviewing the decade-old results of Romney Care after various modifications. This will tell us about future revisions to consider or predict, and with Massachusetts’ largest hospital buying a large managed care company, will tell us who will push who in the end.
  7. In the Future, Medical Extenders Will Be More Valuable Than Most Equipment:  As a doctor, he sees and supports the primary care re-emergence, the creation of medical homes, and sees closed ACOs as gatekeepers assuming more insurable risk so Nurse Practitioners will be one of our best bets for operationalizing care pathways, enhancing image, and being physician and hospital system friendly.
  8. Gatekeeping Has Three More Eras of Change:  As we shift from government approval to Managed Care approval this decade, the regulatory power will need to step in for a period of time as the only way to keep managed care honest as a temporary gate keeper until two things happen:
      • Competition through HC exchanges finally takes off, which is much better because it will be free market competition (he likes HC exchanges that are wide open, where it offers discounts for closed access, lifestyle, patient engagement, etc.).
      • Secondly, many physicians are too emotional toward their patients to make great evidence-based decisions, but as providers assume total risk. They will be a reliable gate keeper who becomes less generous than the government, but not as punitive as MCOs.
  9. Forget about National Tort Reform:  This is an impossibility that politicians talk about about but never a real possibility, so watch the tone of the states you choose. But the more macro issues are the care for high-acuity patients with low margin/high risk for the industry, and being forced into clinical service gaps that are ‘damned if do or damned it you don’t.’  Made really strong comments about Kentucky’s current state as scorched earth!
  10. Final Thoughts to Consider:  He likes the  5-star program, which is really an operator checklist, and believes in it because it aligns efforts. He sees the suspension of the mandate as the fast start of the separation of HC from employment. He does not buy the myth that customers will become good HC consumers, but strong buyers of customized healthcare plans will be their sweet spot. Expect more consolidation of regional operators because big players will not want more risk and small players will get out quickly.

After his talk, I wanted to catch some one-on-one time with him, just to thank him for a spirited discussion and open forum.  He was gracious with his time, helping give me some counsel about the limits of politics that frustrate him – but why the policy work makes it worth it – and discussing his current work as a visionary teacher as well as overseas mission work.

He also wanted to know more about the Signature Revolution, which I believe intrigued him. Maybe having a clinician for a President may not be such a bad idea after all.

See Dianne Timmering’s post about Howard Dean’s Keynote at the CXO Healthcare meeting >>

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