Rising health insurance costs are a big issue in the presidential election. To watch any of the presidential debates, though, you would have thought it’s a minor problem with a few simple solutions. Donald Trump seems to believe that repealing the Affordable Care Act, and allowing insurance companies to compete across state lines, will solve the problem. Hillary Clinton is focused almost exclusively on expanding Medicaid and going after the profits of pharmaceutical companies.
They could have had an entire debate on this topic, but I’m not sure either of them would have gotten to the heart of the matter:
Health insurance costs are driven by the cost of HEALTHCARE and our per capita costs are twice as much as the next industrialized nation.
These costs are, of course, driven by the industries that make their profits on our system – pharmaceutical companies, medical supply and device manufacturers, and insurance companies.
We’ve created a pseudo-free-market healthcare system where there really isn’t the sort of competition, supply and demand, and open market principles that increase quality and decrease costs in other industries.
The other big cost is the workforce. Healthcare is a labor intensive industry. Hospital labor costs as a percentage of total operating costs exceed 54%! Here’s a comparison: the major cost of making a car is the materials that go into the car. Generally, materials cost 47%, while labor costs make up only 21% of car manufacturing.
At the same time, with increasing demand and access to care, we have a growing shortage of providers – physicians, nurses, and even front line staff like home care and long term care aides!
It doesn’t appear that either candidate has an interest in regulating the costs of those companies making a huge profit on healthcare, or in finding a way to create a truly competitive situation to drive down costs (and some economists question whether the unique nature of healthcare even makes that possible).
That leaves us with the workforce. We need to:
- Do a better job training and preparing physicians, nurses, and other staff who are not only adaptable but innovative. The U.S. has always done a wonderful job training the most clinically talented physicians and nurses, but that isn’t enough anymore. For instance, more healthcare organizations are adopting lean and Toyota Production Principles, but they miss the idea that EVERY member of the team is tasked with constantly finding better ways to do their jobs. How do you build that type of culture?
- Hire and develop physicians and nurses who are not only excellent clinicians but who appreciate the business of the healthcare. Sometimes they want to argue for costly interventions on behalf of their patients – focusing rightly on their role as the patient’s champion. But, they need to understand “no money - no mission”- and help to make smart, system-wide decisions that help as many patients as possible. Physicians and nurses need to be drive decisions about how to provide the best care to the most people. Which means they need some business acumen and understanding of hospital finances.
- Make better decisions as we select and develop leaders. We need to learn from other industries, that understand the leadership skills they need, and purposefully vet candidates based on these skills, as well as identify and develop these skills in their own people. We can’t leave this to chance.
Do more with less – which means we need to find ways to control labor costs while, at the same time, improving the quality of care. Yes, these seem like mutually exclusive tasks, but they can’t be.
Maximize HR’s effectiveness and efficiency. We need to do a better job, quickly finding candidates and then vetting those candidates for the skills that matter – the ability to lead, to collaborate, to innovate, and to constantly build a truly patient-centric culture.
Our healthcare system has big, complex problems and there are (sorry, Donald and Hillary) no simple solutions. New payment methodologies. New care delivery models. A new culture that gets the most out of limited resources. Sounds impossible, but I’m betting that just like in sports, the team with the best talent will win. You could say that nothing is going to be more important to our success or failure than the quality of the people implementing these changes.
To learn more about how talent impacts success or failure – see our whitepaper: