Not All Epiphanies are Religious

Epiphany [ee-pif-uh-nee], Noun: A sudden, intuitive perception of, or insight into, the reality or essential
meaning of something; experience of a sudden and striking realization.

 

Largely to listen and learn, I recently sat in on a regional healthcare meeting of community leaders at which two large hospital systems were amply represented – which is to say, they comprised at least half the people in the room and included senior health system staff and a hospital CEO.  (The specific CEO, hospital systems, and region probably doesn’t matter.)  Regrettably, employers were under-represented – which is to say, one attended.

A month earlier, I had presented the results of the RAND hospital pricing transparency analysis to a convening of some of these same organizations.   At this more recent meeting (which, understandably, drew a more substantial and senior audience), HCPF’s Executive Director (Kim Bimestefer) and CFO (John Bartholomew) presented an even more comprehensive and therefore compelling story about hospital financials.  They presented how hospital revenues overall – and revenues of those hospitals represented in the room – had grown significantly faster than either Medicare prices or even the hospitals’ own costs.  They showed hospital specific data raising various questions and pointed out that one of the hospitals in the room, which isn’t particularly large in terms of bed size, has $1.45B in reserves.  (Yes, that’s a “B” as in billions.)

I’ve participated in similar regional discussions with Kim and John.  Each time I am impressed with their commitment to the community and to the broader interests of Colorado.  They both care about the value Coloradans and Colorado employers receive for their dollar(s).  John is an incredible source of insight into the economics of our health markets.  And Kim – leading discussions on “hospital transformation” and the “roadmap to affordability”- has demonstrated courage and a resolve to make Colorado a leader among the 50 States.   But it was the response of the hospital CEO that most struck me and has since stayed with me.  He provided a sort of admonition if not an outright warning – to the approving nods of other hospital folks in the room.  Speaking generally to and of purchasers, he said something to this effect:  “You need to ask yourself what the impact on our communities will be if you start cutting hospital revenues.”

Really?  THAT’S the question we should be asking?  At a time, as documented by the Brookings Institute, when middle- and lower-income Americans are cutting back on food and housing but spending significantly more on healthcare over the last decade, when half of Colorado schools operate on a four-day week because of lack of funding, when healthcare is the number one cause of bankruptcy, and when, Colorado’s largest health systems are making 3 to 4 times what’s needed to break even (as documented by the Rand Report), shouldn’t we be asking the EXACT OPPOSITE question:  “What will be the impact on our communities if we DON’T start cutting hospital revenues?”

Non-profit community hospitals should be just that: institutions governed by local leaders committed to the citizens and employers of their community.  And we still have some of that in Colorado.  Denver Health, for instance, stands out as a humanistic, mission-driven organization committed to public service, high quality, and low cost.  And, across the State, numerous independent community hospitals not only continue to put community first but have – according to the Rand Report – the best pricing in the State.  That demonstrates their commitment to actually being accountable to their community.  Meanwhile, the very “systems” that were to have realized economies of scale have clearly just used increased market share to raise prices time and time again – well above their costs.  Tax-status aside, they seem most interested in pricing to what the market will bear – regardless of the impact on our families or State.  In fact, one system CEO announced to the Denver Business Journal, he intends to double revenues in the next five years.

 

I wonder what he thinks the impact of THAT will be on our communities.

Bob Smith

Executive Director, CBGH