Are Healthcare Execs Bailing Out, Or Just Getting Old?

June 30, 2009

Modern Healthcare reports in its June 29 issue that hospital CEOs are jumping ship in the face of a variety of pressures, including revenue shortfalls and the uncertainty of healthcare reform. 

In the second half of June alone, more than a dozen healthcare CEOs announced departures or formally retired, including: Ed Dahlberg, 61, retiring as CEO of three-hospital St. Luke’s Health System, Boise, Idaho, effective next March; John Ferguson, 60, retiring as president and CEO of Hackensack (N.J.) University Medical Center, effective July 1 (June 22, p. 16); and Ellen Guarnieri, who is in her early 50s, president and CEO of 270-bed Robert Wood Johnson University Hospital at Hamilton (N.J.)….

The trend is not limited to health providers. H. Edward Hanway, 57, chairman and CEO of Cigna Corp., Philadelphia, announced his retirement effective in January, and Boston Scientific President and CEO Jim Tobin, 64, announced his resignation, which will be effective July 13.

Regarding turnover among health plan executives, Carl McDonald of Oppenheimer writes:

Half of the companies in our coverage universe have named a new CEO since 2006. The longest serving CEO in the industry is Richard Barasch of Universal American, while both Mario Molina and Mike Niedorff of Centene assumed the top spot in 1996, before both companies were publicly traded. (Allen Wise also became the CEO of Coventry in 1996, although he stepped aside at the end of 2004, before resuming the top spot earlier this year). Jay Gellert ranks fourth on the tenure list, as he took over in 1996. The turnover has been even more dramatic among CFOs, as there have been 10 CFO changes since 2006, including five switches in the last two years. Universal American also has the longest tenured CFO, in Bob Waegelein, followed by Stuart Huizinga of eHealth (2000), and Jim Bloem of Humana (2001).

Looks like the brave new world of healthcare in the U.S. will be led some different faces.  Will they be up to the task?


Long-Term Care: The Next Healthcare Crisis?

June 29, 2009

All this talk of late about promoting wellness and disease management as a way of controlling healthcare costs and helping people live longer, healthier lives got me wondering who is going to take care of all us old folks when our bodies start breaking down in the future. 

The number of Americans aged 85+ alone (an indicator of long-term care demand) is expected to reach 21 million by 2050, up from just 4 million in 2000.  Right now, something like 10 million people require LTC at any given time.  The majority are cared for by unpaid help (e.g., children taking care of their parents at home); a smaller number are cared for at home by paid help; and only around 13% or so are in nursing homes.  While numbers vary (I pieced the above together from the Urban Institute, Census Bureau and CDC’s National Nursing Home Survey), you can expect all of the above to increase substantially in the years ahead.

Who pays now — and who will pay in the future when there are too many old people (like me) and too few children to care for us? 

The bulk of paid LTC services is funded out-of-pocket or by Medicaid;  Medicare pays a smaller portion. 

Only a tiny percentage of LTC is paid for by private insurers. That’s largely because LTC insurance remains a niche product aimed at helping the relatively wealthy and upper middle class protect their assets.  According to the American Assn. for Long-Term Care Insurance, about 180,000 people received LTC benefits in 2008 (out of 8.25 million covered under LTC insurance).  Total LTC premiums in 2008 were about $20 billion and claims expense was about $8.5 billion. 

Leading insurers are Genworth, John Hancock, MetLife, Prudential and Mutual of Omaha.  There are also 27 state public-private partnerships, in which individuals purchase private LTC insurance and receive some level of asset protection in case they exhaust their benefit and have to apply for Medicaid.

All of which suggests to me an expanded government role in the future to help fund LTC for an aging nation.  The only question is at what cost to taxpayers.

End-of-Life Care Debate

June 29, 2009

Some interesting thoughts on life-expectancy, aging populations and end-of-life care in The Economist (Hat tip: Infectious Greed).  It’s an issue that often requires the type of tough choices few are willing to make.

The trouble with health care in America, says Muriel Gillick, a geriatrics expert at Harvard Medical School, is that people want to believe that “there is always a fix.” She argues that the way Medicare is organised encourages too many interventions towards the end of life that may extend the patient’s lifespan only slightly, if at all, and can cause unnecessary suffering. It would often be better, she thinks, not to try so hard to eke out a few more hours or weeks but to concentrate on quality of life.

Of course, the above paragraph can be read an entirely different way (I mean, a way the author didn’t intend), i.e., people always think there’s a fix for the U.S. healthcare system in general — when, in fact, any “fix” requires hard choices and sacrifices.

‘Deadlines and Commitments’

June 29, 2009

Posting will be light today and tomorrow as we deal with other deadlines and commitments.

The Economist on Healthcare Reform

June 26, 2009

The Economist has a couple of very good articles in its current issue on the U.S. healthcare reform debate.

The first is an opinion piece pointing to “two huge distortions” in the U.S. system: 1. the tax exemption for employer-sponsored health insurance, which it says encourages “gold-plated insurance schemes;” and 2. Fee-for-service provider payments that encourage overuse of care.  (Btw, the piece warns that a public health plan “could harm innovation and distort the market further.”)

In other words, The Economist argues, it’s all about fixing the incentives.  A much longer article in the same issue expands:

If American reformers doubt the power of incentives, they should visit Sweden. Like other relatively cheap OECD systems, Sweden’s single-payer model has been plagued by long waiting-lists—a sign, to American conservatives, of the rationing that goes with socialised medicine. Swedish health officials tried and failed to cut queues by increasing direct funding for hospitals and even issued an edict requiring hospitals to cut queues for elective operations to three months. Then, last year, the health ministry said it would create a fund into which it would pay SKr1 billion ($128m) a year for local authorities that managed to reduce waiting times to that threshold. Nine months ago virtually none of the counties passed, but this month the health minister revealed that nearly all had cut their queues to three months or less.

Full Disclosure: Condom Samples

June 26, 2009

It’s rare that I accept healthcare product samples.  But I couldn’t resist the offer from 5W Public Relations to provide samples of the X2 Condom from Ansell Healthcare, which is billed as “the first and only condom lubricated inside and out with Excite sexual enhancement gel — a breakthrough in sexual pleasure for both men and women.”  The product is being released “just in time for National HIV Testing Day tomorrow,” 5W says.  Be it known that I, Carl Mercurio, am doing my part to promote safe sex.

Cherry Picking, Lemon Dropping in Healthcare

June 26, 2009

Health insurance reforms being kicked around in Congress include provisions for guaranteed issue, community rating and a variety of other regulations designed to keep coverage affordable, available and adequate.  The question is whether regulation is enough, or is a public health plan needed — as President Obama says — to keep insurers honest.

In this video interview, former Cigna public relations executive Wendell Potter says, “Regulation is not enough….I don’t think that this is an industry that’s honest enough to ever be regulated as it should be.” 

David Whelan, writing in Forbes, agrees — but he thinks a public plan will become a dumping ground for the sick as insurers continue to cherry pick the healthy.

Insurance companies find ingenious ways to get healthy members in the door while being inconvenient to sickly applicants. That’s bad news for reformers, who imagine an egalitarian world that doesn’t discriminate against the sick. The four health care proposals now getting the most attention in Congress all require HMOs to offer coverage to all who apply, regardless of their health status.

Good luck with that. Insurance companies will have a financial motive to attract and keep the healthiest members, the ones who don’t rack up hospital visits or take costly medications. If Obama Care means HMOs will have to compete with a new public plan, a disproportionate number of unhealthy people will end up in the latter.

It’s an interesting dilemma.  I’ve been a proponent of the public plan, but I’m not blind to the possibility that a government-run option will result in various unintended consequences that will have to be addressed later.

Addition (June 26, 2009; 3:13 pm): After writing the above, I wondered in true Machiavellian style why health plans would oppose a public option if they could use it as a risk selection mechanism.  Then I remembered that Matthew Holt had already asked that very question:

As far as I can tell the regulation that AHIP is promoting would put them in a similar position to the role they play in Medicare in the commercial insurance market. But without a place to dump the people they don’t want to insure.

So here’s your quiz. If insurers need a place to risk-select against which they know will have to take the patients they don’t want, why is AHIP opposing a public plan?

It’s a good question.

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