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Soaring Health Care Costs Spur Calls for Reform

Posted on: Monday, 3 October 2005, 03:01 CDT

By Bradner, Tim

Health care providers admit they are part of the problem behind soaring health care costs in Alaska. The state's medical industry, they say, could use a old-fashioned dose of better management, cost control and implementation of new information technologies - practices that have been widespread in other industries for years.

Health care costs in Alaska are 40 percent higher costs in Seattle, and they only continue to rise, according to Premera Blue Cross, the state's leading health insurer.

Al Parrish, chief executive officer of Providence Health Systems, voiced some candid observations and suggestions at a half-day conference on health care costs and insurance convened by the Alaska State Chamber of Commerce and the Anchorage-based business group Commonwealth North on Aug. 9. Ron Betit, who heads the state's hospital and nursing home association, as well as Jim Jordan, executive director of the Alaska State Medical Association, joined Parrish on a panel With other industry leaders, to voice their ideas.

Commonwealth North used the occasion to release a nxh examining the complexity of the issue and to launch the Health Care Roundtable, a group that will focus on recommending ways to control medical costs on a sustained basis.

Parrish, who heads the state's largest non-government health care group, faulted the health care industry for poor management and cost control practices. and he didn't exempt his own organization.

While not endorsing Health Management Organization, active in other states, he said Alaska providers could use a dose of the discipline and efficiency that HMOs bring to the market.

Parrish also said health care providers have a responsibility to become more active in promoting healthy lifestyles and diet as basic prevention measures to ward off future health problems.

Betit, who also spoke on the panel, formerly headed Utah's state health agency, which achieved significant reductions in the number of people lacking health insurance coverage. Utah also instituted a health data information network and "real portability" in health insurance for working people, Betit said, which allowed coverage to be transferred when people change jobs.

"We can do this in Alaska, too, but it is tedious work. It takes a sustained effort to effect change," Betit said.

State Health and Social Services Commissioner Joel Gilbertson, also on the panel, said lot of what's driving up health care costs are social issues, such as the growing population of senior citizens, who consume more medical services, as well as lifestyle choices by those of all ages. "We need to eat less and move more," Gilbertson told the group.

Some things driving health care costs are largely out of the control of Alaskans. Paul Sherry said his organization, the Alaska Native Tribal Heath Consortium, has seen annual increases of 15 percent to 20 percent in the cost of pharmaceutical drugs. "This is really irritating when I read that 30 percent of pharmaceutical costs is in advertising," he said.

Work can start on short-term solutions

Tackling obesity, lack of exercise, alcohol consumption and drug use, as well as lack of health insurance and underinsurance are longterm issues. But Sherry, Gilbertson, Parrish and others at the conference agreed that there are actions that can be taken in the short term.

Creating an electronic information network is at the top of the list, they said. "We have the world's most technologically advanced medical system but does still write things down on paper," Gilbertson said.

Processing forms electronically rather than using paper records would save costs because standardized formats for forms and data would he established, reducing administrative costs.

Major health providers are now working toward a regional health information network, a big step, but there are challenges, such as developing security protocols, the commissioner said.

Parrish said electronic record systems would do a lot to reduce errors. "Have you ever tried to read a physician's handwriting?" he said.

Establishing an effective electronic information system has its challenges, however. Jordan of the Alaska State Medical Association said Alaska physician practices are small and the purchase of even basic information systems is a matter of concern.

"These can start at $50,000 and there are 1,200 physicians in the state. Let's remember that physician practices are basically small businesses," Jordan said.

There are other problems. "We don't have the basic data to develop electronic health records. How are we going to really implement this?" he asked.

It's still worth doing, said Sherry, chief executive officer of the Alaska Native Tribal Heath Consortium. "if you added up the true cost of what we spend on administration and paperwork ... We send bills to ourselves (between providers) and argue who's going to pay. We could cover the cost of the noninsured if we eliminated this waste," he said.

Sherry said he strongly supports electronic health information systems and data-sharing. The Alaska Native Tribal Heath Consortium is a statewide nonprofit that manages health care for 130,000 Alaska Natives.

Sherry said technology has allowed cost reductions in other areas. For example, improvements in telecommunications allowed many medical procedures to be done in rural clinics, reducing the need for costly trips to urban hospitals.

Investment in prevention also pays off. The tribal health consortium has been aggressive in screening to prevent disease and is active in promoting home safety, Sherry said. "We've been seeing a dramatic reduction in major injuries and traumas in the last 10 years due to aggressive promotion of things like helmets when riding snowmachines, float-coats while on the water and fire alarms at home," he said.

Management practices targeted

Health providers do need some lessons in management, however. Parrish, of Providence, said providers generally do a poor job of cost control, particularly with labor, the major cost for providers. "I'll admit we need efficiencies at Providence," he said.

The problem is not so much reducing labor costs as in "rightsizing" care units, making sure the right number of nurses and other staff are on hand for the number of patients. "We're good at up-sizing, but we don't down-size well. We need to learn how to do it," Parrish said.

Inventory is another area crying out for better management, he said. Hospitals have to cater to independent physicians who request, and often get, particular specialized equipment, which then is not always used as efficiently as it could be.

"We need to limit physicians' choices of technology and work out joint-purchasing arrangements," Parrish said.

Sherry said the federally supported health care providers like the tribal health care consortium, the military and veterans' service, do grouppurchases of pharmaceuticals and specialized supplies to reduce costs.

High-price specialists are also shared among the groups, spreading the costs, he said.

The roundtable established by Commonwealth North will continue to study ways to bring down the industry's costs.

Janie Leask, Commonwealth North's president, said five organizations have already signed on to help support the roundtable, including GCI, Arctic Slope Regional Corp., Premera, Providence Alaska Medical Center and University of Alaska Anchorage.

The University of Alaska Anchorage's Institute of Social and Economic Research will play a support role in conducting research for the roundtable, Leask said.

To see the Commonwealth North health care study, go to www.commonwealthnorth.org.

Copyright Morris Communications Aug 21, 2005

Source: Alaska Journal of Commerce

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