Is it back to square one for health care reform? We take a look.
April 2, 2012 1:10 p.m.
Chris Van Gorder, President and CEO of Scripps Health System.
CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. Oral arguments last week at the U.S. Supreme Court have set the stage for a major ruling on the affordable healthcare law. Legal pundits told us the questions asked by the justices during argument did not seem to bode well for the part of the law that requires Americans to buy health insurance. If the Court strikes down that part of the law, the entire healthcare reform law could be in jeopardy. If the law goes away, we're right back where we started in terms of cost and access to healthcare. Joining us to talk about what that means is my guest, Chris Van Gorder. President and CEO of Scripps health system.
VAN GORDER: Delighted to be here.
CAVANAUGH: One of the arguments of opponents is that America's healthcare system is not broken and doesn't need to be fixed. Do you agree?
VAN GORDER: Oh, it's absolutely broken. It's too extensive today, there's too many people without access to affordable healthcare. In California, we're getting close to one out of four people fought insurance because they can't afford it or their employer doesn't offer it. That's seven million Californians alone who are going without healthcare. I believe the healthcare system is broken, it's too expensive, too difficult to get access into it, and it's very, very fragmented.
CAVANAUGH: If healthcare is struck down by the cores, what happens?
VAN GORDER: It's speculative at this point. I would agree based upon the tone of the questions, it might be overturned. And if you actually go back to the appellate courts, they had similar questions, in a majority of cases, and they upheld the law. But having said that, it depends on whether or not the entire act is found unconstitutional. Or whether the mandatory insurance component is found unconstitutional. If it is, from the federal standpoint, we are back to square†1. That doesn't mean the states won't go ahead and step in on their own. The secretary has already indicated this the state would probably start to take on some of the initiatives themselves.
CAVANAUGH: So you're not an absolute fan of that reform law, are you?
VAN GORDER: We are so heavily regulated now as an industry, I think there have been studies that said if you just stack the Medicare regulations on end, it would be about 17†stories high. This act was about 2,000†pages or so, and there are at least 1,500 clauses in there saying the secretary shall, meaning the secretary of health and human services will be prom you will gating regulation, one of those 1,500 different elements am so I knowledge any legislation that's that complexion isn't going to solve the problem, and in some ways might create some problems. Having said that, I also believe we needed to start somewhere as a nation, not just as individual states. So unlike business, what we generally try to do a strike plan, and implement over time and adjust. The government works opposite way. They pass a law and then fix it over time.
CAVANAUGH: What in your opinion is right about this law?
VAN GORDER: Well, we have to find a way of getting everybody insured. And while I know the mandatory insurance component is probably the most controversial, we have to find a way of insuring that 21% here in California alone that are uninsured -- either we need to provide it by government or mandate it by employers or ask everybody to step up. It is true. Insurance does not work. If you just wait till your house burns and then you buy insurance. With healthcare, it doesn't work if you wait till you get sick and then buy health insurance. It works by the majority of the people not needing insurance and then paying for those that do. We're all going to need healthcare at one point or another. That's the most controversial element, and the issue is federalism. Whether the federal government can mandate it, or the states can mandate it. And I don't think anyone is questioning at this point the states. Massachusetts already did if, and California certainly could as well. However, the State of California is in a lot of financial trouble right now. And I'm not sure whether we would come up with the money to provide this for all of those people who cannot afford it on their own.
CAVANAUGH: I'm speaking with Chris van Gorder, president and CEO of Scripps health system. Can healthcare providers themselves fix this problem out the government?
VAN GORDER: I think we have to. The healthcare system is very fragmented and broken. We have historically been what I would describe now as a sick business. If you're not sick, we're actually out of business. And we need to flip that model to a wellness business where we are spending a lot more time and energy trying to keep people well. That's not the way the reimbursement mechanisms have worked in this country which is why we became a sick business. We formed hospitals, we never paid hospitals to try to keep people well. And generally speaking we don't pay physicians to try to keep people well. And healthcare providers need to take this lead to exit this fragmented system back together again flip the model from being in-patient focused to being more ambulatory focused. For the frequent flier, the people that are chronic users of the 911 system, it actually is about 1% of the population that has 20% of that total cost. If we focus on disease registries, patients that are brittle diabetics, that are heavy users of the healthcare system, create registries, navigators, so the patient is in assistant contact with some provider to make sure they're getting the right care at the right place at the right time. Not waiting till somebody gets very sick. If we focus on developing those systems in the environment, we can reduce the cost of care and keep people well.
CAVANAUGH: Have you talked with state lawmakers about what they might be able to do if it falls upon them to come up with a healthcare plan for California?
VAN GORDER: Well, I'd be happy to. Most of the legislatures don't pick up the phone call and ask the provider when is we think and what we can do. We're well represented, but aye yet to be called by any legislature to ask me what I would do in fixing the healthcare delivery system. So we're taking it on our own. At Scripps, we are starting to change the model. Eer looking at not only the cost of care but the quality of care. There's so much fragmentation in the system, that variation often leads to a quality problem. But it also leads to a higher cost. And we actually, you know, flipped our company on its side and identified if we looked at our hospitals, just our hospitals alone horizontally, we did things differently to the degree of $150 million a year.
CAVANAUGH: Now, when Scripps saves $150 million a year, do patients get the fallout of that? Where does that money go?
VAN GORDER: Well, they will over time for sure. We'll be able to accept reimbursement from the insurance companies lower than perhaps we had in the past. The reality is right now, because of healthcare costs and the changes that are going on nationally, we're actually not seeing very large reimbursement from the insurance companies. One of our major companies this year decreased our reimbursement by $10 million. We're seeing reductions in reimbursement over time.
CAVANAUGH: I want to talk more about the emergency rooms and the people who use them. You used the word frequent fliers. There's a serious in UT San Diego now that we'll be talking about on this program tomorrow about so-called frequent fliers, the homeless people who use the emergency room over and over again. Puyou have also said that there are now generations of San Diegans who use the emergency room as their healthcare provider. They have no insurance, no primary care doctor. What kinds of problems does that create for an institution like Scripps?
VAN GORDER: Well, we're the only business that I know of anywhere where we're required to actually take care of you, regardless of your ability to pay. I'm certainly in favor of that. From an ethical standpoint, we would never want to turn a patient aware. But a lot of generations have grownup realizing their hospital emergency rooms are there 24 hours a day, seven-days a week, it's extraordinarily convenient. And if they can't pay, they know they're going to get cared for in the emergency room. So ERs are overwhelmed. 20% of the patients really need that care, and 80% probability could be cared for in another location less extensively if those familiarities were open to them.
CAVANAUGH: And fair to say that people buying health insurance, and having government involved in that, we're all paying if are that right now?
VAN GORDER: It's been estimated that at least $1,400 of your premium is going to pay for other people's care. That's cost shifting. And that's something that the government has endorsed and probably even encouraged based upon the fact that the government does not pay the total cost of Medicare patients. They don't pay the total cost for Medi-Cal patients and Medicade patients. In our case alone, we deliver $268 million in uncompensated care last year. About $42 million of that was direct care where there's no reimbursement whatsoever, and that's at cost. That's not an inflated charge basis.
VAN GORDER: Somebody has to pick up the tab for that. We don't want have donors sitting out there, writing was $40 million in checks. So we cost shift over to those who do have insurance. Governor Schwarzenegger called that the hidden tax. And he said it was about the third of a cost of a premium, going to take care of other people.
CAVANAUGH: There has been a feeling expressed that if you don't make the proper choices, if you don't buy health insurance, and you go in for care and you can't afford it, maybe you shouldn't get it.
VAN GORDER: Well, No.†1, that's not the way the law works, and frankly, that's not the way healthcare providers would work. If somebody fell down in the street corner right now, I'd probably stop and try to help them. Hospitals are no different. If you come in and you need care, you're going to deliver that care. We're not the kind of society, if you're not willing to pay for it, you're in the going to get it. We're not going to do that. Somebody is going to have to pick up the tabs for all of this. And if falls to the hospitals, eventually, they'll shut down, and they won't be able for anybody.
CAVANAUGH: Now, as you said, Scripps is working very hard to decrease costs as are other health systems in California and around the country. One of the things they're trying to do is utilize technology, to cut down on the frequency of doctor visits and allow patients more partnership in their healthcare. Tell us about that.
VAN GORDER: We're moving toward more electronic monitoring, more information electronically, and information is much more accessible to us today about the computer systems that we have today that are bridging the gap between the private doctor's office, the hospital, and even to bridge between different healthcare systems so that we don't end up getting a patient in an emergency room that had a test done in the ambulatory environment and then repeat it. So that will lower cost. The biotech industry is huge in San Diego and there are about 150 companies coming up with wireless methodologies to monitor patients. If we could monitor a patient and intervene before they get sick or have them contacted by a nurse or doctor, we might be able to prevent a very expensive admission.
CAVANAUGH: This still sounds like science fiction to a lot of people upon are you going this?
VAN GORDER: Well, even further, we're breaking down the genome, and we've identified 81 gene variation that slightly prevents the metabolism of a drug, a very, very expensive drug used across this country. We estimate that he about the third of the of the patients who get prescriptions can't metabolize it, or it doesn't work. If we can use technology to identify a drug that works on an individual that does work or does not work on an individual and prescribe the appropriate therapy, we'll save literally billions of dollars and improve the quality of care at the same time. So there's wireless technologies, genomic technologies, innovation and healthcare delivery that we're working on that are frankly excited. If you can't tell, I'm bullish on the future of healthcare. I've never seen such collaboration between our physicians and the healthcare administration. I've never seen such fantastic technologies coming to bear that's going to improve care and decrease costs. So there are times when I wish government would get out of our way a little bit and free up our ability to be innovative. And I think we could make human in-roads in fixing the healthcare system.
CAVANAUGH: And it sounds as if these procedures that you have initiated at Scripps are going to continue no matter what the ruling is that comes down in June.
VAN GORDER: Absolutely. We're going to continue full-speed ahead in fixing the system. We've been interfacing with other healthcare systems across the country. We had a healthcare system from Atlanta in here last week that we were doing. We've done web casts, the last one was 279 healthcare organizations called in to find out what we're doing. There's huge innovation in healthcare delivery that's taking place right now, and that's going to continue regardless of what the Supreme Court does, or what happens in Washington DC or Sacramento.
CAVANAUGH: I hope you're right! Thank you very much.
VAN GORDER: Delighted.