Feature Stories - May 2008

Industry Focus: Healthcare

Recently, a group of Nevada-based healthcare professionals gathered at Cili Restaurant in Las Vegas to discuss current challenges within the industry, including the recent healthcare availability crisis, professional credibility, staffing issues and increasing costs. Connie Brennan, publisher of Nevada Business Journal, served as moderator for NBJ’s monthly event that brings industry leaders together to discuss issues pertinent to their professions. Following is a condensed version of the roundtable discussion.

Credibility Issue

The healthcare professionals who attended the roundtable discussion agreed that the public has lost trust in the industry, due to recently exposed practices of the Endoscopy Centers. They believe it’s the job of physicians to educate the community, and in time, they can regain the public’s trust.

Warren Volker: People identify with their hospitals and their doctors. At the end of the day, we really value the hospitals, the clinics and the doctors we choose. I have patients I have been taking care of for many years and they value that ongoing relationship. The current healthcare crisis in Southern Nevada is going to have a long-term effect. The medical malpractice crisis of 2001 and 2002 was nothing compared to current problems because people have lost all trust in the profession. Hopefully, something really positive can come from this. The most important thing we can do right now is reassure our clientele that good doctors, who provide top quality healthcare services, are readily accessible throughout Nevada.

Silvia Young: I’m concerned about the downstream tsunami effect. What happens if we lose the headway we’ve made thus far on litigation reform in Nevada? I was not here five or seven years ago, but I understand that the healthcare community really came together to get caps on malpractice awards so that we could recruit and retain doctors in the community. And there’s some concern that the bank may be broken as a result of the headlines we’ve all read in the newspaper.

William Bannen: One the things that will help the industry regain the client’s trust is time. First of all, the majority of Nevada’s doctors are honorable, ethical, hard-working physicians. The current crisis is focusing on the improprieties committed by an unscrupulous few, represented by a handful of anesthetists and nurse anesthetists and 16 gastroenterologists. Unfortunately, the public comes away with the interpretation that one can no longer trust one’s physician, and that simply is not true.

Anthony Pollard: There’s going to be litigious blood in the streets. The gastroenterologist clinics own 60 percent of the Las Vegas Valley in terms of GI outpatient procedures. Who knows how many people along the referral chain will be named in lawsuits? Physicians are supposed to be morally above the corner-cutting actions that occurred in those clinics. Patients should rest assured that the proper checks and balances are taking place. We need to sympathize with patients and remind them that there are good doctors out there who have high standards. This crisis has created a higher level of awareness and put everyone on alert, across the board.

Recruitment

All agreed that recruitment is difficult not only for nurses and support staff, but doctors as well. As the average age of nurses and doctors increases, the importance of attracting more students to the field increases. Participants discussed the arising issue of less people going into the medical field in general.

Sam Kaufman: It is extremely difficult to recruit employees, whether it’s for a family practice, internal medicine, OB/GYN, or any area of practice. The more in-depth of the subspecialty, the harder it gets to find qualified staff. Once you recruit a few and start circulating physicians, it’s like a feeding frenzy. They go to the highest bidder, and that is not a good thing either. With nursing staff, we try to grow our own, and that’s a very difficult process. You either recruit from outside, or you take from within, which leaves a void at an existing facility. Nursing schools are not graduating enough nurses to satisfy the needs of Nevada. Fewer people are electing to attend nursing school than ever before. The average age of the typical nurse continues to climb higher and higher. It’s probably up to 48 or 49 years old. Younger nurses are going into non-traditional types of nursing, like case management performance. Furthermore, you should avoid having too many new graduates on your staff because it raises competency issues. It’s a hard balance.

Sierra Health Services Buyout

The participants felt the United Healthcare and Sierra Health Services merger as good and bad, depending on the direction the company seeks. They believe it will increase insurance costs for businesses, but will also provide a better service to patients. Those in attendance agreed that employers are more concerned with the cost of healthcare than plan benefits.

Volker: As a physician and an insurer, I think there’s little perceived value in insurance today. People buy the cheapest insurance. If people valued it, they would pay more for it. In some ways, the United Healthcare merger is a good thing, because the participants maintain national standards, although they tend to be profit driven. I have mixed feelings about how the merger will affect the state. I think we’ll see some good results and some bad. It ultimately depends on the behavior of the company – if it plans to use its influence as a negotiating tool to decrease reimbursement to physicians, it will be catastrophic.

Bannen: If a company signs with United, I can assure you that WellPoint will trail that by a year or two and come in and make them sign with us at a competitive level. Almost everyone in Nevada comparison shops for the lowest price. If you are 10 dollars cheaper, you get the business. The merger is good for Nevada. I think that we’re always going to present a product that is competitive with all the healthcare insurers around. Employers may not accept 18 percent increases, nevertheless, if a small group is doing poorly – if its members are sick, require tests and hospitalizations, etc. – any cost increases will be passed on to the employer.

Increasing Costs

The participants agreed that the cost to practice medicine keeps increasing, as well as the insurance costs. In part, costs are increasing because of the advancement in medicine. These costs are making it harder for small businesses to pay for health insurance. They said the system is broken and needs to be reformed, but it’s not that simple.

Don Koitz: Everyday costs continue to escalate, which translates into higher premiums than many small employers can afford. This makes it difficult for employers to even offer insurance, or if they do, they only cover their employees not employees’ dependents.

Pollard: It’s going to be harder in the future for physicians to sustain the current level of care in the sophisticated primary care area in exchange for ever decreasing reimbursement scales. The current system is broken. I’m not sure socialized medicine is the cure, but something needs to change. We’re a capitalistic society who wants a socialistic value system, which is what we’re asking medicine to bear. If we think that everybody should have healthcare, whether or not they can afford it, then someone is going to have to pay for it.

Charles Perry: It’s a hard business. The public, in general, still has the mentality that somebody else is going to pay for it. But we don’t want to raise taxes, nor do we want regulations. Nevada’s Bureau of Licensure and Certification is wholly funded in two ways. The first is by a contract with the Medicare and Medicaid certification centers, whose task is to approve and certify medical facilities to participate in both the Medicare and Medicaid programs. The second is from the fees we all pay to be licensed by the state to be in business. You can’t live with your head in the sand and yet be successful.

Bannen: The reality of medicine today, with ongoing rapid advancements and the insurance problems, is cost increases of 12 to 18 percent a year. Employers are having to dig deeper to make up an ever-expanding disparity between the cost of a benefits package and its perceived value. So, they’re upset about the rising cost despite the fact that, overall, healthcare products continue to advance. People are healthier, live longer, have replacement surgeries and organ transplants much earlier in life than in previous decades. That has a cost expense. The expectation from the member, whether it’s a group member or individual member, large or small, is that just about everything is covered. At some point, we are going to have some balance in the system, or we will have to accept 20 percent-a-year healthcare insurance increases. We have to push a little more money back in the system, for the hospitals, for nursing and staff development, for the physicians and for the ambulatory services. The reality is that you can’t continue to shrink your payout and increase your services while increasing quality of care. The government and public have to realize this.

Volker: I started my physician’s insurance company because I was a victim. I couldn’t get insurance as an OB/GYN. One of our biggest pressures is that we are the victims of our own success. People are living longer than ever – it’s being called a silver tsunami. Furthermore, the Medicare system is bankrupt. We need to figure out how we are going to finance that miscalculation. We have high expectations about how our healthcare system should function. The fact is, doctors and hospitals are working harder than they have ever worked on an increasingly smaller margin.

Pollard: The fact of the matter is that healthcare is a big business.

Bannen: Well, I believe that everybody in America receives healthcare. We don’t turn patients away in the ER. They may come late in their disease, but everybody gets healthcare. Hospitals and primary care doctors take non-paying patients.

Pollard: This is true but the fact is that the costs continue to escalate. It’s a corporate society and someone has to pay for that.

Bannen: Well, I’m not too sure that I agree that the government is particularly an expert in fixing anything. Look at the Veterans Administration or Medicare or Medicaid – I’m not sure they’re improving.

Koitz: A competitive capitalistic system can often appear to work at odds with the altruistic nature of healthcare. I realize even physicians are capitalists in a true sense, because they run a business. Sometimes, that’s the problem with the system.

Pollard: In order to meet market demand, there will come a point in time that the current rate increases cannot be sustained. Small companies won’t be able to afford to buy insurance at an 18 percent increase.

Volker: The bottom line is: You are trying to run a business. You are trying to find a benefit for your employees because that’s the expectation. If you don’t want quality employees, don’t provide benefits and see what you get. If you ask your employees what they want, they will tell you they want good drug plans and low co-pays. If you ask employers what they want, they will tell you they want cheap insurance because it affects their bottom line. A capitalistic healthcare system, driven by competition and market demands has advantages and disadvantages. It’s good for medicine since physicians are motivated because of the competition. In that sense, the spirit of competitiveness improves medicine. People want good healthcare, and, believe they deserve it. But they don’t want to have to pay for it.