This is the transcript of my recent podcast interview with Evan Falchuk, United Independent Party candidate for Governor of Massachusetts. Visit the original post to listen to the podcast and read a summary. This is part of a series of interviews with all nine candidates for Governor. The full schedule is available here.
David E. Williams: This is David Williams from the Health Business Blog. I’m speaking today with Evan Falchuk, candidate for Governor. Evan, thanks for being with me today.
Evan Falchuk: Thanks, David. I’m really glad to be here.
Williams: Does Chapter 224 represent the right approach to addressing rising healthcare costs? And if not, where does it miss the mark and what would you do differently?
Falchuk: It’s a start, Chapter 224. The larger problem that we have with healthcare costs is that they keep going up. The largest driver of that, from all the data that’s been looked at, is hospital cost, and in particular rising hospital prices. Researchers are finding that as hospitals merge and they get bigger, they have more bargaining power to ask for higher prices from insurers and other payers, and they take advantage of it.
What we’re seeing is a kind of monopolistic market structure going on in Massachusetts, where you’ve got a small number of hospital systems that have control of 72% of the market. As we’re seeing now, with the planned acquisition by Partners of the South Shore Hospital, there are some serious concerns about the extent to which that kind of market concentration causes the kind of increased prices that are driving healthcare costs in our state.
If the state really wants to tackle this, we’ve got to put teeth into the promise of 224. We’ve got to make it possible to create the kind of fee schedule and structure that’s been in place in Maryland for many years. That structure has managed to keep those increases in healthcare costs tied to the kind of care that’s delivered and the quality of care that’s delivered, and not to the purchasing power and the market power of the hospital systems.
Williams: Evan, my second question is tied to the way you answered the first one. And that is that certain provider systems in Massachusetts are reimbursed significantly more than others for the same services, even though there are virtually no differences in quality. Does the state have a part to play in addressing these disparities?
Falchuk: It does. It’s got an important part to play in it. In the bigger picture we’ve got a problem with Massachusetts becoming increasingly unaffordable to live in. Healthcare costs is perhaps the leading cause of that problem. It makes it hard for people to save money and to get ahead, or start a business, or take care of a parent.
What the state can do is to create the kind of fee schedule that would get rid of those inequities. If there’s a difference in quality between one hospital and another, then I’m completely understanding of the need to pay more. But now you see the kinds of situations that you described in your question. Sometimes you see a difference of six times or more between the same care delivered in two different places. One hospital has bigger bargaining power and one has lesser, and that’s a distortion.
These are the kinds of anti-competitive practices that we’ve seen since the Progressive Era of the early 20th century, with guys like Teddy Roosevelt. We’ve known it’s bad for consumers and for businesses in our state. They certainly affect the way in which medicine is practiced and delivered to patients, and it affects the experience people have when they go in to the hospital. The state can do something about it, and it should.
Williams: There are more than a dozen state agencies that have a role in healthcare. Is there an opportunity to consolidate or rationalize them?
Falchuk: There are always opportunities to do things like consolidation when you have multiple agencies overlapping in their responsibilities. The biggest ticket items that we can deal with in healthcare have to do with over-concentration and distorted practices that are happening in the marketplace.
Let’s say we were able to get at 5% of the cost of care delivered in hospitals, by creating fee schedules that got rid of so much of this unnecessary spending. That equals $2 billion a year that goes right back into the pockets of taxpayers and businesses, and even the state government, because it has to pay so much for healthcare. This includes the cities and towns around the state.
Rationalizing the way that some of the services all over the state are delivered would save some money. However, it doesn’t compare to the amount of money that can be saved from rationalizing the way that healthcare is paid for in hospitals today.
Williams: Government policy, both at the federal and the state level, has encouraged adoption of electronic medical records. However, many providers complain about the systems and some of the benefits have been slow to materialize. Do you think the government should play a role in helping to realize the promise of health information technology?
Falchuk: It should and it has. One of the challenges has been incentivizing and trying to encourage providers to adopt more electronic medical records,. It has been spotty, at best. The systems that are in one hospital may not talk to another, and one doctor’s office or one diagnostic center may not talk to another one. There are enormous efficiency gains that happen across the economy when people adopt all kinds of electronic record keeping.
Now why, in an industry that is as innovative as healthcare, have we seen slow adoption rates of electronic medical records? I suspect part of the answer is that hospitals are able to get away with being very inefficient in the way that they deliver service. They can just charge the insurance company or the government for their inefficiency.
It’s similar to what we saw in the United States in the early 1980s with the car companies. If you talked to executives of car companies at that time and said, “Hey, you know, you guys are not really providing the best, most efficient cars. They don’t have good gas mileage, and people don’t like the styling.” They would say, “You’re nuts. We have nothing to worry about. People buy our cars, they don’t have any choice.” The next thing you know, the Japanese companies came in and showed them the real story.
That’s exactly the kind of problem that we see in our hospitals. Until we can change the financial incentives and make it so that it is in the hospitals’ best interest to adopt these kinds of systems, we won’t see the kind of adoption that we need to see. Hospitals need to change not because there’s an incentive from the government to do so, but rather because it will affect their bottom line if they don’t.
Williams: Hepatitis C is three or four times more common than HIV. There are new drugs that can cure the infection that are coming on the market this year but they’re very expensive. What role should the state play in ensuring that residents are tested, linked to care and have access to these new medications?
Falchuk: It has a role to play. This is an important public health issue. It’s good there was some legislation in both the House and the Senate this session dealing with the issue of prevention and testing, for both Hepatitis B and Hepatitis C. It’s a good thing that’s going on.
One thing that’s important about Hepatitis C is that it’s related very commonly to drug use. The state really has a role to play in helping make sure that people who are dealing with mental health issues or substance abuse issues can get the kind of treatment that they need. This is so they don’t end up in a situation where they’re dealing with the question of “How do I pay for the Hepatitis C drug?”
It’s better if you can help address a problem before it becomes much worse. So, if we can help people avoid self-medicating and using really harmful drugs on themselves, we can also avoid someone getting Hepatitis C. Not to mention, there is the human toll these kinds of illnesses and drugs take on people. There’s a lot that a state can do to really address this problem.
Williams: There are multiple healthcare related ballot questions on the ballot in November. What are your thoughts about them?
Falchuk: One has to do with CEO compensation, and not having CEOs of hospitals be paid some multiple higher than the lowest paid worker in the hospital. It comes back to the same issue that I’ve been talking about. There is a feeling among so many voters out there that there’s a lot of money being made in these hospitals, but the quality of care isn’t matching up with what people are paying for. So people get understandably frustrated. They say, “You guys are not doing what you said you were going to do. There’s too much money being made and care is not being the focus.”
That’s just a reflection of what most voters are seeing in the healthcare market. Healthcare is getting more expensive and it’s hard to understand why. It’s easy then to point to the executive compensation and say that’s part of the problem. It is a problem, but the executive compensation part is really just a symptom.
I’m not against people making money and certainly not for being successful in what they do. Healthcare is, after all, a business. But when you see excessive profits and excessive compensation and distorted market practices, it shouldn’t be a surprise that there’s support out there for laws that try to rein that in. There are better ways to address that problem than to just attack CEO pay. I’d rather go after the issue much more comprehensibly.
The other issue has to do with nurse staffing, which ties back in to the same story that we’re talking about. Hospitals, in an effort to try to rein in their own cost for their own purposes, have made it harder for professionals to deliver medical care. Doctors commonly are seeing 30 patients or more a day. Nurses are complaining of the same thing. There have been efforts to try to change that through collective bargaining and in other ways. Since people have been unable to see that turn into a reality they turn to the ballot box to try to do it.
It’s a blunt instrument to use to do something very complicated, which is to make sure that we’ve got truly patient-centric care. Again, it’s a symptom of this larger issue of the incentives in healthcare and the way that they work. We will continue to see these kinds of outcomes until we can drive through the kind of change that says hospitals must be incentivized to deliver efficient, affordable, high quality care.
Williams: Evan, what did you learn from running Best Doctors that will be useful as Governor?
Falchuk: Best Doctors is a fascinating company that’s totally focused on the issue of making sure that each patient has the right diagnosis when they’re facing an illness. Making sure you get the right diagnosis before you go ahead and start treating someone is hugely important. In many cases, 20% to 25% of the time, it really is the entire story of why someone has a good health outcome or a bad one.
In public policy, where you’re dealing with very complicated issues and have to make decisions and where there’s conflicting data coming from all directions, it’s really the same type of thing. Very often it’s easy to treat symptoms rather than disease and to miss the underlying causes in an effort to take quick action to move something forward.
From that experience, first of all, you learn a great deal of humility about how hard it is to make complicated decisions. You have to make sure that you’re thoughtful and that you’re able to say, “We have to find out what the reality is.” You have to be able to confront that reality. You have to take action that is decisive and that reflects the best understanding of what are the things that will address the problem that you’ve identified.
Williams: Evan, much of the emphasis in healthcare reform has been on adult patients. Is there a need for specific focus on children’s health?
Falchuk: There is. A lot of the ways in which healthcare systems are designed is focused on the way that adults experience health and illness. Children’s health issues are oftentimes just under-represented. The issue of how to make sure that we’re preventing and treating and properly diagnosing illnesses in kids is something that really does require more attention. One of the challenges is that while adults can come and they can describe, pretty clearly, what’s going on with them, kids can’t. They often need to rely on an adult to do it for them. That adult may not be someone who spends a lot of time taking care of themselves, or being engaged in the healthcare system, or even having their own primary care doctor. So it presents additional challenges.
There’s a great deal of public health-related responsibility, where the state has to help educate parents who may or may not have the best skills in helping to raise a healthy family. They need to know how to do it, that they’ve got those tools in order to make it happen. Also, from a systems perspective, we’ve got to recognize that as hard as it is for an adult to navigate the healthcare system, it’s that much harder for a child. There needs to be a very clear focus from a policy standpoint on making sure that the systems are set up to deal with children as they come through.
Williams: Evan, thank you very much for answering all my questions. Is there anything else that you’d like to add that we haven’t covered?
Falchuk: My campaign for Governor, as an independent and someone who’s forming a new party, is really based on the kind of things that we’re talking about here. We’re saying we need to get away from the idea that there’s a Democratic and Republican version of policy, and that’s all that exists. The majority of voters are no longer enrolled in those parties and most people are looking for something that can be just practical, pragmatic, progressive, new, thoughtful, where you can have a reasonable, rational conversation about these issues and take action.
This kind of dialogue, where you get to have a substantive conversation with candidates about these very important issues, is really important. It’s one of the things that is missing far too often from our political debates.
So, David, you’re doing important work by making sure that we spotlight these important issues, and making sure that we press all candidates, for whatever office there is, to really give them some thought and to educate themselves and to take thoughtful positions.
Williams: Great. Evan Falchuk, candidate for Governor. Thank you very much.
Falchuk: Thank you, David.
By health care consultant David E. Williams, president of the Health Business Group.March 2, 2014