Tuesday, December 1, 2009

Better health-care reform - Does provider’s sound business approach offer good hints?

By Paul Hampton
December 1, 2009

On Nov. 21, The Star embraced a commentary by Michael Halseth, former president and CEO of VHS (Valley Health Systems), in opposition to congressional health-reform proposals.

I’ve had a neighborly talk with Mr Halseth on the issue. The value I got was not from his perspective as a 38-year health-care administrator on the usual arguments in opposition to health-care reform. What I learned were aspects of a successful business approach that are incorporated in health-reform measures.

* Control and leverage matter — It would hurt VHS to be confronted, like Inova Loudoun Hospital has been, by the establishment of a private for-profit hospital in its midst. A private hospital could deflect patients who are “uncompensated care” risks to VHS facilities and thus negotiate lower prices with the best paying insurers to its competitive advantage.

Owning the region’s hospital capacity, VHS has control over the allocation of costs and revenue throughout the area and leverage among insurers. Why would patients want to be at the disadvantage of shopping on their own for health care among providers who have empowered themselves to their own advantage?

Congressional proposals aim to create markets with greater choice for patient groups to shop for coverage and a public option for leverage that weakens advantages insurers and providers exploit.

* Increased access
— VHS leads a generous and valuable community resource in its Free Medical Clinic. The clinic also makes it possible to serve patients in a less expensive environment avoiding uncompensated care in a more expensive emergency room and avoid the hospital inpatient setting — space is preserved for the best payers. Congressional reforms that increase access to insurance and health care will likewise save costs uninsured patient care impose on our system.

* Effective treatment — Insurance industry groups and companies provide technology for providers to manage billing and offer treatment advice and knowledge through studies that encourage effective and cost-efficient treatments. Google Ingenix and Millimen Intelliscript on the Internet, you’ll see. Bogus claims by partisan critics famously misrepresent sound management provisions for boards and panels in congressional reform whose aims reflect sound business models now practiced in the private sector.

* Money matters
— Any responsible supporter of private enterprise who knows more than irrelevant taunts about freedom understands that business needs money and that businesses must generate profit that competes with the best around to get the money it needs to operate and grow. How do we control the cost of a private health sector model that is becoming a focus for private investment opportunities, higher profits, and wealth generation? Congressional reforms currently include a “public option” that is not driven to compete for funds and therefore the private equity market demands on the private sector that sacrifice paying for care for the sake of profit.

*  Like the good jobs, so will disappear health insurance — We don’t have to vote on changing our health-care insurance system. The increasing expense and dwindling resources to pay for it already result in a trend that the older and sicker will be segregated into the uninsured and government sector via Medicare and Medicaid as they age and become poorer. I don’t believe it was an accident that the recent GOP proposal reflects a trend to segregate sick and high medical risk patients into pools away from the ranks of the insured.

Every day individuals are subjected to the waits for needed health services because they don’t have the money or don’t want to jeopardize coverage they already have. Insurers consult the MIB Group data base looking for possible pre-conditions that might provide cause to deny claims. Families and businesses will continue to be priced out of health coverage because a sick or high-risk spouse, child, or co-worker boosts the cost of underwriting to a breaking point.

The greatest threat to Medicare, Medicaid, and Social Security is that the Baby Boom age progression is coupled with a defunding of its revenue source. Earned income growth (job growth) that pays Social Security and Medicare Part A taxes has been stagnant for a decade while unearned income like capital gains that generate no revenue for these programs has soared. On top of that, tax rates on capital gains that could pay for growing Medicare part B and D expenses have been cut 40 percent since 1997.

Not only did we cut taxes on capital gains, but also deregulated banking and investment rules making it possible for investors and the financial sector to multiply capital gains in new unstable markets without expanding the jobs base. What business in its right mind would cut prices on items in growing demand of which it has exclusive control of the supply?

With the key to every hospital in the region in his pocket and the expense of serving an increased Medicare population heading his way, did Mr. Halseth cut prices 40 percent? No, he made sound business decisions to empower his ability to meet the growing challenges to VHS survival by preserving its revenue position and so should we (our government).

Paul Hampton is chairman of the Winchester Democratic Committee.

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Profits and compensation at not-for-profit Valley Health.

Profits and compensation.
Published: April 25, 2008

Valley Health is located in Winchester Virginia.

According to their just posted annual reports, they continue to do well financially.

The $62,803,000 in profits that they report making for year end 12/31/07 is up slightly from the $59,432,000 in profits that they reported making in 2006.

What's really impressive is that $62.8 million in profits comes from $612 million in revenue.

Michael Halseth serves as the CEO of this not-for-profit health care system.

The latest 990 Federal Tax Form we have for this system is from 2005, but here's what we can tell you.

In 2003, Halseth received $455,020 in total compensation.

In 2004, that amount increased to $620,432.

And in 2005, he received another big increase as his total compensation for that year reached $824,113.

From: wherethemoneygoes.com©

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