HCI3 Update from the Field: Bad Numbers Are Usually Bad News

Submitted by francois.debrantes@hci3.org on Friday, November 15, 2013 - 12:49

Most of the time bad numbers are bad news, but sometimes they're not, at least not for all – According to a newly published report, the health care industry has the highest rate of worksite injuries for its workers. Leading the way are nursing homes followed by other types of inpatient facilities. That's worrisome at many levels. At the most basic level, as has been argued by Lucian Leape and former Treasury Secretary Paul O'Neill, the inability of an employer to guarantee the safety of its employees sheds doubt on its ability to guarantee the safety of its customers. And the health care industry has indeed shown us that it cannot guarantee the safety of its customers given that over 200,000 people die in the US because of the industry. At another level, the cost of human suffering, both from injured employees and patients, is incalculable, and the sequelae of that suffering mean increased health care costs for all. These bad numbers are just bad news. Another set of numbers, however, seem bad, but aren't. Health care employment is actually falling, and job losses in the industry are mounting. While that's never good news for those losing their jobs, it might signal an important and definitive turning point.

What this means to you – For years economists have claimed that the increase in health care costs as a percentage of GDP is unsustainable, and yet the ratio has continued to go up. It has recently stalled, and there are actual signs of attrition. While the debate will rage for some time on the causes of that attrition, there should be little doubt that the combination of much higher consumer cost sharing and payment innovation are forcing the industry to shed its excess capacity. All the signs pointed at the industry are now clearly trending towards, at best, a freeze in existing expenditures and, more often than not, a decrease. For example, the Congressional Budget Office's recent report suggests capping Medicaid payments to States and bundling payments to providers. In addition, the bipartisan proposal to fix the Sustainable Growth Rate formula would force physicians to have a significant percentage of their total practice revenue covered under two-sided financial risk arrangements from private and public sector payers. And so provider organizations that had probably padded their payroll a little too aggressively, knowing that the fee-for-service system was more than forgiving, are now finding themselves forced to make very different calculations. The numbers they're coming up with are pretty bad, and that's good news for the rest of us, even if the transition will be painful for many. Workplace injuries, patient safety failures, excess costs have been the hallmarks of the health care system to-date. Here's hoping the numbers in the new system will be good for all.