This is how the professionals get trapped into SISI – Single Income, Single Identity.
A “mouse” was put at the top of a jar filled with grains. He was too happy to find so much of food around him. Now he doesn’t need to run around searching for food and can happily lead his life. As he enjoyed the grains, in few days time, he reached to the bottom of the jar. Now he is trapped and he cannot come out of it. He has to solely depend upon someone to put grains in the same jar for him to survive. He may even not get the grain of his choice and he cannot choose either. If he has to live, he has to feed on whatever has been put into the jar.
Here are top 4 lessons from this:
1) Short term pleasures can lead to long-term traps.
2) If things are coming easy and you are getting comfortable, you are getting trapped into survival mode.
3) When you are not using your potential, you are losing it.
4) If you don’t take right Action at right time, you will finish what you have and will be in no position to come out.
Abstract: This article focuses on the correct strategic response to the impending implementation of price transparency on New Year’s Day of next year.
I have stated before that I have multiple articles in process at any given time. Some of them have been ‘in process’ for years because newer topics sometimes rise to the queue’s top. Price transparency is an example of such a case. I have a friend who is developing AI-enabled solutions to help organizations respond to price transparency government diktats. Few people beyond healthcare CFOs, healthcare financial consultants, and accountants have any useful understanding of how convoluted hospital pricing has become due to decades of ill-conceived government policy for the most part.
Another problem is endless confusion over terms. People frequently interchange the terms ‘price’, ‘cost’, ‘payment’, and ‘reimbursement’ in situations where the polar opposite is true on the other side of the issue. In other words, ‘cost’ to a payor is price or reimbursement to a provider.
Anyway, my friend’s questions finally inspired me to go to the Federal Register, acquire the final rule, and begin the process of learning where government is headed with these regulations. There are probably at least fifty diatribe angles I could launch into over the final rule, but I will confine my rant to only a couple of points.
First, the final draft of the rule is ‘only’ 331 pages long. The three-column final rule in the Federal Register is ‘only’ 83 pages long. That pales compared to Obamacare that is over 1,200 pages long, so by government standards, this is but a trifle of regulation.
Secondly, some parts of the final rule are actually funny. For example, CMS estimates that the average hospital will spend only 150 staff hours in the first and 46 staff hours in subsequent years complying with price transparency requirements. Is it constitutional for government to compel private enterprises to disclose the terms of what they thought were private contracts? Apparently so. Once government breaks this ice, will any agreement of any type ever be private?
As I have discussed price transparency with healthcare leaders, I sense that leaders are currently focused on technical compliance with the regulations. With COVID on their plate simultaneously, they have little capacity to take on strategic financial planning.
The final rule lays out in excruciating detail what providers face complying with the regulation. Reading the comments and responses is equally entertaining. CMS repeatedly says something to the effect; we heard your concern, and we’re proceeding as planned anyway. Litigation brought by the AHA and others has to date been unsuccessful in slowing stopping the price transparency snowball that is now most of the way down the mountain.
So, what are you supposed to do? The CFO and CIO will work, possibly with consultants’ assistance, to prepare the organization’s data release. Soon after the release occurs, expect the defecation to hit the rotary oscillator. The press will call out organizations with high prices, and the rancor over learning what some systems have been able to get from third-party payors will be entertaining, to say the least. Many people believe that one of the primary motivators of the massive consolidation occurring in the healthcare industry is the market leverage exerted by growing systems on third-party payors to obtain otherwise unachievable reimbursement rates.
Regardless of the course of action following price releases in January, the intended and most likely result of this initiative is to drive prices to a lower common denominator. A lot of people think Medicare rates will become that benchmark. There are two significant issues that I did not see addressed in the pricing rule that will have the effect of transferring substantial risk to providers.
The first is that there will be little if any provision for recognition of complications, comorbidities, and hospital-acquired conditions that can dramatically impact the cost of care in a given diagnosis.
The second is the elephant in the room. The current pricing system has developed over time to facilitate cross-subsidization among payors. There is a reason that commercial rates are so high that has nothing to do with the cost of providing care. I have stated before that, government has turned the entire healthcare industry into a taxing authority to extract tax from commercial payors for the benefit of government payors that routinely reimburse providers below the cost of providing care. It has been entertaining to watch the reaction of Boards of Directors when they first realize that the healthcare system has been forced by government into a wealth redistribution mechanism.
So, what happens as providers lose the ability to cross-subsidize the cost of care? Very few hospitals (<10%) are profitable on Medicare, and it is doubtful that any hospital is breaking even on services provided to Medicaid patients. In my experience, hospital reimbursement for self-pay patients is less than 5% of charges. If the prices hospitals realize for services start falling and they lose the current ability to cross-subsidize the cost of care . . . . . well, you don’t need an MBA to understand the likely outcome.
What to do? If (when) prices start falling and providers lose pricing leverage, the only place to turn is operating expense. Hospitals that have failed to undertake serious, highly focused, and robust operating cost reduction programs that yield quantifiable results may not have a very bright future. If your organization is not in the bottom quartile of operating cost compared to its peer group and part of your mission is to remain independent, you must be losing sleep. In a recent article related to COVID Response, I argued that the time has come to get after clinical process variance that is the source of most of the high cost, waste, and abuse in the healthcare system. For most organizations, the days of sourcing cheaper supplies and sending nurses home early are, for the most part, over as there is little if any juice remaining in that lemon.
If, as a leader, you do not have a plan that gets you to break-even on Medicare within the next 12-18 months, you had better have a plan B, something like tuning up your CV. I can help you with your response to price transparency, working on your CV, or helping manage your next career transition as the case may turn out. I am as close as your phone. Best of luck.
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The Red Area Features A Total Population Greater Than The Grey
The rotating cast of officials appearing behind President Trump to detail the government’s response to the coronavirus are leading to new criticisms that they reflect a scattered approach from the White House that too often leaves states fending for themselves.
Top Trump administration officials say the appearances by a broad range of administration officials shows the “all of government” undertaken to combat the coronavirus.
But some current and former government officials see a disconnected strategy where it can be unclear who’s in charge of what or whether there is a coordinated long-term plan.
The shifting assignments and addition of officials with unclear responsibilities have contributed to the inefficient distribution of key supplies, those officials argue, which has been exacerbated by Trump’s insistence that the federal government merely play a supporting role for states.
“The approach that’s been taken at the White House with respect to critical inputs – protective gear, testing kits, ventilators, reagents, skilled personnel – there has never been a clear plan,” said Steve Morrison, director of Global Health Policy at the Center for Strategic and International Studies.
“And the alternative has been a very haphazard patchwork approach that has gone from overpromising and underdelivering multiple times and left the states on their own,” added Morrison, a former Clinton administration official.
In recent days, more than a dozen administration officials have appeared behind Trump at the daily briefings.
Attorney General William Barr rolled out new drug interdiction efforts; Defense Secretary Mark Esper spoke about the military pitching in while retaining combat readiness; Treasury Secretary Steven Mnuchin touched on economic relief for businesses; senior adviser Jared Kushner outlined partnerships with the private sector; and top trade adviser Peter Navarro elaborated on the use of the Defense Production Act.
A White House spokesman rejected criticism that the effort has been disconnected. He identified Vice President Pence as the person in charge of coordinating the entire response, and listed dozens of actions taken by the administration that include travel restrictions, disaster declarations for states and funding for businesses and families impacted by the virus.
“As both the President and Vice President have said, this is a locally executed, state managed, federally supported response to a global pandemic,” deputy press secretary Judd Deere said in a statement. “Every level of government needs to deliver solutions and that is what we are doing in partnership. During these difficult times, Americans are receiving comfort, hope and resources from their President, as well as their local officials, because this is an all-of-America effort.”
The White House has shifted responsibilities as it scrambled to get its arms around the magnitude of the pandemic, which Trump downplayed for January and most of February.
The White House created a coronavirus task force at the end of January, putting Health and Human Services (HHS) Secretary Alex Azar in charge.
Trump tapped Pence in late February to oversee the federal response as it became apparent the virus was spreading domestically. Within days, Pence was identifying himself as the leader of the task force, pushing Azar aside and adding officials from across the government to help steer the response effort.
In the weeks since, Azar and Robert Redfield, the head of the Centers for Disease Control and Prevention (CDC), have been largely absent from public briefings, and the CDC has stopped holding its own briefings for reporters even as the public health crisis worsened.
Kushner made his first appearance in the briefing room Thursday, where he elaborated on the work he’s done to facilitate the supply chain at the Federal Emergency Management Agency (FEMA) to try and get ventilators and other equipment out to states in need.
The president’s son-in-law has drawn scrutiny for his increased portfolio in responding to the virus given his lack of medical background. But Kushner rejected the idea that he is operating a “shadow task force.”
“I would just say very simply — look, the president asked the vice president to run the task force. The vice president asked me to assist,” Kushner said. “I’ve been serving really at the direction of the vice president, and he’s asked me to get involved in different projects.”
FEMA was put in charge of organizing the response to states, but only in late March, forcing an agency typically tasked with targeting relief toward a region reeling from wildfires or hurricanes to quickly grasp the logistics of responding to a nationwide pandemic.
But Kushner and some of his allies have set up shop with FEMA to mobilize the private sector. While officials describe the effort as well intentioned, it has further clouded who was responsible for getting desperately needed ventilators and personal protective gear to states facing shortages.
Trump put Navarro in charge of managing the Defense Production Act to push companies to produce essential supplies. And while Navarro spoke at length about that effort from the White House on Thursday, Trump has been the one needling companies like General Motors and 3M on Twitter and invoking the act to ramp up manufacturing of masks and ventilators.
“There have been so many iterations. Who’s in charge has been a constantly evolving item,” said one government official who requested anonymity to speak candidly.
That has been a particular point of frustration for states. Governors in both parties have pushed for the federal government to use a stronger hand in leading the process of procuring equipment so that states aren’t forced to bid against each other. Washington Gov. Jay Inslee (D) last week urged Trump to be more like Tom Brady than a backup quarterback.
But Trump has been adamant that he views the federal government’s role as secondary, going as far as to blame states who failed to foresee the pandemic for their own shortages.
“Remember, we are a backup for them. The complainers should have been stocked up and ready long before this crisis hit,” Trump tweeted Thursday. “Other states are thrilled with the job we have done. Sending many Ventilators today, with thousands being built. 51 large cargo planes coming in with medical supplies. Prefer sending directly to hospitals.”
Kushner adopted that tone on Thursday when he chided state leaders for not having a full accounting of their supplies before suggesting the national stockpile wasn’t intended for states to use.
Trump’s criticism of states; preparedness for the pandemic may be difficult for some local leaders to swallow, given the president was still comparing the death toll from the coronavirus to the flu and automobile accidents as recently as two weeks ago.
The president has adopted a more somber tone in the past week as the White House rolled out grim projections that show hundreds of thousands of Americans could die from the virus even with strong mitigation measures.
But public health experts and former health officials have expressed skepticism that Trump is thinking far enough ahead to address the supply chain and medical problems the virus will pose in the weeks and months to come.
“There is a basic playbook for how to deal with an epidemic,” said Thomas Frieden, who served as CDC director during the Obama administration.
“You have the incident manager, they control the response, they are aligned with political leadership. They tee up the decisions to be made, there are policy decisions to be made,” he said. “I don’t see that happening. That makes me really worried. I don’t see us thinking a week, two weeks, a month ahead.”