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7 business solutions to reduce health care costs

March 19, 2017

As a businessman who runs a large health care company, I can say that the Affordable Care Act – including its 2,600 pages of regulations — is the worst operational plan in government history.

That’s because it was designed by bureaucrats and academics who don’t understand how health care works and how to make it operate efficiently.

According to the Heritage Foundation, only 11.8 million people gained additional coverage under Obamacare, and 84 percent of those enrolled in Medicaid. Meanwhile, millions of people lost their coverage and now pay for more expensive plans with higher deductibles.

Compounding the problem, the Congressional Budget Office reports that from 2014 to 2023, the law was destined to cost $1.8 trillion.

It may have been more cost-effective to pay cash for the health care needs of the uninsured than to create this inefficient government mess.

The biggest omission in the drafting of the Affordable Care Act is that it did not address the true challenge facing all Americans – the escalating cost of health care. While health care was once unaffordable for a small portion of the population, it is now getting to be unaffordable for virtually every American.

While Congress and President Trump debate reworking insurance coverage for every American, I believe we should place more focus on modernizing the health care system to reduce costs.

Here are seven ideas to significantly reduce health care costs.

  1. MANDATE MEDICAL SMART CARDS: No one enjoys going to a hospital or physician’s office and filling out multiple forms that repeatedly ask for the same information. Patients should be given a smart card that catalogs their personal information and tracks medications, tests, conditions, and treatments. Upon arriving at a medical facility, doctor’s office, or pharmacy, a patient would provide their smart card or online account to update the physician with the most recent medical history. It would eliminate countless hours of data entry, reduce clerical errors, and eliminate duplicate services.
  2. STANDARDIZE REIMBURSEMENT SYSTEMS: Health care billing and collections accounts for 10 to 15 percent of all health care costs. Costs could be reduced to 1 to 2 percent if we would use an “intelligent” ATM or credit card type system that would pre-approve care, calculate payments based on coverage, and pay the provider immediately.Each payer could connect to the system and download benefits, copays, coverage, and payment amounts for each provider. This would eliminate the wasted time spent manually obtaining approvals by phone or mail and the delay in payments to providers.
  3. ELIMINATE FRAUD: It is estimated that fraud accounts for more than $150 billion per year, according to “Stop Paying the Crooks,” a book by Newt Gingrich and Jim Frogue. The FBI estimates fraud to consume between three and 10 percent of healthcare expenditures. Fraud occurs when fake providers utilizing fake patient names bill the government. In South Florida, crooks are shifting from selling illegal drugs to conducting medical billing fraud.  Their rationale is that there is more money to be made and no enforcement.Combined with the patient smart card and the “health care ATM system,” the administration of the accounts could be outsourced to Visa, MasterCard, and American Express. These companies experience very little fraud, and they already have mechanisms in place to handle it.
  4. TELEMEDICINE: The biggest expense in a hospital setting is labor, which accounts for 60 percent of all costs. Hospital executives say labor on demand would be a more efficient model to eliminate paying for underutilized staffing.Congress should adopt legislation to allow payment for telemedicine across state lines.  Telemedicine creates labor on demand, which means the physician is paid only if they are called upon to provide treatment. Kaiser, for example, has adopted this model, and in 2015 52 percent of patient visits — or 59 million Kaiser enrollees — were treated using online portals, virtual visits, or health systems apps. The telemedicine concept is providing significant cost savings in a host of locations across the country.
  5. INNOVATION & RESEARCH: Many procedures, drugs, and technologies take five to seven years to be approved by the FDA. Life-saving and cost-saving drugs and therapies should be on a fast track to the market place. This would not only save lives, but also reduce the cost of health care.Congress should streamline and cut the bureaucratic red tape so that these drugs and therapies can hit the markets faster. Currently the FDA is in the business of zero risk tolerance, which is not good for sick patients who need a speedier process for getting new drugs to market.

    Alzheimer’s disease, for example, will cost the federal government $175 billion in 2017 in Medicaid and Medicare expenses. Investing at least $2 billion annually in brain science research is an effective return on investment, and a smart preventive measure to help improve the lives of the growing number of Americans afflicted by Alzheimer’s.

  6. MANDATE PRICE TRANSPARENCY: In health care, the buyer (patient) does not pay and the seller (physician) does not know the price for services.  It is the opposite of a free market. Consumers can’t save money if they don’t know the price.
  7. ELIMINATE ALL MEDICALLY UNNECESSARY PROCEDURES AND TESTS: According to Gallup and the Institute of Medicine, at least 40 percent of U.S. health care costs are for unnecessary medical procedures and tests. There are three major reasons for unnecessary care: defensive medicine, duplicate tests, and medicine ordered to please the patient or family member.Defensive medicine occurs when physicians orders more tests or procedures for the sole purpose of avoiding a malpractice lawsuit. Gallup in 2010 reported that 26 percent of all health care costs were related to defensive medicine. A better system would be to abolish malpractice for a no-fault system similar to workers compensation. Patients would be compensated quickly and doctors would freely admit mistakes and develop best practices. The only losers would be trial lawyers. It would create a savings of $650 billion annually.

    Doctors also routinely order tests that have already been performed by other physicians for the same patient. By creating a personal patient record and smart card, all physicians will be able to share results and reduce the occurrence of duplicating services.

 

It’s time for our nation’s policymakers to rise above the noise and look at what’s really impeding health care efficiency. America has fallen into the trap of making health care over-regulated, costly, and cost-prohibitive for too many citizens. It’s time to reverse course and modernize our health care system so it can have as fine a reputation as the medical care offered by our providers.

Richard Jackson is Chairman and CEO of Atlanta-based Jackson Healthcare, one of the largest healthcare staffing and technology companies in the U.S.

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