A Publication of WTVP

The cost of, and access to, quality health care in the United States has faded in and out as a national crisis over the last two decades. Although other factors have played a role in determining whether the country is in a health care crisis mode at any point in time, the most significant factor has been the state of the economy.

Whenever the economy has been weak, we have been in a health care crisis. When the economy has improved with declining governmental deficits or even budget surpluses, the health care crisis has melted into the background. The only consistency throughout this entire period is that the overall cost of health care and the lack of appropriate access to quality care have never significantly improved.

Perhaps surprising to many people outside of health care is the significant improvements made by health care providers towards enhanced productivity over the last 20 years. In addition, during the 1990s, many health care providers aggressively pursued horizontal integration strategies and alignment with other health care providers. Some of these arrangements were successful and some were not. However, the majority of the arrangements that were well thought out and had a long-term focus have been successful in reducing costs and increasing appropriate access to quality care.

The growth of managed care in the 1990s also had a significant impact on the cost of health care. Managed care has forced mergers of hospitals in many markets and has served to keep hospitals’ feet to the fire in the need to further improve their internal cost structures. The theory that managed care in its pure form will achieve optimal efficiency of resources while ensuring appropriate access to quality health care is still absolutely sound. However, just like the development of horizontal integration of health care providers, some of the managed care developments have been more successful than others.

Unfortunately, several of the well-known HMOs in their early years were wildly successful from a financial and cash flow perspective, but were not originally designed for sustainability over the long term. These original design flaws have caused several well-known HMOs to eventually fail in well-publicized financial disasters. Other managed care organizations were only interested in the managed price component of the managed care concept. This may have benefited select segments of our society in the short-term, but are not sustainable over the long-term. Many other managed care plans have not been able to overcome the inherent right that seems to come with being an American of demanding to receive what we want, when we want it regardless of cost. That mentality may work in a good economy, but it doesn’t work in a poor economy.

The reality is that all the improvements in productivity from the health care providers, effectiveness from vertical integration and benefits from managed care have been more than offset during the past 20 years. The American way, as described in the managed care discussion,certainly has played a significant role in the failure to successfully address the issues of the health care crisis. However, the most significant factors that caused us to fail to address the health care crisis is our own success. America’s ability to develop new technologies, new drugs and pursue new medical research is astonishing. The strides already made in our ability to enhance the quality and longevity of life are almost unimaginable.

All indicators point to the fact that the developments in medical science over the next 10 years will far surpass anything most of us can even imagine today. However, all of these developments will add tremendous costs to the health care system.

As we enter into a period of overall economic distress and most likely a recession, the typical concerns over the health care crisis of old will have two additional elements fueling the fire. The current serious shortage of registered nurses and other key patient care professionals is not even projected to reach its most serious levels for several more years. That future point in time may well coincide with the dramatic increase in demand for health care services from a graying baby boomer generation.

Finally, we have the dawn of a new era created by the September 11 terrorist acts. The resulting repercussions on our society will add significant costs and pressures to our current health care system. IBI