Last week I attended the Tenth Annual Innovation 2009 Conference in California. One of issues garnering a lot of attention was the notion that the Obama health care reform plan could ultimately wind up creating a government-run insurer. One of the speakers, former Congresswoman Nancy Johnson, indicated a strong belief that a public health plan of this nature would essentially doom innovation in many areas of health care. There was a lot of agreement on this from most of the attendees; the prevailing feeling being that the respective track records of Medicare and Medicaid aren’t very encouraging when it comes to driving new ideas and advancing health care.

This immediately reminded me of a recent New York Times editorial that supported the development of a new public health plan that would be modeled on Medicare and compete with private insurers. As I experienced at the Innovation Conference, the topic is already stirring debate. I suspect it will be a source of even more vociferous discussion in political circles in the coming months. Unfortunately, either intentionally or out of ignorance, those favoring a government-run plan are missing a key point.  

A government-based health insurer modeled after Medicare would possess Medicare’s distinct advantage over private insurance companies: the ability to use the power of the law to set rates of reimbursement to doctors, hospitals and other care providers. Private plans, in contrast, are forced to negotiate these rates. The significance of this disparity was captured in a study by Milliman, Inc., last December which revealed that private plans shouldered a $90 billion annual cost-shift from Medicare/Medicaid. A public plan’s ability to use the legal authority of the federal government to set whatever rates it chooses, as Medicare does, would effectively eliminate any chance private plans have to be competitive. Contrary to what the Times’ editorial states, this would indeed serve as a death knell for private insurers as we know them.

It is important to bear in mind that insurers are required to create and maintain financial surpluses in order to exist. Like banks, they must dedicate these surpluses to reserves for covering major losses. This reserve money is largely dependent upon revenue, which is directly impacted by reimbursement rates. A government-run plan wouldn’t have to maintain a reserve since it could simply tap into tax dollars when the need arises. Removing reserves from the equation in this way could easily result in the health care equivalent of the current financial crisis caused by undercapitalized banks, wherein private plans would be forced to match the non-negotiable reimbursement rates of an undercapitalized public entity. This too could ultimately render private plans extinct.

Our health care system, and our economy, simply cannot withstand the elimination of private insurance companies. Aside from adding literally millions of people to the ranks of the unemployed, it would remove the very competition that creating a public insurer is intended to generate in the first place. Such competition is a key component of the Obama reform plan. Additionally, government programs such as Medicare and Medicaid have nowhere near private insurers’ history of innovation in health care management and delivery. At best, Medicare and Medicaid wait for good ideas to arise from the private sector and then attempt to implement something similar. We therefore need private plans to pioneer new solutions in order to ensure a robust and prosperous system overall.

As the president’s plan suggests, competition is a great thing – and something most private insurers would welcome. However, the playing field must be level. No entity should have an unfair advantage over the others. Therefore we simply must ensure that any plan will negotiate reimbursement rates with care providers the same way today’s private plans do, and that all plans maintain appropriate reserves. It is crucial that pundits understand this — and all of the other peripheral facts — when debating the highly volatile health care issue in public forums.

Yesterday MEDecision’s President/COO Scott Storrer and Senior Director of Product Marketing Robyn Fritz conducted a very interesting Webinar discussing how actionable, real-time clinical information can enable the health IT industry to meet President Obama’s challenge of creating electronic health records (EHRs) by 2014. One of the things Scott and Robyn focused on was how creating smarter clinical data for more meaningful EHRs depends on increased partnerships and collaboration throughout the industry. With the challenges and opportunities the president has created for health IT, working together to ensure interoperability and bi-directional information flow is more important now than it has ever been.  

Wednesday’s Webinar also included an overview of some focus groups we conducted with providers at the recent HIMSS conference in Chicago. We set out to gauge clinicians’ feelings on the MEDecision Nexalign Clinical Summary in particular and health information exchange in general. Scott and Robyn reported some really interesting findings, primarily that the providers we spoke with understand the benefits of EHRs and health information exchange and believe that having a more complete picture of a patient and their health history can help to improve care. They also expressed some anxiety about implementing and adopting EHRs. This is a concern we’ve heard from providers for quite some time, and one we’re continuously working to alleviate. In all, the focus groups gave us a wealth of valuable feedback that we will incorporate into our planning and development processes going forward.   

I think Scott and Robyn’s Webinar was rather timely. There is definitely a growing interest in partnerships and collaboration in the industry. Health IT entities are beginning to understand that this is our most expeditious route to meeting the Obama challenge. And, based on our focus groups, providers are starting to recognize the power of EHRs, which will help to streamline adoption. This all adds up to a pretty exciting time for health IT. After years of touting the potential of our products and technologies, we have at long last been given an opportunity to show what they can do. I’m quite confident we won’t disappoint.  

I was very fortunate to have the opportunity to attend a good number of events at the recent HIMSS conference, particularly some very interesting workshops and keynote addresses. I also had a great deal of informal one-on-one interactions with new and familiar colleagues alike. From a clinician’s perspective, one of the points I heard with great consistency was a concern that the provider community was sorely under-represented at the event. Granted, HIMSS is a technology-focused conference that is basically for-technologists-by-technologists, if you will, but the sentiment was that it would have been better balanced with a stronger clinical contingent.  

I tend to agree. With virtually all eyes focused on how to best deploy technology to reform and transform health care, having additional experienced clinical insights at the table would have significantly benefited all of the stakeholders. Hopefully we can rectify this for HIMSS 2010 and promote a closer partnership between the technical and provider communities. This will give us a more accurate depiction of the health care universe, which can only be more helpful for everyone.  

Something I found quite inspiring at HIMSS was the very strong sense that technology companies are seeing beyond their respective niches and better understanding the downstream impact of what they do. For example, we’re now seeing companies that traditionally focus on, say, the payer segment seeking to augment their support for physicians, members and so on. This means the payer-focused company now understands how the products and services it offers impact its customer’s customers, so to speak. More and more, organizations are seeing how what they do — even if it’s a seemingly small part of the equation — fits in to the end-to-end process of improving health care. This can only mean great things for the partnerships and strategic alliances that will be necessary for us to deliver on health IT’s tremendous promise.  In all, HIMSS was great for both MEDecision and for me personally. I was thankful to experience the energy and enthusiasm of an industry preparing for a very bright future.

HIMSS 2009 was incredibly busy and successful for MEDecision. I noticed a distinct buzz about MEDecision at the show, which is a testament to our decision to “go big” this year with a booth space that was five times larger than any we’ve had in the past, some key sponsorships and triple the amount of staff in attendance. Based on the reaction I got from folks in attendance, our expanded presence made a difference.   

One of the things I noticed this year was the increase in senior executives in attendance. This was especially true at the Payer Symposium, which was one of the events we sponsored. My speculation is that various health care entities are positioning themselves to take advantage of the American Reinvestment and Recovery Act funds. I think more companies sent top-level execs to HIMSS this year because there’s more at stake than perhaps there has been in a while. This leads nicely into a point I was able to make when addressing the crowd at the payer breakfast, which was the other event we sponsored. Our industry is at a very exciting and very pivotal crossroads right now. We’ve long touted information technology’s ability to foster health care reform and finally, at long last, we’ve been given a $19 billion opportunity to prove it. We need to step up and seize the possibilities that the federal government has created for us. And I think partnerships and collaboration are keys to making this happen. We need to work together to meet the market’s growing need for actionable, meaningful EHRs.  

Thankfully, it was apparent at HIMSS that the notions of partnerships and collaboration are resonating well in the industry. We had a lot of really productive meetings and conversations with a number of entities. We came away with a strong sense that there is a lot of interest in working together, which makes for some really exciting opportunities. I’m very interested in seeing how things play out down the road in this respect both for MEDecision and the industry as a whole.