Time Capsule: US Healthcare Value is Low – Follow the Fancy Buildings

I wrote weekly editorials for a boutique industry newsletter for several years, anxious for both audience and income. I learned a lot about coming up with ideas for the weekly grind, trying to be simultaneously opinionated and entertaining in a few hundred words, and not sleeping much because I was working all the time. They’re fun to read as a look back at what was important then (and often still important now).

I wrote this piece in March 2007.

US Healthcare Value is Low – Follow the Fancy Buildings
By Mr. HISTalk

Cerner CEO Neal Patterson made a characteristically blunt comment to a newspaper reporter at the HIMSS conference. Referring to what he quoted as the 31% of healthcare costs wasted on administrative functions, he said, “One of our goals is to eliminate insurance companies as they exist today.”

Many of us in healthcare would agree. It makes me boiling mad to drive by the palatial offices of Blue Cross Blue Shield and other companies like them. God forbid that a living, breathing patient or provider should cross their doorstep. I bet they’d call security.

On the other hand, I seem to recall that Cerner has some pretty nice digs out there in Kansas City. Neal’s sitting on about $300 million worth of Cerner stock, all of it due to the free spending of hospitals buying his product. Maybe insurance companies should state a goal of eliminating computer vendors who get rich by trading paper-pushing for mouse-clicking with little patient benefit.

Like they say about banks, casinos, and car dealers, “They didn’t build those big buildings by giving their customers good deals.”

I can’t blame insurance companies or Cerner for taking advantage of the messed-up healthcare system we’ve all allowed to be created. And in their defense, BCBS is no less hilariously “not for profit” as those big medical centers with hundreds of millions in bottom-line “excess revenue” and their own version of the $3 million a year executive. They usually have Taj Mahospitals themselves.

I’m not smart enough to figure out who the good guys and bad guys are in healthcare, so I look at just one thing: buildings. When I see stunning hospitals, vendor headquarters, insurance offices, and doctors’ houses, I figure they’re doing a little better than I’d like. Make a nice income, but don’t flaunt it.

There’s little question that we’re getting a poor return on our healthcare investment. We spend head and shoulders above the entire rest of the world on healthcare, which continues to chew up more and more of our gross domestic product, yet we have life expectancy and infant mortality that rival that of third-world countries. The costs keep climbing faster and faster.

It seems to me that hospitals, insurance companies, and IT vendors have a symbiotic relationship. You wouldn’t be selling many $8 aspirin if people had to pay up out of their own pockets. And without those, your hospital wouldn’t be buying expensive IT systems to spit out bills and document care. Everybody needs big profits to pay for those buildings.

There’s plenty of blame to go around for our poor bargain healthcare system. About all we IT types can do is to apply technology to process change. Not just buying Neal’s systems, in other words, but actually doing something useful and measurable with them to increase quality and decrease cost.

If we do that, then maybe all of those big buildings – owned by hospitals, insurance companies, and IT vendors – will become a little less opulent.