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Economic Stimulus or Cost Control? The Health Care Conflict

Four hundred business people with conflicting priorities came to the recent San Francisco Business Times program on the future of health care.

Many were interested in the enormous business opportunities that the UCSF and California Pacific hospital construction projects would bring to their companies. Others wanted to know what was being done to control health care costs and their companies’ Health Insurance premiums.

That is the conflict. Health care facilities construction is one of the key economic drivers in San Francisco. We have seen many of our clients refocusing their business development efforts to the health care field. The companies who have won contracts are prospering.

However, these expensive new hospitals, designed for seismic safety and greater efficiency, will be paid for by our taxes and insurance premiums. It was all too apparent that neither Mark Laret (CEO, UCSF Medical Center) nor Warren Browner (CEO, California Pacific Medical Center) were focused on cost control. Laret described new robots which will prepare and deliver medications to hospital patients, thus eliminating human error.

In contrast, Blue Shield’s COO Paul Markovich declared, “We are obsessed with costs.” Bill Kramer, Executive Director for National Health Policy, Pacific Business Group on Health and Steve McDermott, CEO, Hill Physicians, also spoke convincingly of the need for major overhaul in our health care system.
What do they see as the future? Coordination of care seems to be the current buzzword. Markovich proudly described a collaboration with CalPERS, Mercy Hospital, and Hill Physicians designed to both reduce cost and improve quality of care. We are hopeful that the annual savings of $400 per person is just the beginning of the project’s impact.

During the question period, I asked how the Small Business Health Insurance Exchanges would deliver the much anticipated premium savings. The members of the panel shook their heads. Kramer said the exchanges have been “oversold.” The exchanges are likely to be the major source of insurance for lower income Californians, people with the most health problems and the least ability to pay. If the panel is correct, then the savings will come from tax credits for the smallest, lowest wage businesses and the subsidies to their employees—not from any reduction in insurance costs.

We are following the development of the California insurance exchanges, attending meetings and interviewing key people. Look for a summer blog post on the potential impact of the exchanges on your health insurance options and costs.
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About Oscar Henry

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