Enforced Efficiency
A lot of angst these days over proposed cuts in Medicare payments to physicians. Big money tussles on both sides of the issue. The Democrats sort of don’t want to do that but sort of want the money to do other things, so sorting out the pros and cons is not a slam dunk.
Interesting to look at this question from an efficiency standpoint. A high school teacher of mine used to say, “Nothing ever got stronger by supporting it.” Put your leg in a cast and look at what happens to the bone and the muscle. Pushing old folks around in wheel chairs doesn’t develop their ability to walk. Similarly, pouring money into the healthcare system won’t make it more efficient. Where’s the incentive to improve if you’re still getting paid for doing it the old way? In one sense, the best thing that could happen to healthcare would be for Medicare to cut their reimbursements by 25%. Or, say 10% this year and promise 10% each year for the next 5 years. That’s what the Germans did to gasoline tax, and guess what? The people are now driving smaller cars and using less gas. Funny how that works. (See previous posting, 1 Jan 07, "Lessons from Germany.")
If hospitals had to work with 10% less revenue next year, they’d find a more efficient way to operate. Or go bankrupt. There’s a hospital in my area that’s doing just that. Going under. The CEO wrote to the newspaper last week that “We have this management consultant, so the problem is not with our operations.” Sure. Incremental changes will beget incremental changes. When you need a stair-step improvement, you have to wipe the slate and re-design. A new paradigm. Usually, this doesn’t come without a crisis, and bankruptcy qualifies. More institutions should try it.
I once visited an ambulatory care system where a new CEO told employees they would be out of business unless they: saw 20% more patients, cut the average visit time by 30% and spent less money than the previous year. And they did. It is possible, but it takes creative thinking and a willingness to cast off old habits. “New Eyes.”
Interesting to look at this question from an efficiency standpoint. A high school teacher of mine used to say, “Nothing ever got stronger by supporting it.” Put your leg in a cast and look at what happens to the bone and the muscle. Pushing old folks around in wheel chairs doesn’t develop their ability to walk. Similarly, pouring money into the healthcare system won’t make it more efficient. Where’s the incentive to improve if you’re still getting paid for doing it the old way? In one sense, the best thing that could happen to healthcare would be for Medicare to cut their reimbursements by 25%. Or, say 10% this year and promise 10% each year for the next 5 years. That’s what the Germans did to gasoline tax, and guess what? The people are now driving smaller cars and using less gas. Funny how that works. (See previous posting, 1 Jan 07, "Lessons from Germany.")
If hospitals had to work with 10% less revenue next year, they’d find a more efficient way to operate. Or go bankrupt. There’s a hospital in my area that’s doing just that. Going under. The CEO wrote to the newspaper last week that “We have this management consultant, so the problem is not with our operations.” Sure. Incremental changes will beget incremental changes. When you need a stair-step improvement, you have to wipe the slate and re-design. A new paradigm. Usually, this doesn’t come without a crisis, and bankruptcy qualifies. More institutions should try it.
I once visited an ambulatory care system where a new CEO told employees they would be out of business unless they: saw 20% more patients, cut the average visit time by 30% and spent less money than the previous year. And they did. It is possible, but it takes creative thinking and a willingness to cast off old habits. “New Eyes.”
