Health costs pushing U.S. economy ‘off the cliff’: NBCH CEO

Brian Klepper joined the National Business Coalition on Health last month as the organization’s new CEO. He chats with EBN about his goals, his concerns about private health care exchanges and why the cost of health care is a threat to the competitiveness of U.S. businesses.

What appealed to you about this position? Why take on this challenge now?

My background is as a health care economist and from my perspective, I think there’s a great deal of data that can show that the health care cost problem is literally [pushing] the U.S. economy off the cliff. For example, Rand published this study in 2011 in Health Affairs, which showed that in the decade leading up to 2009, 79% of all the gross household income was absorbed by health care. You had similar problems with competitiveness of American companies on the global stage because of the health care cost differential that they’re subjected to.

One of the great mysteries up until this time has been the inability to galvanize and mobilize American business leaders, who pay for a very significant portion of health care, and to get them to treat health care purchases like they would treat anything else.

What attracted me was an organization that had 7,000 businesses and 25 million people that it represents as a platform for really meaningful change. And being able to leverage the collective purchasing heft of those groups to hold health care organizations and professionals accountable in a way that they haven’t been held accountable before.

What would you say are some of the biggest challenges facing employers right now?

Well, 70% of CFOs say that it’s health care. There was a Merrill Lynch study survey a few months ago that was published in USA Today and that was the number. The previous year, the number was 59%, so if you believe that, the concern is intensified and I think that that has a lot of roots. Health care cost is an overwhelming concern for business.

[For example, the way the American Medical Association sets management codes for primary care] means that primary care doctors have shorter office visits – so they can have more office visits – so they’re basically gerbils running faster on the wheels. But rushed offices make them more prone to refer to specialists more easily when they see somebody who’s got a problem. When you refer to specialists quickly, that drives up the cost 10, 15 times. Or the way that health plans pay hospitals for services at basically whatever price they ask for.

I come from a clinic company that I’m an owner in and I’ll very often be able to go to market with a critical mass of patients that I can use to get market-based pricing. I’ll be able to buy advanced images or ambulatory surgery or pain management for 15, 20 cents on the dollar of what the health plan was paying. When I show that to business leaders, they become infuriated because they know that they’re being overtly taken advantage of.

What do you hope to accomplish during your tenure?

I want to empower the regional coalitions. I want to help infuse them with value, so that if you are an employer who joins the coalition, you have a high degree of confidence that your costs will end up being lowered and the health outcomes of your population will be higher. And, at the same time, I want to leverage the collective purchasing strength of employers and unions and local governments together in a way that tells the health care industry that good behaviors will be rewarded and bad behaviors will be punished.

You say your perspective favors patients, whose medical care often exposes them to needless physical risk. Can you expand on that?

The question you have to ask is why does health care in America cost double what it costs in all other countries, and there are really two reasons. One is over-treatment and the other one is egregious unit pricing. And usually it’s a combination of both. For example, we do CT scans on patients about five times as often as they do in Australia or Switzerland or Korea. We do stenting on patients an equally great amount of time and it’s not because those services are medically necessary, but because they’re lucrative and the system is set up to encourage that. If you have a stent implanted in you unneccesarily, you are being put at physical risk, real physical risk, and some people lose that bet.

The health care system, with the Affordable Care Act, is undergoing a massive shift and we’re hearing more about private exchanges. What’s your sense of how your members are feeling about private exchanges and do you think they will become a more widely used method of delivering health care benefits to workers?

I think what my members are feeling is confused. There’s not a lot of clarity. I think that the private exchanges are rife with conflicts of interest, because they’re being mounted by people who are supposedly advising them, so there are issues there. I think that the concept of exchanges, which are basically there to provide subsidized or sliding-scale subsidies for individual coverage of standardized plans, is a good one, with the exception of one problem and that is that in America, the health care industry has essentially captured control of the regulatory process.

We’re still so early in the process that it’s hard to know how it will play out, but I think we are far from over with understanding how this is going to work, especially when you have health care costs. Health care inflation has been slowed by the recession of the last several years but there has been, from my standpoint, no change in the mechanisms of cost creation. That, of course, is a big problem with the [ACA] – it doesn’t really address that very effectively.

We’re going to see how the re-emergence of medical inflation [is] going to impact the ability of people who have been put out on the exchanges to keep up with that inflation. Because, undoubtedly, their employers are not going to keep up with the inflation for them.