Changing health care’s business model

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

On Tuesday, the CEO of a major Arkansas employer announced a new offering that could cost it a lot of business someday.

Troy Wells, president and CEO of Baptist Health, announced his hospital system had received a grant from Verizon Wireless for a yearlong diabetes study. The study will provide 125 Pulaski County patients with tech tools such as wireless glucometers that will transmit glucose levels to medical staff when patients test themselves at home. The patients also will be given cell phones so health professionals can coach them up on taking care of their health. Another group will be given more old-fashioned equipment, and the results will be compared.

The technology will help medical staff keep an eye on their patients to spot problems early and help them stay healthy. All of the patients will be “medically underserved,” meaning they face barriers to health care. In other words, they’re probably poor, they’re often aged, and they need help managing their diabetes.

This kind of preventive telemedicine holds great promise for society. Aside from the human factor, it costs the health care system much less to keep a patient’s blood sugar levels stable than it does to intervene after the disease has begun to take its toll.

The problem is, what’s good for patients, and for their families, and for the health care system, and for society, is not necessarily good for Baptist Health’s bottom line.

Of all the problems with health care reform, the biggest is that not nearly enough has been done to address the system’s perverse financial incentives. Baptist Health, like most medical providers, makes its money by treating patients, not by curing them and not by helping them stay healthy in the first place. About the only time health care providers have a meaningful financial incentive to promote good health is when they’ll otherwise have to provide uncompensated or inadequately compensated care – which is probably the case with some of the patients in this study.

The health care payment system operates under a “fee for service” model. Medical providers bill insurance companies or the government for each procedure, regardless of the results and regardless of how efficiently they perform. Therefore, promoting a healthy population cost-efficiently is about the worst thing a medical provider can do for itself, financially speaking.

That’s not to say that doctors and hospitals don’t try to cure us. Frankly, they deserve credit for acting against their self-interest. But, like all humans, they respond to incentives. As a writer, when I’m paid by the word, I’m not going to cut the story short – and no, I’m not paid by the word for this column. Likewise, incentives shape how medical providers decide priorities, in how they invest resources, and in what interventions they recommend. The reason there’s no cure for the common cold is because it hasn’t been financially viable to invent one. For cold medicine, it has been, which is why pharmacies and grocery store aisles are stocked full of multiple varieties.

Reforms are occurring. For example, the state has been engaged in a years long effort, the Arkansas Payment Improvement Initiative, which is replacing the fee for service model with one based on “episodes of care” in some situations. Medical providers, state agencies and insurance companies together have determined appropriate costs for various health events. If medical providers’ costs over time are lower than that range, they receive a financial reward. If costs are higher, they’re penalized. The federal Medicare system is doing something similar.

After the Arkansas initiative began and the incentives changed, unnecessary antibiotic prescriptions for unspecified respiratory infections dropped 19 percent. As former Arkansas Surgeon General Dr. Joe Thompson, a pediatrician, told me, it had been easier for him to prescribe the medication than it had been to spend 10 minutes telling a mother why it wouldn’t help her child. Now that those unnecessary prescriptions could cut into doctors’ bottom lines, they might take the time to explain.

To create a healthier society and save on health care costs, the system must provide a higher profit for the good folks at Baptist Health when they prevent disease, or quickly cure it, or cheaply manage it, than it does when they treat it or operate on it. Doctors and hospitals often nobly act against their own financial self-interest, and thank goodness they do. But it’s hard to build a lasting business model that way.

With 600 jobs at stake, reality beats ideology

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

This week, state legislators, many of them elected promising to fight big government, voted for a lot of it, coming and going. They did so because today’s realities trump their political ideologies.

The legislators voted in special session for an $87 million bond package, paid for by Arkansas taxpayers, to help Lockheed Martin win a federal government contract to build 55,000 Joint Light Tactical Vehicles near Camden. In other words, state taxpayers will go into debt so the federal government can spend money.

This is corporate welfare at its most naked. Almost all of the package, $83 million, is going directly to a global company with $45.6 billion in sales last year, dwarfing Arkansas’ state budget. The practice is so ingrained that, during a press conference on the Capitol steps Tuesday, when asked why taxpayers should give his company money, a Lockheed representative simply turned and walked away from the podium, letting Gov. Asa Hutchinson answer the question.

All of this should be contrary to somebody’s political ideology, and yet of course legislators said yes, because in this case, reality is far more important. And the reality is that this project is expected to create at least 600 jobs and perhaps far more in south Arkansas, which badly needs them.

This would be the auto plant Arkansas has long wanted, but it’s even better because the customer is almost guaranteed to buy the plant’s products. Moreover, in addition to Uncle Sam’s 55,000-vehicle order, foreign governments will come shopping. Suppliers would locate close to the JLTV factory, creating more jobs. The presence of the JLTV facility would increase the area’s defense presence; already, hardware such as the Patriot missile is produced there. And if the state does this auto plant right, maybe civilian auto manufacturers could be persuaded to locate here as well. These things tend to snowball.

Those are realities. Here’s another one: Legislators knew the next potential large employer might want to locate in their district. They’d better play ball with south Arkansas lawmakers, because someday they may need their votes.

Finally, there’s this reality. Lockheed Martin is competing against two strong companies, Oshkosh and AM General, maker of the Humvee. The Pentagon has already decided that these 55,000 vehicles will be built somewhere, so Arkansas taxpayers will pay for them regardless. If 600 jobs are to be created, it might as well be in Camden.

Human beings need foundational beliefs lest we twist in the wind. For lawmakers, those foundational beliefs might include – actually, I hope they include – an aversion to big government and corporate welfare.

But there’s a difference between foundational beliefs, which allow room for difficult moral judgments and common sense, and rigid political ideology, which runs everything through a filter and requires new facts to conform to prior beliefs, or to be ignored.

Outside of this session, legislators and others are talking about difficult issues that won’t be settled in three days: how Arkansas’ health care system should look; how it should fund highways; how it should reform its prison system; what it should do about the Common Core.

If lawmakers are willing to vote for the JLTV package because it’s better to do so than not, then let’s hope they are willing to accept some other realities as well, and then work within them. Ideologically, they may hate the private option, but the reality is that it now provides health insurance for a quarter million Arkansans who mostly wouldn’t have it otherwise, so if they want it to go away, they should replace it with a better idea. The reality is that highways are badly underfunded, so if lawmakers’ ideology says that taxes are bad but roads are good, they need to offer creative ideas that are consistent with their foundational beliefs but not hamstrung by rigid ideologies.

If it were up to me, the federal government would buy fewer than 55,000 JLTVs. We’re going to pass part of the cost to our kids, and that’s not right. But if they’re going to be built, I hope they’re built in Camden by my fellow Arkansans. All things being equal, I think you take care of your own first.

It’s a foundational belief.

Should secret political donors be disclosed?

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

About 70 people turned out for a political demonstration on the State Capitol steps Tuesday – a fraction of the number that would have appeared if the subject were a controversial social issue, but I’ve seen plenty of smaller crowds there.

The issue was campaign finance reform. A coalition of groups were calling attention to their coming effort to gather signatures for a ballot initiative serving two purposes. First, it would make Arkansas the 17th state to call on Congress to advance a constitutional amendment allowing it and the states to regulate campaign funding. That’s just a request. Second, it would require independent political groups in Arkansas to disclose their donors. That would be the law.

Among the speakers was Rhana Bazzini, an 81-year-old Floridian who previously had marched from Sarasota to Tallahassee to protest current campaign finance laws. Bazzini pointed out, correctly, that every issue – education, health care, the national debt – is connected to how we elect our public officials.

And how we elect our public officials is through legalized bribery. I mean, let’s call it what it is. Serious candidates ask donors for money; unless they are super-wealthy, they have no choice. Groups who want something from the government give candidates money, which buys access, sympathy and loyalty. The more they give, the more access, sympathy and loyalty they receive. You know that version of the Golden Rule that says, “He who has the gold makes the rules”? That’s a fundamental part of American democracy.

This has always been the case, of course, but the dots between money and politics are becoming ever more connected. In America, money is speech and corporations are people, and under the 2010 Citizens United ruling, corporations and unions can spend unlimited amounts on campaigns.

The result of that ruling has been the creation of independent groups spending enormous amounts to spread half-truths and slander political candidates while hiding under the cloak of anonymity. A single donor, or a small group of them, essentially can buy their own candidates in legally approved secrecy. Because more money is going into judicial races, justice increasingly is for sale.

I am not sure if there are easy answers for this. Money tends to find its way to power like water finds its way to the bottom of a hill, no matter what laws are passed. Also, I can see the argument that spending money to advance a political idea is a form of political speech, as well as a property right.

The obvious problem with that last argument is that more money equals more speech, which, after all, is supposed to be “free.” We know this current system is having a corrosive, corrupting influence on our politics. It’s creating a class of ultra-wealthy political sugar daddies. It’s accelerating the transfer of wealth from middle class taxpayers to the one percent. (Remember the bank bailout?)

It’s also affecting our daily lives. According to the Declaration of Independence, one of the reasons the colonists broke away from Great Britain was to better enable the pursuit of happiness. The constant barrage of negative political ads isn’t making anyone happy except those who get paid to produce them.

What do you think? Should there be limits to the amounts that donors can give to candidates and/or independent political groups? Should campaigns be publicly financed, so that more candidates could run for office without having to rely on these legalized bribes? Or would that just open up new cans of worms?

At the very least, disclosure of donors to independent political groups ought to be required. If people are able to spend millions of dollars to elect a candidate, at least the rest of should know about it. That’s the law these groups want in Arkansas, and they probably are going to have to pass it through a ballot initiative. This past session, Rep. Clarke Tucker, D-Little Rock, tried unsuccessfully to pass a disclosure law through the Legislature, and it didn’t even advance past a House committee.

“Speaking” is by definition a public activity, so there should be no expectation of anonymity when doing so. If people want to spend their millions to shout from the hilltop, they can’t expect to do so from inside a cave. So when the canvassers ask for my signature to place this measure on next year’s ballot, I’ll enthusiastically write my name – in person and in public.

Leadership needed to keep the republic

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

As Benjamin Franklin was leaving Independence Hall at the end of the Constitutional Convention, a woman asked him if the delegates had created a republic or a monarchy. According to notes written by Dr. James McHenry, a Maryland delegate, Franklin replied, “A republic, if you can keep it.”

He did not say “democracy,” which the Founding Fathers saw as “mob rule.” Instead, they created a republic, where the people have ultimate authority by electing their officials but don’t stand in town squares and raise their hands to decide national issues.

Given that history, should elected officials vote their consciences, or should they follow popular opinion? Both, if they are doing their jobs. They should listen to their constituents and give great weight to their wishes, but if all they do is stick their fingers in the air and then follow the political winds, why should they exist? Why not just post every question currently facing Congress on the internet and let us all vote by clicking? How much funding should the Central Intelligence Agency receive this year? Click.

The character quality that’s needed, and the one that’s been missing far too long, is leadership. Elected officials must be willing to make tough calls, explain their decisions, and then accept the consequences. In some countries, if you lose power, you die. Egypt, for example, recently sentenced its previous president, Mohammed Morsi, to execution. In the United States, former Sen. Mark Pryor became a well-paid lobbyist after being “deposed,” as did Blanche Lincoln, Tim Hutchinson and many others.

And that brings us to the national debt. I think I first wrote about the subject in 1992, and frankly, I’m getting tired of trying to convince you people to be concerned about it. But I’ll try again. The debt has reached $18.2 trillion – roughly $57,000 for every American man, woman and child. It’s partly financed by foreign creditors, which is a really stupid idea. The government has many trillions of dollars in assets and is not bankrupt. But this is a growing problem because the government has made many trillions of dollars’ worth of promises that it cannot keep.

A number of groups – the Peter G. Peterson Foundation, the Concord Coalition, the Committee for a Responsible Budget – are trying to educate the American people about the debt, and, just as with my columns, it’s not getting through. Americans know no entity can indefinitely spend more than it collects and are concerned about the debt in the abstract, but they oppose specific cuts and don’t want to raise (their own) taxes. It’s hard to balance a budget if you don’t decrease outgo and/or raise income.

Anyway, democracy often doesn’t reflect the will of the majority on a particular issue, but the will of the loudest and most committed less-than-majorities. Any spending cut or tax increase will attract fierce opposition by the groups most affected. What matters is not what 51 percent want. What matters is what 15 percent want that the other 85 percent won’t fight for.

The debt is not the kind of issue that leads Americans to march on the Capitol. It’s a terrible injustice that affects mostly people who are too young to do anything about it. There will never be a groundswell of support for paying it down, even though the alternative is leaving it to our kids and grandkids, which surely few of us want to do.

Because there’s never going to be a groundswell, elected officials must lead. They must make tough decisions that they explain to the public, and then they either will be re-elected, or they will lose and become lobbyists. No one will lop off their head if they raise the gas tax or cut a program somewhere.

It takes a special person to do this, because apparently it’s very tempting in Washington to do whatever it takes to be re-elected. These types of republic-leaders can’t get elected without support. They need campaign donations – in larger increments from those who can, and in smaller increments from the concerned common man. I really wish those groups I mentioned, or at least their allies, would start playing a little more hardball.

There’s been enough talk about this subject. A few of us must lead, and a few more of us must have their backs. And if the American people won’t accept that this republic can’t keep going into debt, then I guess we won’t be able to keep it.

The keys for Johnny Key: leading, mending

Johnny Key speaks after Gov. Asa Hutchinson announces him as his choice as education commissioner.

Johnny Key speaks after Gov. Asa Hutchinson announces him as his choice as education commissioner.

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

I’m not the first person to point out that two of the most important people in Arkansas education these days are not educators. Not surprisingly, some educators are not happy about this.

Those two would be former Sen. Johnny Key, the state’s new education commissioner, and Baker Kurrus, the new Little Rock School District superintendent, who was appointed by Key.

Until this past legislative session, Key legally could not have served in his current post. Under previous state law, the state’s education commissioner was required to have been an educator for 10 years with five years’ experience as an administrator. Key has owned a day care but has not worked in education.

Previously, he was chairman of the Senate Education Committee and was the leading legislator regarding education policy. In that role, the Republican won friends and respect because of his cooperative, conciliatory, consensus-building style. You might not agree with him, but he’s fair.

He’s also perhaps the best person to be education commissioner, despite his lack of qualifications.

For the past decade, Arkansas education has been marked by consensus thanks to a common enemy – the fear of returning to court. The state spent many years under the thumb of the Lake View case because the Arkansas Constitution requires a “general, suitable and efficient system of free public schools,” which the courts redefined as “adequate” and “equitable.” To get the state out of court, and keep it out, legislators poured money into schools and then regularly gave them a cost of living raise, at the expense of all other state priorities. When other states were cutting school funding, Arkansas was increasing it.

But thanks to time and term limits, Lake View is a fading memory, and the ties that bound everyone together are fraying. A real divide exists now at the Capitol among education reformers, including some Republican legislators, and the education establishment. If anybody can bring those two sides together, it’s Key, the former Republican legislator known for fairness.

Still, the idea that a non-educator would be in charge of education policy is understandably hard for some educators to accept. He’s never been in the trenches with them. He’s never tried to teach geometry to a struggling student, or administer a standardized test, or deal firsthand with the laws he helped pass. My wife the other day said the president of the United States ought to have served in the military, of which he or she serves as commander-in-chief. It’s the same principle.

Key has some fences to mend across the state, especially after one of his first major acts was to appoint Kurrus as superintendent of the Little Rock School District. As education commissioner, Key effectively is a one-man school board for every district under state control, and that includes the state’s largest.

Like Key, Kurrus has crafted education policy but isn’t an educator. A well-respected attorney and businessman, he served 12 years on the Little Rock School Board and has been heading a committee studying the district’s finances. If Key is best described as “conciliatory and cooperative,” Kurrus could be described as “thoroughly competent,” and the district could use a lot of that right now.

But he’s not a competent educator, or at least, not an experienced one. The appointment of a legislator to lead education – that was tough for some to swallow. When that legislator named an attorney and businessman to lead Little Rock’s schools – well, then it became kind of a one-two punch.

Outsiders can bring a needed fresh perspective, and there are many walks of life where an organization’s leader is not necessarily an expert in that organization’s primary mission. It works well when those leaders understand their role and limitations and let the experts do their jobs. When I asked Key about his lack of experience, he cited the example of the hospital CEO who is not a doctor. Would any patient care? Of course not.

Is that a good analogy? Mostly, although in many hospitals, the doctors are the stars with the ultimate power, and the CEO, no matter how well paid, plays a support role. Teachers don’t quite have that kind of sway. The most important single person in Arkansas public education is now Johnny Key. The most important single person in Little Rock public education is now Baker Kurrus, and the person to whom he answers is Key.

This can work as long as they know their roles, let the experts do their jobs, and mend some fences.