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UM's President Shalala Addresses Health Care Reform at Forum Co-Sponsored by School of Business

March 08, 2010
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The cost of treating the vast and growing number of uninsured Americans must be absorbed somewhere, and the cost-shifting typically ends up in the ever-rising bills paid by large corporations for their employees' health coverage, according to Donna E. Shalala, the president of the University of Miami. "At the end of the day," Shalala told an audience of public company audit committee members in February, "we're all paying for it."

Shalala was speaking in Aventura, Fla. at the annual Audit Committee Issues Conference, hosted by KPMG's Audit Committee Institute and co-sponsored  by the School of Business Administration. Shalala is an internationally recognized expert on health care policy, having served eight years as secretary of Health and Human Services under former President Bill Clinton.

"Uncompensated care is an increasing part of hospitals' budgets," said Shalala, "and hospitals, which have been doing very well over the past decade, are increasingly at risk. The price of hospital care will continue to go up because hospitals include in our bills the cost of uncompensated care. This makes it increasingly difficult for insurance companies, whether we're self-insured or not, to negotiate decent rates with groups of doctors or with hospitals. That's why the president and most people in health care, whether they're Republicans or Democrats, think that we have to figure out a way to get everybody covered."

Shalala said that too much of the health care reform dialogue has been about coverage and not enough about cost containment. She sees some hope coming from the portion of the federal economic stimulus package that requires electronic medical records for hospitals and health care providers. "For the first time," she said, "we'll see what we've got, what we're spending money on, and we'll have a better handle on our costs."

Increased pressure from insurance companies and employers on health care providers will also result in more competitive pricing, Shalala said. Some of the cost reduction will come from bundling of services for a single incident. Increasingly, she added, physicians are becoming employees of health care systems, giving them a personal financial incentive to keep costs down. And tort reform will result in tests and procedures that are performed out of medical necessity rather than as a precaution against malpractice claims. A move toward health care providers being paid based on outcomes will also drive greater cost efficiency into the market, as will a focus on rooting out fraud, which will put money back into the health care system.

Shalala pins some of her best hopes on the increased use of advanced practice nurses who, she says, can handle 70 percent of the services patients normally get from primary care physicians. Advanced nurse practitioners, along with pharmacists and physician's assistants, will increasingly be used in integrated health care teams providing quality care while holding costs down.

The point of service is changing, too, Shalala said. Chain store clinics - generally staffed with nurses and pharmacists - offer convenience and lower costs. So can telemedicine, permitting remote access to specialists or linking low-cost clinics to more advanced care. "There is going to be more innovation coming from people who have not traditionally been in the health care business," Shalala said. "It's going to come from entrepreneurs and business people who see the financial opportunities and want to get into the business, and I think that's a very good thing."

- Robert S. Benchley

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