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25 February, 2011 Posted by John G. Self Posted in Healthcare
2 comments

That Other Potential Calamity for Healthcare

Posted February 25th, 2011 | Author: John G. Self

When some public policy calamity strikes, people tremble with fear or anger and they cry out:  “Why didn’t someone warn us?  Why didn’t someone tell us that there were bad consequences?  We do not want this pain!”

That is a reasonable request, especially for healthcare leaders who are already facing unprecedented challenges that threaten to dramatically change the way we do business. In responding, let me borrow a quote from Mike Moncrief, Fort Worth’s mayor and a former county judge, who once said about a major change in EMS service for his community, “The train is on the tracks.  You are either on the train or on the tracks.”

Now, which train are we talking about — the Patient Protection and Affordable Care Act (PPACA) — the so-called Obamacare plan — or something far more sinister.  The answer to that question is easy:  something far more sinister. It is the fat, smelly elephant in the room that no one wants to look at, much less talk about: the skyrocketing and soon-to-be catastrophic debt crisis.  Healthcare executives — it is time to step up to the leadership plate to prepare to deal with this very real possibility.

I try to stay away from politics in this space, but this issue is too important for me not to comment.  Hopefully, you will agree that this is truly a bipartisan train wreck.  The proposed GOP  House plan, which many know will probably never see the light of day, is more about ideology and a political principle than good policy.  Their proposed $61 billion in budget cuts comes from about 12 percent of the annual budget that is known as discretionary spending.  While $61 billion is serious money, and many in the GOP would argue that it represents a good start, it is woefully inadequate given the size of the deficit and our long-term debt.  In other words, this approach, without commitments to a sustainable policy of reduced spending over the long term will not keep the bond vigilantes away from our door. You simply cannot balance the budget by reducing discretionary spending.

The Democratic position is equally ludicrous.  Democratic defenders argue that the White House’s initial plan was only a starting point for prolonged negotiations to craft a meaningful spending plan.  That line of defense of the President’s approach is akin to a timid man whistling while passing a graveyard. You knew we were in trouble from a leadership perspective when the President said that he and the Republicans had “to step in the boat at the same time.”  If a hospital CEO tried that approach with his medical staff when it came to a critically tough decision, there would be blood on the floor.

If the bond market decides that the U.S. is unable or unwilling to come to grips with the deficit and debt crisis, the consequences will be “abrupt, swift and painful beyond our wildest projections,” argues David Walker, former Comptroller of the U.S. Public Accounts under George W. Bush.  Recently, while serving as a guest host on CNBC’s Squawk Box morning show, he predicted that the crisis, now challenging debtor nations in the Euro zone, will visit the U.S.  shores within the next three to five years, if not sooner.  When it occurs, he posits, and it could happen at any time, the U.S. government’s ability to continue borrowing, and refinancing existing debt, will become so expensive — assuming anyone will lend to us at all — that it will wreck our way of life as we know it today.

Healthcare providers will be at the nexus of this calamity. Regardless of what we say, the excuses we use and the promises we make, it will be too late.  Our economy, our industry will face an immediate restructuring, the type that is found only in the the most desperate of bankruptcies: It will be “abrupt, swift and painful beyond our wildest projections.”

So why aren’t we hearing more about this potential calamity from the healthcare trade press?  For the same reason that most futurists/after dinner speakers, and others who know better, are avoiding the subject.  Perhaps it is that we cannot imagine a system of care that is not like the one we have today, or perhaps it is simply that people will not pay good money for speeches who produce more heartburn than good feelings and laughs.   

This is a time when leadership must rise to the surface.  Leadership is not only about leading an organization for today, it also about the ability to anticipate how market and financial forces will shape its future, and to prepare the business to adapt.

© 2011 John Gregory Self

 

© 2021 John Gregory Self

2 comments

  1. Steve Davis says:

    John – I agree that the scary meltdown scenario is woefully under-discussed, a point I also made in this post from my blog:
    http://healthcarestrategist.blogspot.com/2010/11/what-would-happen-if-employers-walked.html

  2. Steve Davis says:

    John – I agree that the scary meltdown scenario is woefully under-discussed, a point I also made in this post from my blog:
    http://healthcarestrategist.blogspot.com/2010/11/what-would-happen-if-employers-walked.html

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