Joseph: Health care as an economic engine

Health care as an economic engine Let’s start with a prediction that is more of an aspiration. It’s my hope that in 2016, healthcare in Connecticut will be recognized for what it is: one of Connecticut’s leading industries. Hospitals provide 55,000 full-time jobs, and the economic activity represented by each of those jobs creates another job in our communities. That’s 110,000 jobs that can be directly or indirectly attributed to hospitals. Every year, hospitals in this state spend $4.2 billion on goods and services — from medical supplies to food and energy. Throughout the state, hospital spending generates another $4.6 billion in local economic activity. And hospitals are just one part of our state’s existing healthcare economy. The broader sector includes medical equipment manufacturers, health insurance firms, pharmaceutical companies, medical researchers and a growing array of outpatient providers and programs. In every sense, healthcare is an economic engine. Here at Hartford HealthCare, we will invest $1.3 billion in capital over the next decade. Many of those cranes in the air over Hartford are ours. We are building the new Bone and Joint Institute facility and expanding our Center for Education, Simulation and Innovation. We just opened our $40-million HHC Cancer Institute at The Hospital of Central Connecticut. We are building or renovating family health centers in around the state. Our significant investments extend far beyond traditional bricks and mortar. Hartford HealthCare is building the state’s most comprehensive healthcare information technology platform — in all, a quarter-billion-dollar expenditure that will link our robust electronic medical record system with data analytics to help us improve healthcare decision-making. This venture creates new and attractive jobs in the IT sector. The transformation of healthcare will need new technology, ideas, products and services. Here in Connecticut — and along what has been dubbed “The Knowledge Corridor” from New Haven through Hartford and north to Springfield — there is a potent mix of world-class higher education, business acumen and healthcare know-how. Together, we could create incubators of innovation, leading to greater economic opportunity, the promise of additional jobs and even better care for our communities. The year of the customer The year 2016 will be the year of the customer in health care. I say “customer” and not “patient” to make a point. One key aspect of the change in health care is what is being called the “activated consumer.” In a traditional market, goods or services are exchanged by buyers and sellers, with the buyers then typically owning or using those goods or services. That’s the way it typically works. But with the advent of generous employer-provided health plans during World War II, the buyer of health care (the employer) was not the user of the service. This led to lots of overuse — and oversupply — of unnecessary medical services, and it is one of the reasons the U.S. has the highest per-capita medical costs in the developed world. This is rapidly changing. What’s activating the healthcare consumer is that he or she has more skin in the game. From 2010 to 2015, the average employee cost of family healthcare has jumped 43 percent. Connecticut ranks 9th nationally for its percentage of commercial enrollees in high-deductible plans. In other words, the people using healthcare are, increasingly, paying for it themselves. They are looking for — shopping for — value. They get help from online information, often supplied by their employers or by their health plans. In addition, they can look at rankings provided by Consumer Reports or the LeapFrog Group, and refer to user reviews on Yelp and Angie’s List, among others. Healthcare providers are moving quickly to meet the activated consumer — with conveniently located primary care and urgent care centers, customer-friendly hours and online options. Traditional retailers like CVS Health and Walgreens are part of this mix with their in-store clinics. In 2016, look for a further expansion of offerings that seek to meet the customer on the customer’s terms. Expect to see a broader use of telehealth through “virtual” physician appointments, and the integration of personal biometrics, as measured by devices like FitBit and Apple Watch into the doctor-patient relationship. Or, more accurately, the customer-provider relationship. Coverage doesn’t equal access If my first prediction — that healthcare could be seen as the economic driver it is — was hopeful, my concluding prediction is dire. Even as our nation continues to expand insurance coverage through Medicaid, here in Connecticut we could see less access to care. Let me be clear: providing our most vulnerable individuals with insurance coverage through the state-federal Medicaid program is absolutely the right thing to do. Connecticut should be proud for being among the first states in the nation to add lower-income adults to its Medicaid plan. We need, however, to make a crucial distinction between simply providing coverage and ensuring affordable access to medical care. Access requires fair payment for the services provided. That’s not the case in Connecticut. The state’s hospitals are now paid 33 cents for each dollar of cost to treat Medicaid patients. At the same time, the number of Medicaid patients is increasing — now one in five Connecticut residents, double what it was at the start of 2010. Simple logic dictates that below-cost payments and increasing demand for services create an unsustainable combination. In 2016, our state will face a decision that will affect the future of healthcare in Connecticut. If payments remain below cost, we will see services curtailed and jobs lost. All the talk about insurance expansion will be but a hollow promise, as access to care for the neediest and most vulnerable people in Connecticut will decline. Paradoxically, this would lead to higher healthcare costs overall as chronic conditions go untreated and emergency department visits begin to rise. There can be a better ending to this story. We are grateful that legislators listened and eventually restored a portion of the most recent Medicaid cuts, but no one should believe the underlying problem is resolved. Rates are far below cost, and reimbursing hospitals for care they already provided should not a matter of debate. Let's advocate for fair payments and enhanced access to healthcare in 2016. [See what others are saying on HBJ's Economic Forecast 2016 page]