If you’re a business student and you want to work in healthcare, you’re going to need to understand at least a little bit about healthcare policy. While Americans take pride in their “free-market” healthcare system, government sources pay 55 cents out of every healthcare dollar spent in the United States…and there are a lot of healthcare dollars spent in the United States (far more than any other country in the world).
During Duke’s Week in DC trip, speakers from across the healthcare industry talked about a number of different ways that healthcare policy changes could have a dramatic impact in 2015. For example, a number of our speakers talked about the upcoming King v. Burwell Supreme Court case and the potential $36-65B annual impact that this decision could have on the industry. We also heard about the potential repeal of the medical device tax (a $4B annual impact on the medical device industry). We even heard a few speakers talk about the potential of non-profit hospitals to lose their long treasured tax-exempt status as the number of uninsured patients falls drastically in some states (Not-for-profit hospitals are exempted from paying $20B in sales, property and income taxes each year).
While all the issues I mentioned previously are important, I feel that the most emblematic topic we discussed this week was the Sustainable Growth Rate (SGR) or “Doc Fix”. I’ll spare you the gory details, but Congress passed a law in 1997 that was designed to rein in healthcare costs. This sounds great in theory, but Congress has prevented its own rule from being enforced 17 times. The latest delay in enforcement expires on March 31, 2015 and many in Washington are optimistic that Congress won’t “waste a good crisis” and will issue a permanent Doc Fix. The proposed fix attempts to transition physician payment away from fee-for-service towards a payment system that rewards higher quality and better outcomes.
The reason I feel that the SGR debate is so emblematic of the week is because it highlights the best and worst parts of healthcare policy. The worst part of healthcare policy is that it is constantly changing, heightens uncertainty and often doesn’t factor in unintended consequences for those in the industry. The best part of healthcare policy is that it can be used to redesign the largest healthcare system in the world towards a system that rewards better care (instead of more care) and offers opportunities for entrepreneurs like Privia Health and Evolent Health to do well (make money) while doing good (saving lives).