The growing cost of healthcare: A conversation with the head of Melrose-Wakefield Hospital

That process is going to have to include not just the politicians who make the laws, but also healthcare providers, such as hospitals and physicians, and insurance companies who deal directly with the consumers.

“We all know healthcare is too costly, but we also know we need to collaborate and standardize the way we do things,” Sack said. “If you’re looking at collaboration, it can’t just be doctors. You have to work with everyone.”

But moving forward doesn’t mean forgetting how the healthcare crisis escalated to where it is today. Sack said in his opinion, it goes back to the passage of Medicare and Medicaid in the late 1960s because the law really changed the way healthcare was delivered.

Before, consumers only paid for healthcare they could afford, but passage of the new law allowed for more public access. As insurance companies took on a more dominant role, the demand for that access grew.

Sack called healthcare “a moving target,” one that’s been ongoing since the late 1970s/early 1980s, when politicians like Jimmy Carter and Ted Kennedy squared off against each other. The fight led to Diagnostic Related Groups (DRG), or bundles of care around a certain disease where payments and treatment were built into the reimbursement.

Although DRGs slowed down costs, a decade later they were rising quickly. Sack said that led to managed care and then Preferred Provider Organizations, where there were more options and choices, as long as patients followed certain protocols, such as using providers in a certain network or staying in the hospital only a certain number of days.

“People rebelled,” Sack said. “So that changed the model of care again.”

Sack said in all its incarnations, healthcare’s biggest problem hasn’t been the way services are delivered to patients. It’s been the reimbursement.

“Because of the economy and high cost of healthcare, there’s really a need to marry payment and delivery together,” he said.

With a slowdown in reimbursement from state and federal programs, Sack said the time has come for serious reform. The economic slowdown has really affected the way hospitals and physicians are working, especially if they aren’t paid in a timely fashion for services already rendered.

“Cost controls are essential because there’s simply not enough money to go around,” Sack said. “Look at how provider care has gone up less than the rate of inflation over the last four years.”

The next phase

To make real changes, all providers will have to work together. It also means looking inward at the day-to-day business models, Sack said.

Over the next six months, Hallmark Health will be looking at the way it does business. Sack said that may mean merging with another provider or killing plans for building new facilities.

“We have to evaluate our strengths and our weaknesses,” he said. “We have to change and we’re setting out to do that.”

One of Hallmark’s strengths, said Sack, is the system’s sound fiscal base. He said high scores in patient satisfaction surveys and staff confidence show Hallmark is on sound footing.

“Those types of things, like being the Boston Bruins official provider, bring more attention to the organization,” Sack said. “What we want to do is continue to provide quality care to all our communities.”

Sack is quick to point out Hallmark also has weaknesses, such as a loss of quality personnel. Although the system has managed to slow its changeover of nursing staff, its physician staff is becoming older.

“Massachusetts is not a desirable state to work in as a healthcare provider,” Sack said. “The high cost of living is a factor, as are the rate of reimbursement and the degree of competition, among others.”

In the eight years Sack has been Hallmark CEO, he’s seen the competitive healthcare market change and grow, and not just in the doctor’s market either. Whereas academic centers used to stay in Boston, they are now spreading into communities that were once the domain of local hospitals.

“The question is how to reconcile that,” Sack said. “Do we work with the academic centers? Do we try to compete?”

Those are the questions that have to be answered, and Sack said there are plenty more, like whether Hallmark should build out its facilities or expand into satellite locations.

“It comes down to consumer choice,” he said. “If you have one location, that requires people come to you. If you adopt the idea that you go where people work, you can put in an ambulatory site to provide the needed services.”

The future

As federal healthcare reform comes more and more into play, Sack said there needs to be more collaboration among all the parties involved.

“Our goal is to promote wellness,” Sack said. “But there has to be more collaborative practices, more standardization of protocols.”

Sack said working towards comprehensive healthcare will remain challenging as long as the fighting continues, not only on Beacon Hill, but in Congress as well.

“A lot of this, fortunately or unfortunately, depends on the upcoming elections and in two years, the presidential election,” he said. “There’s a lot of distraction and a lot of posturing, but in reality, what is the option? Not to change?”

Should politics stay out of it? Sack thinks not.

“Politics have played a useful role,” he said. “My sense is that we have to pay attention to what we’re doing.”

And that means having all parties sit at the table, not just allowing legislators to make all the decisions. Sack said there’s still a lot of fear out there about what the future holds, but it’s key to keep pushing forward.

“We spend a lot more of our time now dealing with legislators and policy makers,” Sack said, adding providers have allowed politicians to make decisions with little to no knowledge of what they were doing. “But the time is coming when we’ll change that. We have to keep looking at ways to collaborate and standardize the way we do things.”

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