Some days it’s hard not to be cynical, but this week I became an optimist again on the topic of healthcare reform. I was lucky enough to be invited to a forum hosted by New Jersey’s U.S. Sen. Robert Menendez to discuss the hospital industry’s perspective on healthcare reform. He invited hospital CEOs from across the state of New Jersey to the Cook College Campus Center (my alma mater, so I loved going back) to discuss key items we think lawmakers must consider as reform is debated. Sen. Menendez is a member of the Senate Finance Committee, and all roads to reform pass through his committee. Last Monday, I had the opportunity to discuss health reform with New Jersey Congressman Frank Pallone at Meridian Health System’s Jersey Shore Medical Center. Congressman Pallone is chairman of the Subcommittee on Health of the House Energy and Commerce Committee. Again, all roads to reform on the House side must make their way through his committee.

So why am I optimistic? First, we have a wonderful congressional delegation that has traditionally remained united on healthcare issues. Second, we have two committed members of Congress who will be integrally involved in the reform debate. Both have indicated that their houses are committed to passing a bill by June 2009. Third, we have a President who has made a pledge to healthcare reform (devoting more than $630 billion of his first budget as a down payment on reform), even as he faces other significant major challenges. Fourth, we have a confluence of interested parties – business, organized labor, hospitals and certainly the uninsured – that want real healthcare reform. The time is right for us to move forward.

So the timing is right; now we need the right reform package. Here are 11 essential principles that I believe must be considered as we reform the healthcare system and provide healthcare coverage for all.

1. Healthcare for all must be paid for by all. If we truly believe that healthcare is a right and not a privilege, then we must all be committed to paying for it.
   
   
2. Coverage doesn’t equal access. We must be sure that all health insurers have adequate networks of providers, including primary care physicians in all settings. For some patients today – even those with healthcare coverage – finding the healthcare they need remains a struggle. These “underinsured” often have to fight for coverage for necessary care.
   
   
3. Reform must pay attention to behavioral health, substance abuse and the mentally ill. At NJHA we are studying the charity care patient population and finding that a large part of the state’s charity care needs are related to behavioral health issues or to medical issues related to substance abuse. The hospital setting is not always the most appropriate setting for these patients. We need to be sure we provide care for the behavioral health population in appropriate community settings – it’s better for the patients, and it removes a major financial strain on our struggling hospitals.
   
   
4. If we create a new federal bureaucracy, we should get rid of existing ones or at the very least consolidate them. There is a lot of talk about the creation of a National Health Board (promoted by Sen. Tom Daschle) to review best practices and examine the “comparative effectiveness” of different medical treatment. It’s a good idea to standardize care. But if we have a National Health Board, what happens to the Centers for Medicare and Medicaid Services, the National Institutes for Health, the Agency for Healthcare Research and Quality, MedPAC and the other units in the federal government? They need to be consolidated at a minimum.
   
   
5. Training the healthcare workforce of tomorrow must be part of our reform package. We have a shortage of primary care doctors right now, and medical students today have little incentive to enter primary care. Yet if we provide coverage for all, we will need more primary care doctors, more advanced nurse practitioners, etc. We need to plan for this now. In Massachusetts, a health reform strategy has been successful in providing health coverage for more than 90 percent of its citizens. Yet there aren’t enough primary care doctors, so those citizens must often wait months for an appointment.
   
   
6. Graduate medical education must be supported – and paid for – by all. Right now, the federal government pays teaching hospitals to train the next generation of physicians through these GME payments. State government also pays for GME to a much lesser extent through Medicaid payments. (In New Jersey, Medicaid currently pays teaching hospitals $68 million for their important work, but the Governor’s proposed budget for 2010 would roll back that figure to just $60 million.) These payments are essential to provide training for doctors, yet the cost of this is borne by two public payers only. GME is a “public” good, and all payers should contribute to training the medical professionals of tomorrow.
   
   
7. Paperwork must be standardized. We should have one claims form that is used by all insurers. It makes no sense that each insurer requires a different claims form. Standardization could save a lot of time and money if everyone was operating off the same page, literally.
   
   
8. Health information technology also must be standardized so systems can talk to each other and transfer information. Right now, there is no requirement that systems be interoperable so, for example, a hospital in Pennsylvania may not be able to transmit your medical records to the Jersey Shore area if you need it during a summer vacation. Just like someone years ago made the decision that all electrical outlets would have three prongs, the federal government needs to bite this bullet and mandate that the systems be interoperable. If we don’t, all the investment in HIT may be for naught, and that would be a crying shame.
   
   
9. Payment for care must be appropriate, and the incentives must be aligned between providers. Right now, Medicaid only pays hospitals about 70 percent of what it actually costs hospitals to care for Medicaid patients. Medicare pays about 89 cents on the dollar, and charity care pays less than 50 cents on average. It’s no wonder we have seen nine N.J. acute care hospitals close and six file for bankruptcy in the past two years. Payment for physicians is equally poor. Doctors get about $16 for an office visit with a Medicaid patient. I pay more than that to have my hair cut! Payment incentives must be aligned between physicians and hospitals so they are working together to provide efficient, quality care. If we are trying to control costs it makes no sense for an insurer to deny days of care to a hospital, yet pay a doctor for care rendered on that same denied day!
   
   
10. Medical malpractice reform must be examined. It’s a difficult political issue, but something must be done to provide relief to doctors who often order tests as a form of “defensive medicine.” Again, if we are trying to drive down costs, some protection must be provided to doctors in some form.
    
    
11. Medical loss ratios must be examined and standardized. Medicare devotes approximately 3 percent of every dollar to administrative overhead. While it isn’t perfect, Medicare operates remarkably well since it is the largest insurer in America. If Medicare can devote just 3 cents out of every dollar to administrative costs and devotes the remaining 97 cents to actual medical care (what a concept!) why do Americans sit idly by as other insurers charge 15 percent, 20 percent and sometimes even higher amounts in administrative overhead? It boggles the mind really. That is a huge cost driver that contributes to rising healthcare costs. Let’s standardize it and drive the dollars back into the actual provision of healthcare services.

So stay tuned. Right now the glass looks half full on healthcare reform. Only time will tell if I am right.