Face the Future

By David Ball Photography by Paiwei Wei April 30, 2012

Hospital CEO Gwen MacKenzieU.S. Supreme Court justices won’t announce their decision on the healthcare reform law until June. But already, the controversial Patient Protection and Affordable Care Act is having an effect. We talked to Gwen MacKenzie, president and CEO of Sarasota Memorial Health Care System, about why it will be good for many patients, a challenge for many doctors and will force new thinking from businesses.


Q. What don’t people realize about the Affordable Care Act? A lot of it has already been executed.


Q. What are the real positives and negatives so far? The biggest benefit is the coverage of preventive care. We’ve seen an increase in mammograms from a year ago. We’d much rather prevent medical issues than try to fix them later.

Unfortunately, we are also dealing with the “Doc fix,” where physicians are facing a 29 percent reduction in their reimbursements. Preventive care has already been partially rescinded by about $5 billion until the end of the year to cover this “Doc fix” deficit.


Q. The Republican presidential candidates have all said they would repeal the bill if elected. What would that mean? The bigger question is not that, but how would they stem the potential bankruptcy of Medicare? If not this act, then what else? I think it would very hard for them to repeal it.

I’m more concerned with the Supreme Court, which could very well deem some of, or the entire act unconstitutional, which could then repeal everything.


Q. Does the reform work without the individual mandate? It’s going to be very difficult. We have evidence from Massachusetts (which has an individual mandate) that even when facing an IRS penalty, people still will opt out. About 170,000 people in Massachusetts aren’t covered even though it’s required. What you then have is a system for covering people who are sick but you don’t get the healthy people in the system that balances the costs. What we have is actually insurance reform, not necessarily healthcare reform.


Q. How many of the uninsured in Sarasota will get coverage if health insurance is mandated?  We figured this would cover 40 percent to 50 percent of the uninsured. Our uninsured is about 23 percent in Sarasota [about 59,000 people], and the national rate is more like 19 percent to 21 percent.

If you wanted to get insurance you could get it through the healthcare exchanges [state-regulated healthcare plans, which provide federal subsidies], starting Jan. 1, 2014.

However, what the physician behavior will be for the reimbursement I don’t know. We have few physicians in our region who take Medicaid. If this healthcare exchange insurance mimics Medicaid, some physicians might opt out.


Q. Will employers opt to insure their workers or put them on the open market? A study by McKinsey & Company predicted about 30 percent of employers would opt out of providing coverage. I found that surprising, but their logic was that most employers usually cover about 70 percent of the employee’s costs. So, if you’re the employee, paying 30 percent yourself, you might be better off going to the healthcare exchange.


Q. Do you think the exchanges will work? I don’t know. If you go to the Massachusetts exchange it’s pretty easy to maneuver and get insurance. But finding a primary care physician who would then take that insurance from a new patient is a whole different thing. There weren’t enough physicians for this big surge of insured people. But people did what they always do, they went to the ER.


Q. How are you preparing for the surge in the newly insured? It’s going to be a big issue. We’ve put together urgent care centers as a more cost-effective place to see patients who don’t require full-blown emergency care. We’ve got three in Sarasota and Manatee. Our reaction will probably be to create more of those.


Q. The act also creates “accountable care organizations” or ACOs, where health systems and physicians will have to coordinate at an unprecedented level to receive Medicare payments, which will be based partially on quality outcomes of patients. What does this mean? That’s one of the biggest disappointments. We thought that might have been something we could sign on to with our large corps of physicians. But the law is poorly constructed and bureaucratic. It will be upwards of $ 1.9 million to create the infrastructure to meet all the requirements.

It also triples the outcomes that have to be tracked. It’s hard to convince physicians this is a good thing when they are trying to see patients every 20 to 30 minutes, and we say, “By the way, can you track 40-some quality outcomes while you’re doing that?”


Q. You’ve said that Medicare will be more like Medicaid. What does that mean? You have to be realistic. If you are covering 32 million more people and you are reducing the reimbursements to hospitals by $155 billion, something has to give. People are going to have less coverage in order for more people to be covered. Eligibility will be different.

Even now physicians and healthcare systems are having to document a whole set of new requirements about patients. For a knee replacement, you have to document how much physical therapy have they had, have they had a course of pain management, have they been counseled about weight loss. This lengthens the time between a physician and patient agreeing they need a knee replacement and actually being able to get it done. That’s what we’ll see in the future.


Q. What about Gov. Rick Scott’s proposals to cut state Medicaid payments? It’s a perfect storm. At the same time the federal government is reforming healthcare, we’ve got the state government reforming Medicaid. All of it results in less reimbursement, particularly to the kinds of systems like us, which provide 90 percent of Medicaid care and 60 percent of uninsured care in the region. In Massachusetts, some of the health systems that provided the majority of safety net care went bankrupt, and they had to have a state bailout.


Q. Could Sarasota Memorial be bankrupted by these rules? We’ve had a $5.5-million reduction in Medicare reimbursement and an almost $4-million reduction in Medicaid. The state is proposing an additional $3-million reduction for Medicaid. That gives you an idea what we’ll face in the future.


Q. What other possibilities would you predict? The positives would be less hospital care and more outpatient and home-based care. There’ll be more people taking responsibility for their health because they will have a substantial reimbursement of out-of-pocket costs [such as immunizations, preventive care for infants, various screenings].

More physicians will need to have electronic records to connect them with health systems. There will be fewer small groups of physicians because of that. Physicians coming out of residency programs today are either directing towards nonprimary care like pathology, radiology or dermatology, or they are being employed by hospitals. We are not seeing anybody trying to set up a one-person practice, because they have to balance their reimbursements with costs of running their business.


Q. What should local businesses be considering? You are going to want to incentivize healthy behaviors. We just put in an employee gym. We are also looking at a preference toward nonsmokers in hirings. Those are the kinds of things businesses will turn to.

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