Healthcare’s Challenge: Cut Costs But Still Meet Demands of Aging Populace

Andrew Kitchenman | June 2, 2014 | Health Care
Efficient use of highly trained professionals may help offset need to hire more workers

Virtua Health President and CEO Richard Miller; Dr. Lisa M. Biggs, associate chief medical officer of the Children’s Hospital of Philadelphia; and NJ Healthcare Quality Institute President and CEO David Knowlton.
The focus in healthcare has shifted to finding ways to reduce costs while providing the best possible medical services.

But other shifts – in demographics, and in the way those medical services are provided – may require doing something that usually drives up costs: hiring more people to meet the increasing healthcare needs of a more-insured, older population.

Panelists at a recent conference suggested that finding efficiencies – such as having qualified but lower-salaried nurses performing tasks sometimes done by doctors – could be part of the answer.

Health policy experts predict a move away from having highly trained professionals performing tasks that don’t require their level of training. But they say this will pose a fundamental challenge as a growing retiree population will depend on services provided by a relatively smaller workforce.

Former Gov. James Florio recently prompted a discussion of the issue when he noted that most businesses that invest in information technology and other capital costs like hospitals and doctors’ offices usually offset those investment costs by lowering labor costs. He raised the issue during a recent conference focused on the shift from providing healthcare from inpatient hospital settings to outpatient settings.

Government officials have been asserting “that the jobs of the future are going to be in ‘eds and meds,’ ” Florio said, referring to the education and medical fields. “So therefore, we’re going to be expanding the workforce, we’re going to need new people,” such as social workers employed by accountable care organizations.

Florio pointed to the dilemma posed by the rising costs of hiring more workers and the need to limit costs while healthcare organizations invest in technology.

Florio is a board member of the New Jersey Health Care Quality Institute, which hosted the discussion.

Judith Persichilli, who recently retired as president of Catholic Health East-Trinity Health, said the healthcare system in the future will depend more on advanced practice nurses, clinical nurse specialists and other similar providers.

They will be “working to the top of their license,” performing the maximum duties that they are trained to perform rather than doing tasks that don’t require their training, she said.

However, Persichilli said that in the long run, if the healthcare system succeeds in keeping people healthier, “you won’t need as many of us clinicians.”

Dr. Lisa M. Biggs, associated chief medical officer of the Children’s Hospital of Philadelphia, gave the example of doctors advising new mothers on basic nutrition issues for healthy infants, when a nurse could provide that information.

“If you take a look at the jobs that people are doing in a given office, they are frequently performing roles that could be done by someone at a lower level of training,” Biggs said. “It’s often interpreted that if you have a higher-level trained person doing it, it must be better care. But, in fact, that isn’t necessarily true.”

Even with increased efficiencies, healthcare economist Uwe Reinhardt said the workforce will be stretched to cover the needs of an aging population.

According to the U.S. Social Security Administration, the number of workers per retiree will fall from 2.8 currently to 2.1 in 2033.

“Healthcare, if it stays as labor-intensive as it is today, has to compete for that smaller labor force,” said Reinhardt, a professor with Princeton University’s Woodrow Wilson School of Public and International Affairs. “And the only thing that could possibly bail us out, is that all other sectors – Home Depot, airlines, etc. – so squish labor out with computers that most workers work in healthcare, and everything else is run by computers.”

Reinhardt said he doubted this would occur, noting that there is an increased interest in labor-intensive services

“My argument to the venture capitalists is, you’ve got to have labor-saving devices in healthcare – for example, where you could monitor elderly people with wrist watches,” Reinhardt said, noting that while some of this is already being done, it could be expanded greatly.

Institute President and CEO David Knowlton recounted a discussion with healthcare investors in which they predicted that 80 percent of what doctors do today will be done by computers in the future.

The discussions ranged into areas other than the workforce in which costs can be lowered.

New hospital designs are helping to achieve efficiencies, by allowing fewer workers to cover more area, according to the experts. But new buildings also feature wasteful costs. Persichilli noted that European hospitals rarely have grand lobbies with eye-catching design features.

“I agree that we should have new hospitals — they should be efficient,” Persichilli said. “I think that they should not waste space and time and all of these amenities that have nothing to do, nothing at all to do, with having to take care of patients.”

Reinhardt said the public would benefit from knowing how much their premiums rise when insurers agree to pay hospital systems that have built new buildings. He described the secrecy of negotiations between hospitals and insurers over the financing of hospital construction as “unseemly.”

Biggs noted that one proposed strategy for reducing expensive treatments is to increase the coordination of patient care. Hiring workers who coordinate care can lower the cost of patients with a high risk of frequent hospitalizations – like those with chronic diseases. But the financial benefits of investing in care coordination don’t appear to be as great for low-risk patient populations, she said.

Virtua Health President and CEO Richard Miller said it’s necessary that patients take responsibility for their own health through improved diet and exercise. He noted the unhealthy fare he witnessed during a recent trip to a boardwalk in Ocean City.

“At some point, the consumer has to take ownership of nutrition and their health,” Miller said. “It’s obscene, when I walk the boardwalk, what people are eating. That has to change, and the consumer has a role in this, frankly.”

Miller also said that making hospitals more accountable for their costs, quality and safety also is a necessary step.

Biggs noted the challenge of measuring the quality of the care delivered by pediatricians, when some of the largest ways that they can affect the health of patients – like emphasizing the importance to parents of providing a healthy diet – won’t show up in the child’s health for 70 years. But she added that doctors are eager to take steps to improve the quality of the care they provide patients.

Florio said after the conference that while the discussion raised important issues, the panelists didn’t resolve the basic conflict between the message that public officials have been sending that there will be more healthcare jobs and the emphasis within healthcare on reducing labor costs.