Message from the CEO
The Economy, Healthcare Reform and SCCM
David Julian Martin, CAE
CEO/Executive Vice-President
Society of Critical Care Medicine
Typically, the macroeconomy does not have an immediate effect on the healthcare market. However, as the economy struggles to recover from the housing crisis and relatively high commodity costs, as well as staggering investment losses and severe reductions in charitable giving, this prolonged, worldwide recession is taking its toll on healthcare.
The cascading effect of the economic recession has an impact on employer healthcare benefit plans and the level of care patients seek, prompting some to delay treatment or leave hospital bills unpaid. Intensive care unit beds remain filled, while the lucrative portions of hospital businesses that usually offset the high costs of critical care are suffering. Further, hospitals that fund parts of their operations with earnings from endowments and other investments no longer have this revenue stream. For example, Shriners Hospitals for Children in Tampa, Florida, is considering closing one-quarter of the hospital system's facilities permanently. Academic institutions, such as The University of Texas, also are feeling the investment pinch. “It doesn't matter what you're invested in,” said Robert B. Rowling, a regent for The University of Texas and chairman of The University of Texas Investment Management Co. “It's been an [investment] meltdown.”
How big a part of the economy is healthcare?
In the United States, healthcare accounts for about onesixth of the entire economy – more than any other industry. Spending on healthcare totals about $2.5 trillion, 17.5% of U.S. gross domestic product (GDP) – the measure of the value of all goods and services produced in the country. That's up from 13.8% of GDP in 2000 and 5.2% in 1960, when healthcare spending totaled just $27.5 billion – barely 1% of today's level, according to the Kaiser Family Foundation, a nonpartisan health policy group.
Employment in the U.S. healthcare sector has grown by about 427,000 jobs – nearly 3% – since the recession began in December 2007. In April (the latest month for which figures are available), the U.S. Bureau of Labor Statistics reported about 15.5 million healthcare jobs. Most of the increases came in ambulatory care services (up 254,400 jobs) and hospitals (up 148,400 jobs).
However, only 42,900 new jobs have been added in the United States since January. The steady growth in jobs in ambulatory care and hospitals has slowed dramatically over the months, with hospitals adding only 7,700 jobs as the effects of the recession became apparent. Previously unthinkable, some hospital workers (including nurses, physicians and other professionals) now find themselves temporarily furloughed or unemployed.
How will U.S. healthcare reform impact critical care?
President Barack Obama and Congress are trying to reduce the growth rate of healthcare spending by eliminating waste and fraud, improving efficiency and increasing preventive care. It’s unlikely healthcare jobs will decline. In fact, more caregivers will be needed to care for the aging population and the millions of previously uninsured Americans who may obtain coverage under healthcare reform. These patients presumably would seek care more regularly. Drew Altman of the Kaiser Family Foundation called healthcare “one of the few engines of job growth during the recession,” and this growth likely will expand under any version of healthcare reform.
The three committees with healthcare jurisdiction in the House of Representatives – the Ways and Means, Energy and Commerce, and Education and Labor committees – released a revised healthcare reform bill on July 14, 2009. The legislation, which was being debated as this issue of Critical Connections went to press, calls for creating a national health insurance exchange that would mandate coverage for individuals as well as employer contributions. It also aims to reset Medicare's flawed sustainable growth rate formula to eliminate the accumulated debt that is undermining physician payments. The bill would set the 2010 Medicare fee schedule update at the Medicare Economic Index. Beginning in 2011, it would establish two new expenditure targets, one for evaluation and management and preventive services (including critical care), and a second for all other physician services.
While such reforms likely will spark job growth, the issue has put healthcare under the proverbial microscope; intense scrutiny is being paid to quality of care. In the high-risk arena of medicine, mistakes are very costly. Providing safer, more efficient care by following evidence-based and best practice guidelines is being endorsed at all levels. Families and patients now are selecting hospitals based on the facility’s ability to demonstrate a combination of positive outcomes at lower costs. These care seekers know that paying the hospital bill may become their personal responsibility. Considering these healthcare market dynamics, it isn’t surprising that quality and safety are very high on everyone’s agenda from the government, to payors and hospital administration, to the consumer. Doing with less only works when the proper systems are in place to ensure that the Right Care, Right NowTM is delivered the right way.
Money paid by industry to support continuing education activities for healthcare providers also has been criticized heavily. Ongoing congressional inquiries about perceived improper influence of pharmaceutical and device manufactures over healthcare associations, coupled with the economic impact on the industry, have caused dollars used to support continuing education and quality improvement activities to recede. This has had an impact on the development of new programming as well as participation in activities that may have been fully or partially dependent on industry support.
How is SCCM responding to the current economic climate?
Like everyone else, the Society of Critical Care Medicine (SCCM) has seen the effects of these various economic factors. Fortunately, the SCCM leadership long ago adopted a conservative financial model so that, during times of uncertainty, operations may continue relatively undisturbed. For the fiscal year ending September 2009, we anticipate modest net revenue from operations and investments. We do not anticipate using any of our reserve funds during this challenging economy. However, we are making changes to the future programming lineup in an effort to adjust to this environment. We are working hard to ensure the organization remains financially sound into the future.
In response to reductions in industry support (exhibits, advertising sales, sponsorships, grants, etc.) coupled with declines in meeting attendance, SCCM soon will launch a series of live, online webinars that will continue to address members’ needs. Survey data suggest that members continue to look to SCCM for the latest knowledge but need to access that information without traveling. In addition to the webinar series, a new version of the Society’s online learning center, www.LearnICU.org, will debut in the second half of 2010. These new learning forums will offer members a substantially improved ability to find clinical information and tools when they need them, to enjoy interactions with colleagues with similar interests, and to plan, manage, and participate in continuing education in a single place that is always accessible.
Thankfully, SCCM membership continues to grow even during this challenging period, albeit at a slower pace. As we remain committed to exceeding member expectations and investing in an array of benefits important to critical care providers, we look forward to an economic recovery, but also to a new paradigm in which critical care and SCCM will continue to flourish.
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