GOP ‘replacers’ talking to wrong people

Tom Price

Tom Price, Secretary of the Department of Health and Human Services

Republican leaders, who now have to walk the talk on replacing Obamacare, are searching for answers in all the wrong places.

They talk to lobbyists for big insurers and big hospital corporations, the behemoths who were there all along as health costs exploded to $26,500 per U.S. family. These big players are not reformers. They are hip-deep in the busted business model that spends nearly 20% of GDP on health care.

The GOP leaders talk to their staffers, who have never managed anything.

They talk to academics and researchers, who know a lot of theory, but have never paid the bills.

The people they don’t talk to are their constituents who pay the nation’s bills, namely the managers of private companies who shoulder the big majority of health costs at their organizations and pay the taxes to support public health care.

At the end of the day, all margin in heath care and all taxes come from private employers, either directly or indirectly through taxes on wages they pay out. Why not talk to the payers?
They also don’t talk to the innovators on the economic side of health care. These disruptors are not inside the beltways of Madison or Washington D. C. Many are here in fly-over country.

So here’s an invitation to Tom Price, the new Secretary of the Department of Health and Human Services, Speaker Paul Ryan and their GOP allies:

Come to Wisconsin and meet these innovators before you “replace.”

• Meet Eric Haberichter, who is rapidly changing the chaotic world of health care pricing by introducing a broad range of bundled payments. His new Milwaukee company, Access HelathNet (disclosure: I am an investor) presents all-in, fixed prices on more than 1100 medical procedures and treatments. His disruptive business model ends the deliberate camouflage on medical pricing. It’s a silver bullet that the “repeal and replace” crowd needs to understand and incorporate.

• John Toussaint, MD and former CEO of ThedaCare Health in Appleton, the evangelist who is leading the charge for introducing lean disciplines into the health care industry. He has proven that the lean concepts that have transformed global manufacturing can also drive out waste, defects, infections and costs at hospitals and clinics. The GOP reformers must insist that hospital corporations go “lean.”

• Don Weber, CEO of Logistics Health in La Crosse, who offers a comprehensive primary care and wellness center on-site to 1200 employees. Such centers could keep employees everywhere out of expensive hospital systems, except when specialists are really needed. His model is the ultimate in cost control.

• Dr. Rory Wright, an orthopedic surgeon and innovator at the Orthopedic Hospital of Wisconsin (OHOW), one of the top ten bone shops in the country. OHOW has such predictable outcomes and low infection rates that it warranties its surgeries. There are no charges for readmits. Wright, who holds an MBA, espouses lean concepts that put the voice of customer ahead of all other voices. Its $28,000 bundled price for joint replacements is 40% below the regional average. That is what cost control looks like. Thus is rampant medical inflation defeated.

• Vallie Elliehausen, COO of the West Bend School District, who has led its unionized workforce to become better consumers of health care. The district spends about $12,000 per employee, far below most districts where costs often exceed $20,000. Elliehausen uses all the tools in the new business model for the delivery of care. Her union now understands that bloated health costs stand in the way of raises, improved programming and full teacher ranks. Its on-site clinic headed by a physician’s assistant, has proved popular. Elliehausen deploys a deep set of metrics for population health and costs to attack unwarranted costs at every at every turn.

• Mike Brady, the former benefits manager for the City of Milwaukee who convinced nine unions to switch to a consumer-driven plan and to a free primary care clinic. Health costs went dead flat for five years running. Against trend, Brady estimates that the city is saving $100 million per year. Now, that is major league cost containment.

These innovators are pragmatic managers who have pushed cost control and value-based health care at the ground level.

They know about management, a foreign concept inside the beltways.

I stand ready to introduce GOP leaders to these smart operators who deal in management science, not politics.

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  • jim Lenfestey

    John – Wonderful piece, Some one of your readers must have contact with Ryan’s office, Ryan should proudly send a posse to investigate the good practices your describe. Bu tI wouldn’t sanguine about Price, an ideologue from the fat fee-for-serive era.

    • JohnTorinus

      Your skepticism is mine.

  • Denny Caneff

    John, I cited this blog post in a letter I’m writing about health care policy to Sen. Ron Johnson. Expect a call from him any day. (Hah!) Thank you for continuing to provide sensible yet voice-in-the-wilderness ideas and commentary on the health care mess. Signed, a new and worried “customer” of Obamacare.

    • JohnTorinus

      Progress to new business model is rapid — in the private sector and local government. The big boys love the busted model they created.

  • Bill Kraus

    I hope Paul Ryan reads your posting. He seems to have a lead oar, may even be Coxswain, of this boat

    • JohnTorinus

      I read his “Better Way” carefully. It has some good stuff, but not much on cost management.

  • Tanya Lohr

    John, I am the President of the West Bend teacher’s union and I can assure you that OUR union is rarely on board with the unilateral decisions made by Ms. Elliehausen. To paint her as the leader of a unionized workforce who has earned the trust and understanding of its leaders is a gross misunderstanding of the situation at hand.

    • JohnTorinus


      Clearly, you are in an adversary position with the district’s administration. I understand that.

      And I know that under Act 10 you cannot bargain for benefits any more.

      Still, it is a good thing that your teachers have a full benefit plan, with a premium much lower than in the private sector. Bloated health costs help no one.

      And it s a good thing that the health costs per employee come in way under where they were before the West Bend District grot smart about hanging the costs.

      There is an inverse relationship between pay and benefits. If benefits are out of control, wages suffer.

      • Tanya Lohr

        Act 10 does not require that Human Resource directors have an adversarial relationship with teachers and their union. That is a personal choice, as evidenced by the number of school districts whose Human Resource directors choose to have a positive relationship instead. Your choice to paint Ms. Elliehausen as working with teachers and their union is what I question, not your statements on health care. Teachers should be able to speak for themselves, rather than have words put in their mouth.

  • Joseph Kaylor

    John, you will be waiting a long, long time if you think the GOP leaders have any interest in resolving the high cost of health care. They prefer party over country ( do you?) and it’s time to make a personal decisions. The GOP is a bunch of spineless, greedy, corrupt, opportunist that have had over seven years to articulate their ACA solution. They don’t have a plan- are you just delusional? I don’t care who gets the credit for improving the ACA but the game has to stop by voting this spineless group out of office. How are those phone calls from GOP leaders going?