Much public union strife unnecessary

A horrendous misunderstanding about health benefits, prevalent across America, is contributing mightily to the bitter polarity in American politics.

Republican leaders, like Gov. Scott Walker of Wisconsin and the mayor of San Diego, and the Democratic mayor of San Jose as pushing cost increases for health care onto their public employees. A better balance to the contributions of public employees and taxpayers is in order, but much of the cost shifting doesn’t have to be.

What the political leaders and public union leaders fail to grasp is that the problem of health cost hyper-inflation is caused by mis-management — not by undue health coverage. Fixing the bloated health cost budgets is all about management science, not political science.

Managers and executives in the private sector — absent from the health care dynamics for decades — are now engaging full force, and they are flat-lining the costs in their companies.

They have concluded that the old business model for the delivery of health care is totally busted, and they are rapidly putting together a new one.

Deploying change management theory, they have given up on jaw boning the entrenched interests in the $2.7 trillion healthcare industry. Instead, they are starting with a clean sheet of paper and they are going right around existing provider and insurance structures.

As they embark on disruptive innovations, they are finding mandates under the new federal health care law irrelevant. That’s ideological political science, the the work of wonks, idealists and advocates of top-down management.

Here are just a few of the bottom-up reforms that are bending the cost curve — company by company.

* They are taking back the front end of of the healthcare supply chain from the vertically integrated medical systems. They are hiring their own primary care doctors and installing on-site clinics. They now employ the gate-keepers to the expensive systems. Public payers can do the same. Savings are 20-30%.
* They are putting incentives and disincentives into the health plans — high deductibles offset by postal health accounts. A few public payers have joined this stampede. Savings are at least 20%.
* They are seeking out lean hospitals and doctors, because they have learned there is an inverse correlation between between quality and price. A cheaper coronary bypass is better than a high priced operation. Savings from lean providers are more than 30% on elective procedures.
* They have installed proactive preventive care and chronic disease management, thereby cutting hospital admissions by 30% to 50%. As costs go down, productivity rises and absenteeism drops.

In short, government leaders don’t have to gash their employees. They just need to manage better. And the unions and their employees have to abandon their resistance to change and collaborate.

Obviously, very obviously, judging by the bitterness of the Wisconsin and California confrontations, adversarial models no longer work. They are bankrupting government entities, and they are ineffective as solutions to problems.

Here’s the ultimate irony: the new, less costly business models are superior for everyone, including the taxpayer and the employee. They are better health plans because they 1. lower unsustainable costs, and 2. keep people healthier. Benefits are not cut; only costs are. Benefits actually improve.

Is that so hard to understand?

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