Economic Development 2.0 recognizes that all the tax breaks in the world are dwarfed by differences in healthcare value from one community to another. After payroll, the largest cost for most industries is healthcare benefit costs. Just as manufacturers shift production to low-cost manufacturing centers, it is no surprise that large employers are beginning to shift from thinking about healthcare as an employee benefit to a large cost driver that will impact their profitability, and searching out locations with high value health centers. For instance, IBM recently made a decision as to where to locate 4,000 new hires based on their analysis of where they received the best value from their healthcare dollar. With wide cost differentials, some are now holding CFOs and CEOs to task if they fail to shift to models that are proven to save money while maintaining or improving health outcomes and patient satisfaction. This is a scary prospect for communities that are high-cost locations for healthcare. Communities wooing corporations can no longer just throw some tax breaks their way -- they must make sure their health care infrastructure provides the best value. Conversely, communities with expensive healthcare have what amounts to a healthcare “tax” that will push businesses away or, at a minimum, impair their bottom line. MacArthur Genius Grant winner Dr. Jeff Brenner spoke about the “tax” issue in a recent interview: " One of the problems is that we have...this giant bond market called the hospital bond market that’s considered very secure, very safe, [a] good investment. And...that bond market has floated too much hospital capacity and created and brought online too many hospital beds, far more hospital beds than we need in America." Health system CEOs admit that there is at least a 40% over-capacity of hospital beds in America yet some communities still allow for more and more building of healthcare facilities despite there being no evidence that it will improve outcomes -- and to the detriment of education, structural infrastructure, and other basic services. “The healthcare problem is the No. 1 problem of America and of American business. It’s the tapeworm, essentially, of the American economy, and we have not dealt with that yet.” – Warren Buffett As a recent Harvard School of Public Health report pointed out when studying 195 hospital closings, there was no discernible impact on outcomes when they closed. In countries that have shifted from a “sick care” model to one that is focused on health and well-being, more than half of hospitals closed while they have improved outcomes. As an employer providing health benefits to your employees and vital taxes to the communities you choose to operate in, you can flex your muscle by being part of the solution and making your voice heard -- while decreasing health care costs' impact on your bottom line. | “The healthcare problem is the No. 1 problem of America and of American business. It’s the tapeworm, essentially, of the American economy, and we have not dealt with that yet.” – Warren Buffett Here is a list of how forward-looking public officials are re-thinking economic development: 1) Public officials want to partner with healthcare leaders and corporate leaders who recognize that 80% of outcomes are driven by non-clinical factors. 2) “Buy Local” programs reflect that buying from locally owned businesses results in more dollars circulating in the local economy. Municipalities as employers and as trendsetters, which corporations can follow, are increasingly directly contracting for health services. For example, self-insuring rather than sending dollars outside the community to middlemen payors is one example. Another is directly contracting with locally owned surgery and imaging centers rather than with out-of-town owned health chains is another. The potential to recirculate dollars is enormous. 3) More generally, buying health benefits much smarter via the elements outlined in the Health Rosetta. With respected organizations such as PwC stating that more than half of healthcare spending is waste, it’s logical to rethink previous approaches. 4) Many hospitals are in high value real estate locations. Re-purposing hospitals for medical malls is one approach. Health system leaders often state that their businesses are “low margin” so they should be open to re-purposing. 5) Recognizing the point made by Dr. Jeff Brenner, cities do master planning and make permit approvals that should take into account that healthcare is a supply-driven market. Approving more healthcare build-out virtually guarantees an indirect “tax” on local citizens -- and employers. 6) The #1 cause of homelessness and bankruptcy are healthcare costs. Both issues have a profound impact on the economic vitality of a community and neighborhoods. 7) Primary care physicians (PCPs) are foundational to a more effective health system. It harms a well functioning health ecosystem to have PCPs locked into non-compete deals. 8) Proactive city leaders recognize great schools are one of the most important factors in attracting and retaining citizens. The school boards and unions should have common cause with cities and employers to slay the healthcare cost beast. The African saying that "it takes a village" applies. It will take a whole community, the employers in those communities, and the employees working for those employers -- it will take all of us to tame the health care beast we've created in America. We all have accountability -- and we all have power to make the change. Source: Dave Chase, Forbes, "Economic Development 2.0: Playing the Healthcare Card, 5/26/15, http://www.forbes.com/sites/davechase/2015/05/26/economic-development-2-0-playing-the-health-care-card/ |
RSS Feed
