Growth Versus Cost: Two Horns of the Healthcare Dilemma

Healthcare alone represented 10 percent of all new jobs created last month. In the current economy, one would think that’s a good thing.  However, writing in the New York Times Healthcare blog this month, author Lisa Suennenidentified that fact as one horn of a big healthcare dilemma.

She observed that while the constant creation of new healthcare jobs is vital to our economic recovery, spiraling healthcare costs are cited as a key factor in the potential collapse of our economy.

“In his NEJM article,” she writes, “Bob Kocher cites a McKinsey Global Institute study that says that for the United States to return to full employment, as many as 22.5 million jobs would need to be created, with 5.2 million, or 23%, in the health care sector.”

“In other words, make healthcare more efficient and we blow our job creation plan. Let a million healthcare jobs bloom and we will have built a healthcare cost monster that will crush us for sure.”

Ms. Suennen has a dog in this fight. She’s a founding partner of Psilos Group Managers, a venture capital firm focused on innovative companies which reduce healthcare costs, improve the quality of care and align incentives across payers, providers and patients.  Even as an industry insider, her perspective is refreshing.

In many communities, healthcare is the primary job provider. She thinks this is one reason that hospitals are reluctant to adopt technology which can make them more efficient.

“Everywhere on earth employers know that the fastest way to improve profitability is to get greater amounts of work done with the same or fewer numbers of people,” Ms. Suennen says.

“Yet in healthcare we have not quite got the message. For every healthcare IT entrepreneur building an analytics tool to reduce unnecessary care or expand the number of patients one caregiver can treat, there is a hospital cutting a ribbon on a new wing.”

While her one-for-one example may be extreme, we have said many times in this column that automated capacity management, like the kind offered by TeleTracking’s Real-Time Capacity Management™ solutions, is a much more economical alternative to new construction. It also has the advantage of giving hospital personnel more time to spend with their patients, which is one of several ways that good capacity management can have a positive impact on the quality of care, as well as the level of reimbursement under the Affordable Care Act.

The economics of automated capacity management are clear. It’s a win-win for employees, hospital management and patients. We can cut costs dramatically. And with our aging population, the likelihood is that healthcare will remain a strong source of new jobs for a long time to come.