You have to spend money to save money. On the face of it, that statement is counter-intuitive, but it's why the government has pumped millions into programs such as Meaningful Use, interoperability efforts, health data privacy and security and healthcare quality improvement.
Well, the sequestration cuts that go into effect today for some healthcare agencies and programs will allow the healthcare industry--and the government agencies that regulate and promote it--to test an alternate theory that sounds much more plausible: To save money, you have to spend less money.
Although across-the-board sequester budget cuts began on March 1, federal agencies still are calculating and implementing those cuts. The Office for Civil Rights, the unit within the U.S. Department of Health & Human Services responsible for HIPAA enforcement, has yet to determine the impact on its budget, although it's pretty clear those cuts will hamper privacy and security efforts.
At the Office of the National Coordinator for Health IT, sequestration cuts will amount to about $3 million out of its $60 million annual budget. National Coordinator for Health IT Farzad Mostashari told the press at the Healthcare Information and Management Systems Society's annual meeting in New Orleans that the sequestration cuts will have a direct impact Meaningful Use, a program that typifies the philosophy that spending money today on health IT systems to improve care and improve efficiency will cut costs down the line.
The long-dreaded 2 percent cuts to Medicare payments, expected to cost some hospitals millions of dollars a year, also go into effect today, as does a 2.2 percent cut to Medicare Advantage insurers.
Personally, I'm in the spend-to-save camp. It's why I put extra money on my mortgage payment every month--it costs me more in the short-term but will save me thousands in interest over the life of my loan. And with the real estate market in the crapper and my house worth less than when I bought it in 2009 just before the economy took a tumble off a different cliff, I need to spend that money today to save money tomorrow.
To me, it's the responsible thing to do.
(On the other hand, I've also been known to buy stuff I didn't need because it's on sale--a slightly less responsible approach to the spend-money-to-save-money approach, and the reason I own about a dozen pairs of black shoes.)
So which approach better defines responsible healthcare spending? Spend to save? Or cut to save?
We've been moaning for years that healthcare is too expensive, that we need to cut costs, be more efficient and move from a system of expensive sick care to a more sustainable system of wellness and preventative care. In effect, the sequestration cuts--love them or hate them--do that today.
But here's an interesting twist to the sequestration story: Although sequestration triggered $11 billion in cuts to the Medicare program and 2 percent cuts to Medicare payments, many hospital CFOs are saying they can cope with reimbursement cuts ... for now, at least.
In Zanesville, Ohio, the Genesis Healthcare System projects it will lose $900,000 in payments for the remainder of 2013, and $1.2 million over 12 months, according to FierceHealthFinance. But because Genesis is considered the sole community provider, its actual reduction will be about 1 percent.
"Any cut is kind of a big deal, but is it a game-changer? Does it change our future strategic plan? No," Genesis Chief Financial Officer Paul Masterson said. "It does create an issue for us that we need to continue to be focused on, reducing our internal costs, which we have for years."
In other words, Genesis plans to save money by cutting costs.
It's so crazy it just might work.
What do you think? Can we weather the sequester and come out stronger and more fiscally fit in the end? Or is failing to invest in health IT and other programs to improve healthcare quality simply a bad investment strategy? Perhaps there's some middle ground, here. Perhaps we all just need to stop adding to our collection of black shoes, even though they pretty much go with anything. Click that comment box below to weigh in. - Gienna (@Gienna and @FierceHealthIT)