Posted on September 18, 2006

Albany Med chief calls for hospital reform and single-payer system


The Business Review (Albany)
September 8, 2006

As chief executive officer of Albany Medical Center, James Barba has a unique perspective on the health care industry both regionally and nationally. What he sees is a broken system in which costs are rising and competition is increasing, with no cure in sight.

That has led Barba to the conclusion—unpopular with many—that universal, government-run health care is the only solution.

Barba recently sat down with Business Review reporter Barbara Pinckney to share his thoughts and ideas on the future of health care.

What is your general view of the health care system?

There is no American health care system. What we have, at best, is a loose configuration of various interest groups who even when they operate in absolute good faith—and I think, for the most part, they do—cannot bring sense, order or rationality to what we call American health care and what I refuse to call an American health care system. You can’t make it a system. I think that’s the bottom line.

What’s the answer?

Well, I think the answer lies in understanding the problems. And even once one does that analysis, I’m certain that many will not agree with where I come out on it, because I think you can come out in a couple different places. But I think, after you analyze the problems, I break them into two convenient categories: the problems of cost and the problems of constituencies. Why can’t we control the costs? Why are the costs running away? Two trillion dollars in 2005. And who are the constituencies of American health care and why have we not been able to align their interests and their goals?

I come out and say that what we have now is a market-driven system and it has failed us terribly. And the opposite of that is what I think we will inevitably move toward, and that is a regulated system. So once I make that leap—based, I hope, on decent analysis—the answer is you have to look at the government and say “What is its track record in delivering health care? What might we reasonably expect in the future? And can it work?”

Is universal health care a realistic possibility?

Is it realistic that we might have a government-run system? It is. In the end, I think it’s going to be the only practical answer.

I always like to start an explanation of that answer by pointing to the Medicare system. Medicare has been around for 40 years now. It is, I think, universally regarded as a good system for delivering health care to people 65 and older. Not perfect, but we’ll never have a perfect system. The cost for administering the program is 3 percent—the cheapest administrative cost of any health care payer in the nation. So the federal government—the bureaucracy, if you can believe it—spends 3 cents on administering Medicare and 97 cents on actually delivering health care, both in the hospital and through physician payments. That’s extraordinarily efficient. If we could replicate that efficiency in a system that was national, I think we would have achieved something. We actually will have created an American health care system.

What’s kind of interesting to me—and I like to just sometimes theorize about what we could have done and what we can still do, I guess—we have this Medicare system which covers everyone 65 and older. We have in New York state Child Health Plus, but there’s a similar program in virtually every state of the union which covers those 18 and younger whose families meet certain income criteria. If we had started, let’s say, 15 years ago when the Clintons were trying to “reform” health care, to “up-age” Child Health Plus and “down-age” Medicare [and had] taken off two years in each direction in each of the last 14 years, we’d be there by now.

And I guess once I get to that point I say well, OK, the last 15 years have not been wasted; they’ve just taught us, I think that we are not going to solve the problems of costs and constituencies by doing more of the same. It only gets worse. So why don’t we start now and start “up-aging” Child Health Plus and “down-aging” Medicare and see when they meet in the middle, and that analysis will be a matter of how much we can afford it.

Would you like to see the whole private payer system—the Blues, the HMOs—done away with?

Well, they’re going. I don’t know how we can justify a payer system with hundreds, if not thousands, of insurance companies, each one of which has a completely different set of rules for what it will pay, and who it will pay, and how it will pay, and when it will pay, and why it will pay, etc. That replication in and of itself costs hundreds of billions of dollars every year. If we could do away with it all, all of that waste, and just concentrate on a single payer with a single set of rules, and everyone understood what they are and knew what was covered and what wasn’t, some experts estimate that we could save between $300 billion and $400 billion. That’s a lot of money!

As I’ve thought about it, the best I can come up with is transitional roles for [the insurers], having them continue to serve the role that they serve as we go to a single-payer system. We’re struggling under the weight of all these extraneous costs. I don’t want to leave myself, the hospitals, out because hospitals add to it as well. We just happen to be talking about the HMOs right now. But, ultimately, I don’t see any role for them. I know that’s not a popular position but my prediction is it is one that we’ll get to.

Would the role of the hospitals change?

I think in terms of hospitals, we have to take a hard look at ourselves and ask a couple of fairly fundamental questions. One, do we need as many hospitals as we currently have? And the answer to that is “No, we do not need as many hospitals as we have currently throughout the country.”

And second, is there a way to more intelligently design a hospital delivery system than the way we’ve designed it now? Why is it that hospitals in any given region—and I’ll use this one because this is the one with which I’m most familiar—why is it that we’re engaged in an arms race, for example, a technology arms race? [Albany Med makes a purchase and] predictably that will set off in the board rooms and CEO offices of other hospitals in the region the conversation that says “Do we need a new X type of scan or Y type of scan? Albany Medical Center is going to do that and they’ll get ahead of us competitively.” All of that adds unnecessarily and wastefully to costs.

Now, why can’t I just sit down with my fellow CEOs and agree to divide up the market so we don’t do it that way? Albany Med does one thing and St. Peter’s does another? The answer is because we’d all go to jail. That violates the federal anti-trust laws. We cannot do it and so, there again, if hospitals are to be reformed we’re going to need some guidance from the federal government as to how we can intelligently design the services that are being offered. We can’t do it without some help from Congress because it’s all illegal otherwise.

On a statewide level, what are you hoping to see from the Commission on Health Care Facilities for the 21st Century?

I’m hoping to see a sober, analytic document that speaks about what we should be doing vis-à-vis the hospitals in the state. Apparently, from what I read, if the next governor is Eliot Spitzer—and it appears sitting here today it’s going to be—he’s made some statement, I believe, that he’s not going to be bound by that report, and that’s understandable. The question is, can the report in and of itself have sufficient gravitas, or weight, so that even a new governor and a new administration will have to say, “This is pretty important stuff and while we may not want to implement every last recommendation, we have to take it seriously because serious people spent a lot of time thinking and listening and analyzing and came up with these conclusions.” So I think that’s the best thing we’re going to get out of the commission’s report.

What keeps you awake at night?

There is one thing I worry about. As I think most of the country now understands and appreciates, we’ve been working with a nursing shortage for at least a half-dozen years. But I don’t think the public is yet appreciating that there is an impending physician shortage and that shortage is going to happen at the worst possible time in the history of this country, namely at a time when that huge demographic—the baby boomer generation—is moving into an age when they are going to require more and more medical assistance.

The Association of American Medical Colleges for quite a few years was saying that it did not see a physician shortage coming and then, maybe six months ago, it just changed its mind and said, “Yes, in fact, it is going to happen and we’re asking the 125 medical colleges over the next 10 years to increase their enrollment by 30 percent.” Leaving aside the virtual impossibility of just overnight increasing class size by 30 percent, the underlying issue—a physician shortage at a time of enhanced demand—is going to be something that could cause some real dislocation in American health care and it provides another reason for us to try to create something more rational than what we have currently.

What in the health care system gives you the most hope?

There are tremendous bright spots. Look at this medical center. We call it an academic health sciences center—the only one in the region. Ten years ago when I became CEO, I said—and I think people thought I was exaggerating—”This is a place where miracles are performed every day.” I wasn’t exaggerating then and I’m not exaggerating today. I think the statement is more pertinent and more accurate today than it was 10 years ago.

We do wonderful things with science and with medicine to treat conditions that were either totally untreatable and terminal only a decade ago, or that were chronic and wasteful and now they are no longer.

Take a look at the work, for example, that we’ve done with AIDS. I‘m very, very proud of the role this specific institution has played with that particular disease. We worked with the science a dozen or more years ago—the protease inhibitors—and now, by and large, these new medications and the treatments that were developed here and elsewhere, and delivered here, are turning what was an absolute death sentence, by and large, into a chronic disease.

We could go down the list: Look at the transplant programs, look at the advances in childhood cancer; those are all good-news stories.