Washington Report- May 31, 2011

May 31, 2011Hi All,The following is this week’s edition of the Dell Services weekly Washington Report.Information and updates in this report include:  Quote of the Week  Indicium Brevis- Ongoing snippets of information for your consideration…  The GOP’s Medicare Mess- Examining in three parts why the Republican Party has found itself in such a debacle over reforming Medicare and how they bounce back  At a Crossroads: Healthcare in the UK- An overview of the major healthcare issues across the pond  The Maryland Model? - Despite constant pushback by other states, Maryland has emerged from the healthcare reform debate as a model citizen. Why has “The Old Line State” been so successful at implementing these changes?  Health IT Roundup- A weekly digest of the latest health technology developments.Quote of the Week“I feel their strength and the strength of this community. Their strength is more than bricksand mortar, more than regulations, it’s something inside us.”Governor Jay Nixon of Missouri speaking about the community of Joplin, which wasdestroyed by tornadoes earlier in the week.Indicium BrevisOngoing snippets of information for your consideration…Health IT Spending to Top $40B – Furthered by increased spending on healthcare softwareand the gradual implementation of electronic medical records, America’s healthcareinformation technology industry is expected to reach $40 billion by the end of this year.While growing at a rate of 24 percent over the past two years, a new study by the marketresearch firm RNCOS indicates that the industry is booming at a faster pace than at anyother time. With further developments expected in smartphones, software, medical recordtechnology, and additional changes as a result of Congress’ health reform package, manyanalysts believe $40 billion is just the beginning.Optimism Linked to Surgery Success – In yet another example of how it’s always better tosee the “glass half full”, a new report in the Archives of Internal Medicine has shown thatheart surgery patients who remain optimistic that they will return to normal activitiesactually had a lower mortality rate. Led by researchers at Duke University Medical Center, the

study found that those who continued showing optimism had a mortality rate of 28.8 deathsper 100 patients while those who did not faced 56.9 deaths per 100 patients. Proving thatoptimism could be one of the most powerful drugs, it goes to show that we should nevergive up when facing a significant medical issue.The GOP’s Medicare MessExamining in three parts why the Republican Party has found itself in such a debacle overreforming Medicare and how they bounce backThe Issue – Representative Paul Ryan (R-WI), Chairman of the House Budget Committee,created his own budget proposal for 2012, which the House of Representatives has alreadypassed. In direct competition with the White House’s budget, the key features of Ryan’s planinclude changes to entitlement spending on Medicare, Medicaid, and Social Security. Inparticular, the modifications to Medicare have caused quite the commotion. Under theproposal, Medicare would become a system of vouchers where seniors could receive agovernment subsidy to purchase coverage on the private market through an insuranceexchange. According to the Congressional Budget Office (CBO), such a plan, at least onpaper, would help reduce the federal deficit by around 2030.The Problem – So while Ryan’s plan will in fact reduce the deficit, the real problem is that itis causing controversy, especially amongst senior citizens (a key voting bloc in elections).According to the proposal, the amount of money the government will deliver to seniors inthe form of Medicare vouchers will rise as inflation increases. But the key problem here isthat medical expenses have been growing much faster than the average inflation rate. Infact, figures released by the CBO indicate that by 2030 a 65-year-old will be paying 68percent of their healthcare expenses under this proposal due to the rapid spike in medicalcost. This has become a big problem for Republicans. Using the Medicare plan as a “wedgeissue” to build political support, Democrats won a special Congressional election in NewYork’s 23rd District while convincing voters that the GOP’s plan would be detrimental for theelderly. Then later in the week, adding insult to injury, the U.S. Senate (with many moderatesopposing the measure) voted 40-57 against the Ryan blueprint. Ryan himself said on Meetthe Press two weeks that his plan was a “blueprint” to “start the conversation” aboutentitlement spending and he wanted to negotiate with the Democrats and the White Houseover a long term budget and spending plan. But following both incidents, Republicans havefound themselves in quite a dilemma: how to continue pushing for the Ryan budget planand still win the “message war” over Medicare.The Solution – What we are now seeing throughout Washington is a classic “message war.”Democrats, sensing an opportunity, have attacked their colleagues over a somewhatcontroversial plan to reform healthcare for senior citizens. Republicans have clearly beenaffected by this tactic and need to dig themselves out of the hole they are now sitting in. Todo this, the GOP should come forward with a concrete plan on how to cut the cost ofhealthcare, rather than cut the cost of Medicare. Though the Ryan plan takes a serious stabat slashing how the government spends their money on providing Medicare, the proposaldoes little to actually adjust the cost of healthcare. While the Affordable Care Act has madeinsurance more available to millions of Americans, the GOP should focus on finding ways tomake healthcare less expensive. If they accomplish this, then Congress can make suchfundamental changes to Medicare without angering the elderly. Everything should be on the

table: tort reform, more generic drugs, and the purchase of insurance across state lines, etc.If either party creates a law that will actually bring healthcare back to the average level ofinflation, they will undoubtedly not only win the battle, but also emerge victorious in themessage war. The above mentioned proposal takes a long-term approach, so in themeantime, Republicans need to clearly and aggressively articulate how Paul Ryan’s blueprintwill help save the government money while defending themselves as a unified front againstpolitical attacks. Healthcare reform was the GOP’s “bread and butter” as it ushered them intoa historic midterm election last November. It is still possible that they can still recapture thismomentum, but they need to act fast before it is too late.At a Crossroads: Healthcare in the UKAn overview of the major healthcare issues across the pondHealthcare reform in the UK has been in limelight due to the ongoing debate aboutoverhauling the National Health Services (NHS), which has traditionally anchored the UK’shealthcare system. The Health and Social Care Bill, which was introduced to Parliament inJanuary, is currently tabled. This bill that calls for NHS reform proposes:  Shifting the responsibility of “commissioning” from Primary Care Trusts (PCTs) to General Practitioners (GPs)  Launching an ‘NHS Information Revolution’ to enhance clinical informatics  Promoting the use of “Shared Services”Huge public outcry and lengthy political debates on health reform have exposed theweaknesses of the UK’s first coalition government. The UK government has traditionallybeen amongst the frontrunners in encouraging private sector participation in the healthcareindustry. In 2003, when most EU nations had still not actively involved private healthcareplayers , the UK government engaged British Telecom and other service providers to create acentralized data spine and implement electronic care records. In 2011, this approachcontinues, with the UK government throwing open the door for competition between thepublic and private sectors as part of recently announced healthcare reforms.But the current proposal for more public-private participation within the healthcare industryis raising considerable conflict as the private sector will not just be enablers of technologysolutions for the public sector, but could also be actively involved in provisioning healthcareservices. In fact, NHS hospitals, private firms and GPs will now be competing for the samepatients. Plus, the rules capping revenues that public hospitals can earn from private patientswill be scrapped to create a more competitive market for private care.Additionally, the Commons Public Accounts Committee (PAC) has raised concerns aboutthe proposed healthcare reform, pointing out that the reorganization of the NHS takes thefocus away from achieving £20 billion in efficiency gains by 2014-15 essential to bridge thegap between flat funding and rising demand for healthcare. The efficiency savings expectedof individual hospitals to reach this goal is already on the rise. The Health Regulator Monitorreleased a letter to NHS foundation trusts on April 27, 2011, predicting that hospitals wouldneed to make efficiency savings of up to 50 percent, which was higher than previousprojections. This revision was made necessary because of higher than expected inflation

levels and has far reaching implications. For example, the Hull and East Yorkshire HospitalsNHS Trust has to make £95 million in efficiency savings by 2015. This means axing 300 bedsor reducing 2 wards every year till 2015!The UK government committed to drive these reforms, while ensuring £20 billion in"efficiency savings". However, after the public backlash against the proposed NHStransformation, the government announced in April 2011 that it is re-thinking its earlierreform proposal. While reformation of the system is clearly necessary, the present re-thinkaims at strengthening safeguards and implementing measures to ensure that suppliers donot only provide profitable services and that competition is based on quality, rather thanprice. The coalition government is discussing:  Measures to enhance transparency and increase GP’s accountability as they take on the commissioning responsibility  New clauses to ensure that payments match the complexity of treatment so that “lucrative” treatments are not preferred over others  Ways of implementing strict regulatory oversight by redefining the regulator’s roleJust goes to show the road to healthcare reform is rocky no matter where it is beingimplemented.Richard Strong is Healthcare Director for Dell Services’ in the UK and has more than 25 years’experience working in the healthcare and healthcare IT, both within the NHS and in theprivate sector. Having joined Dell (formally Perot Systems) in 2007, Richard has held anumber of senior roles. As Healthcare Director, he created and developed Dell Service’sHealthcare Consulting practice and is currently responsible for all aspects of healthcareservices in the UK.The Maryland Model?Despite constant pushback by other states, Maryland has emerged from the healthcarereform debate as a model citizen. Why has “The Old Line State” been so successful atimplementing these changes?The images have been permanently branded into our memories: thousands of people takingto the streets in protest of last year’s Affordable Care Act (ACA). While causing a commotion,the news media has covered these critics heavily since the law’s passage. From conservativeactivists to governors who have refused to participate in the ACA’s programs, it seeminglyfeels like everyone is against the health reform package. But in reality, this is not the case.The state of Maryland, who has followed the White House’s plans in near lock-step withrelative success, has emerged from the raucous demonstrations and pundits lambasting thechanges. Though they still have a long way to go, “The Old Line State” could serve as amodel to others trying to implement reforms while still keeping their state unified.First, it must be pointed out that the conditions for a successful implementation of theAffordable Care Act are perfect in Maryland. While other states are much more conservative,Maryland has not had a Republican senator since 1987, and six of the eight congressionalrepresentatives are Democrats. Meanwhile, even on the state level, both branches of the

legislature and the governor are Democrats. So, while the Maryland model is certainly anexample of a successful execution of the ACA, it should be noted that the trees were “ripe forthe picking.”Led by Governor Martin O’Malley, who is seen by many throughout Washington as an up-and-coming star in the Democratic Party, Maryland has successfully sold Congress’ healthreform package to their left-leaning constituents by explaining the law’s benefits. Whilerunning a focused outreach effort with strict message control, the governor and his teamconvinced his constituents that much good will come of the reforms. Aided by establishingthe Maryland Health Benefit Exchange, a new insurance exchange where state residents canpurchase affordable coverage options, Governor O’Malley has made strides to not only “talkthe talk”, but also “walk the walk” when it comes to delivering real benefits to the state.Late last week, O’Malley took his plans a step further as he announced the establishment ofthe state’s new Office of Health Care Reform. The governor is creating a new organizationthat will oversee quality and cost reforms, while operating the new exchange. Adding tothese new developments, those who have been tasked to run the new entity are a bipartisangroup composed of policy experts, lawyers, and a former industry lobbyist. With the goal ofcreating moderate changes that will maximize the benefits for residents, the group has highhopes as the implementation process continues.Without massive protests, lawmaker interjection or landmark lawsuits, the state of Marylandhas been a model citizen in the ACA’s post-passage world. With the success that GovernorO’Malley has achieved, which is certainly no easy task, we should expect to see him moreoften on the national stage. Who knew that Maryland was such a bastion of health reform?HIT RoundupA weekly digest of the latest health technology developmentsHybrid Clouds Get Government Agency Votes – A Norwick University study on publicsector virtualization and cloud computing revealed that the majority (36.1 percent) ofgovernment agencies felt like the hybrid (versus private or public) model of cloud computingwould best meet their future needs. While cost-savings was the main reason for moving tocloud computing, a surprising ninety percent of those surveyed said they didn’t have an exitstrategy or were unaware of one.Seven Senators Ask HHS To Withdraw ACO Rule – In a clear setback to the developmentof Accountable Care Organizations, seven U.S. Senators have asked the Department ofHealth and Human Services to withdraw their proposed rule over ACOs. Contending that thestart-up costs to establish an ACO are vastly misrepresented, the lawmakers believe the wayHHS’ regulations are currently structured are bound to fail, and the government ought toreevaluate these guidelines. The contingent of senators, whom all are Republican, are TomCoburn (OK), Jon Kyl (AZ), Mike Crapo (ID), Mike Enzi (WY), John Cornyn (TX), Pat Roberts(KS), and Richard Burr (NC).ONC Launches New Input System – To help the public continue voicing their input on themany health information projects currently being developed, the Office of the NationalCoordinator this week launched a new system to receive such feedback on their data

sharing programs. By utilizing ONC’s Standards and Interoperability Framework, the publiccan make comments on the government’s Provider Directory and Certificate InteroperabilityInitiatives. With the goal of allowing more advice on their projects, ONC hopes the newsystem will encourage further engagement with the general public.Lawmakers Call For Greater Prescription Monitoring – Early last week, members of theSenate Judiciary Committee pressured the Obama administration to begin greaterimplementation of electronic prescription monitoring. Believing that the new technologywill greatly reduce patients abusing their prescription medication, nearly 20 states alreadyhave such a system in place and lawmakers are hoping to establish a national program.CMS Awards Additional HIE Funding – This past week the Centers for Medicaid andMedicare services awarded three states additional funding to support health insuranceexchange initiatives. Indiana, Rhode Island, and Washington received the money; all of thesestates are in various stages of building an HIE. With $34.4 million being distributed, somereports have suggested that the majority of this funding will be used to purchaseinformation technology that will help further develop each state’s HIE.For Past UpdatesFor past editions of the Washington Report, click here. Also, follow DellHealth on Twitter atwww.twitter.com/DellHealth. To contact me, send an email toDell-WashingtonReport@Dell.com.

Washington Report- May 31, 2011

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