"Over the last 20 years the rate of increase in health care costs has been moderating somewhat, and there are initiatives across the U.S. and in Rhode Island that give rise to cautious optimism. "
By Harold Ambler Contributing Writer
With more than 20 years of experience as CEO and chief operating officer of urban teaching and rural hospitals and eight years of experience as CEO of a community organization dedicated to reducing health care costs in Rochester, N.Y., Rhode Island native Albert Charbonneau is the recently installed executive director of the Rhode Island Business Group on Health.
PBN: How long ago did you know that reducing costs was going to be central to both the process of changing the health care system and to your own career – what led to that realization?
CHARBONNEAU: I was recruited in the mid-1970s to the Rochester, New York region, a community known for low cost health care. The major forces driving low cost operations, at that time, included early HMOs, an activist BCBS CEO, health planning, and substantial corporate support for reducing costs. The most important period helping to form my views on cost containment began with Rochester’s Hospital Experimental Payment (HEP) program that ran from 1980-1990.
HEP was a globally budgeted, payment reform program that stabilized hospital incomes allowing the hospitals to focus on managing expenses. According to the General Accounting Office (GAO), during the period of global budgeting under HEP, Rochester’s hospital cost inflation was constrained to an annual rate of 2.1 percent real cost per capita and insurance costs in the region were 33 percent lower than comparable costs in the nation. The program enjoyed wide support from community leaders and most especially business; the latter group was critical to creating a sense of urgency and accountability.
PBN: What might Rhode Island learn from Rochester, N.Y., in terms of managing health care costs?
CHARBONNEAU: I would like to begin by acknowledging that there are many talented people working very hard to lower Rhode Island’s health care costs. What Rhode Island could learn from Rochester particularly during the HEP era is that there needs to be a greater quantity of understandable financial data available to set expectations and monitor progress as well as greater pressure from community and business leaders that will help to increase the sense of urgency.
PBN: In what ways have you seen lowering costs be part of a process that also improves health care for the community?
CHARBONNEAU: There are many examples but let me cite one from an operational perspective and one at the community level. At one point, we wanted to open the third open-heart surgery program in the Rochester region. We met the volume thresholds but the decision of the community was to expand one of the existing programs because additional volume helped the existing open-heart unit to increase quality without increasing fixed cost. At the community level, during the HEP era more people had access to health care because lower than average premiums contributed to lower than average rates of uninsured.
PBN: Businesses haven’t availed themselves of HealthSourceRI.com to the extent that many hoped; what would need to happen for that to change, and do you expect that to change?
CHARBONNEAU: Unfortunately, since this is my first week or so at work, I have not had the opportunity to meet enough of the RIBGH membership to accurately reflect their opinions. Launching an exchange is a complicated undertaking, particularly at a time when there is less trust in the ability of government to manage efficiently. However, I know from personal experience in other regions that employers are hesitant to try something new if there is a question about financially viability over the long run.
PBN: How upbeat are you about the changes taking place in the health care system, both nationally and in the Ocean State?
CHARBONNEAU: Over the last 20 years the rate of increase in health care costs has been moderating somewhat, and there are initiatives across the U.S. and in Rhode Island that give rise to cautious optimism. However, these initiatives need broader support calling for substantial accomplishments. In other words, having providers around the table is certainly a step in the right direction. However, we need to engage providers by setting the expectation of meaningful cost reductions; otherwise, we are at risk for marginal results that will have no impact on premiums.