Archive for the ‘Economics’ Category

The Facts of Inequality

Thursday, April 17th, 2014

Once in a while, an economist comes along who puts out a disarmingly simple concept that seems to cut through the miasma of misinformation that is cable news. Once such person may be Thomas Piketty, a French economist  whose “Capital in the Twenty-first Century” looks at income equality in a striking way. His big thesis?  The reason so many people live so poorly is that G.D.P. growth (which impacts wages) has flagged while the rate of return on capital (things like dividends, capital gains) has soared. John Cassidy , the terrific writer at the New Yorker, has done a good job of explicating Pikettys ideas complete with graphs and charts. http://www.newyorker.com/online/blogs/johncassidy/2014/03/piketty-looks-at-inequality-in-six-charts.html

Lesson #1: Investment income trumps wages
So these statistics will feel familiar:  A recent report by Oxfam says that the richest eighty-five people in the world own more wealth than the roughly 3.5 billion people who make up the poorest half of the world’s population. In 2010, the richest ten per cent of US households owned 70% of the country’s wealth while the bottom 50% owned 50%. All of this wealth at the top is investment income. Piketty and his partner, Emmanuel Saez say that 95% of the income growth in the economy between 2010 and 2012 “accrued to the 1%”. These are the most disproportionate figures since 1928.

Lesson #2: The Income Gap is a corporate things
That’s a shocker – it’s not the ga-zillionaires that are the big beneficiaries but the MBA types. It’s the  “supermanagers,” (with incomes of $1.5 million and up) rather than “superstars,” who account for 70% of the top 0.1 per cent of the income distribution. In the 50s, the average CEO was paid 20 times as much as the typical worker; today, its 200 times.

So, the way to make things more equitable? Make G.D.P. grow as fast as return on capital

The Good News
For all the inequities, things are still relative. Here’s Cassidy again: “In 1981, according to figures from the World Bank, about two in five members of humanity were forced to subsist on roughly a dollar a day. Today, the figure is down to about one in seven. In the early nineteen-fifties, the average life expectancy in developing countries was forty-two years. By 2010, it had risen to sixty-eight years. He quotes Angus Deaton, a Princeton economist  who said, “Life is better now than at almost any time in history. More people are richer and fewer people live in dire poverty.”

The UK: American Healthcare Reform’s Mirror Image

Wednesday, July 25th, 2012

If you want to see a twin of our healthcare reform battle, try the other side of the Atlantic: England is undertaking the biggest reform of its government healthcare program, the National Health Service, as part of its massive 5-year austerity program. “After a year in parliament, more scrutiny than any bill in living memory, and more than 1,000 amendments in the House of Commons and the House of Lords,” as the Guardian newspaper put it, “MPs cast their final vote for the (reform) bill.” At its heart are plans which will give primary care providers more sway over the NHS’s £106 billion annual budget, and introduce more private competition. British reform moves quicker than ours — the program takes effect over the next 12 months. A major plank of the reform is the NHS Mandate, under which the government will set targets for improvement in 60 areas of care, such as patients surviving after cancer treatment, and medical errors. The goals? Reduce administration costs by one third.

And, in another instance of seeing double, we’re watching the other side working hard to repeal it and vowing to do so on Day One if they win the next election. “The government’s reforms to the NHS in England have undermined the service and opened the door to privatization,” said (opposition) shadow health secretary Andy Burnham, who championed Labour’s motion, which claims that treatments and services are being rationed in the NHS. In an opposition-led debate on the NHS on 16 July 2012, Mr. Burnham said: “We will repeal the bill; it is a defective, sub-optimal piece of legislation that is saddling the NHS with a complicated mess.” But (government) Health Minister, Simon Burns said: “Far from the meltdown that some gleefully predicted, we have seen a robust and resilient NHS delivering better care for patients. Waiting times remain low and stable, in fact below where they were at the last general election.”

So, just to recap, here we have the conservatives championing reform and austerity and the liberals pleading for repeal in opposition to a privatized system and rationing.  All of this, of course, is part of the cost-cutting program that some say caused Britain to fall back into a double-dip recession. After the 2010 general election, Prime Minister David Cameron, leader of a coalition of the Conservatives and the Liberal Democrats, initially said that the austerity program would finish by 2015. During this period, more than £80 billion would be raised by spending cuts and tax rises. However, the program was extended to 2017 last fall with further savings £30 billion hoped for.

What Would Repeal Look Like?

Wednesday, July 18th, 2012

The nonpartisan Congressional Budget Office (CBO) has issued a report that the House Republicans’ bill to repeal President Obama’s health care reform legislation would increase the deficit by roughly $230 billion through 2021.   According to the CBO statement, “The March health care legislation would have a net cost of about $780 billion over the 2012-2019 period. Repealing that legislation would eliminate such costs. But [the health care legislation] also included a number of provisions to reduce federal outlays (primarily for Medicare) and to increase federal revenues (mostly by increasing the Hospital Insurance payroll tax and imposing fees on certain manufacturers and insurers); in March, CBO and JCT estimated that those provisions unrelated to insurance coverage would, on balance, reduce direct spending by about $500 billion and increase revenues by about $410 billion over the 2012-2019 period. If that legislation was repealed, such reductions in spending and increases in revenues would not occur. Thus, H.R. 2 would, on net, increase federal deficits over that period.”

Undeterred, Sen. Orrin Hatch (R-Utah), ranking member on the Finance Committee, said if Republicans gain control of the chamber next year, their efforts to replace the healthcare overhaul will focus on cost control, instead of coverage expansions. Hatch was the author (along with Ted Kennedy) of SCHIP, the largest expansion of taxpayer-funded health insurance coverage for children in the U.S. since Medicaid began in the 1960s. Hatch is in position to lead the committee with primary jurisdiction over federal health policy if Republicans retake the Senate, which Republicans would do if they net only four Democratic-held seats.

As evidence of ObamaCare’s inability to reduce overall healthcare costs, Hatch cited the 9.5% increase in the cost of an average family health plan to $15,073 last year over its cost when the law was enacted.

The first cost-control efforts he would undertake would come in Medicare and Medicaid, he said. Those steps include increasing physician pay and removing “government-dictated prices” in Medicare that increases costs for the privately insured when providers pass along the cost of caring for Medicare and Medicaid patients.

June 2012: Jobs Fizzle

Monday, July 16th, 2012

80,000 was the number. 200,000 is what we need for this to feel like a recovery. And 8.2 is the number that keeps hanging on.  The nation’s unemployment rate was unchanged at 8.2% (that’s 13 million unemployed workers) for the second consecutive month, the Labor Department said Friday.   Businesses added just 84,000 jobs, while governments cut 4,000. Monthly job growth averaged 226,000 in the first quarter but slowed dramatically to an average 75,000 a month in the second quarter.

In response, the Dow Jones industrial average fell 124.20 points to close at 12,772.47, wiping out the Dow’s gain for the week, and Treasuries rose as investors moved their money into lower-risk assets. And the Presidential campaigns took the opportunity to issue a number of extrapolations and the usual host of inaccuracies and overreaches. The Democrats claimed that the unemployment rate has been trending down since hitting 10.10% in October 2009; what they forget to point out is that that’s because of the large numbers of discouraged workers – almost 1 million — who’ve stopped looking for jobs. The Republicans, on the other hand, said that the jobs report proves that the Obama administration’s policies haven’t worked, forgetting that the US was hemorrhaging 700,000 jobs a month when Obama took office. According to Politifact, Obama’s record is 22 consecutive months of private-sector job growth, beginning in Feb. 2010, during which the number of jobs grew by almost 3.16 million, or about 143,000 per month.

Putting the candidates aside, the reasons for the anemic job numbers have started to sound like a bad drinking-game song being played by the pundits as they make the circuit of the talk shows: The warm weather drew construction and manufacturing activity into January and February, but dampened spring hiring; the manufacturing sector contracted for the first time in three years in June;  retail sales were weak, Corporate profits fell in the first quarter of 2012,  the first decline since 2008, according to the Commerce Department; the European Central Bank cut interest rates – a sign of nervousness about their prospects; the end-of-year fiscal cliff sent ripples through the public and private sectors with its specter of higher taxes and reduced government spending; a lame-duck Congress couldn’t pass a Jobs Bill; Republican governors made draconian cuts and instituted public-worker layoffs at the state level; and the Administration didn’t put a big enough stimulus in place which is creating an undertow. Take your pick.

So, are there any bright spots? A few.  Friday’s report showed ticks upward in average hourly earnings (to $23.50, from $23.44 in May) and the length of the typical private sector workweek (34.5 hours, from 34.4). Also, a curious fact is that the number of teens in the workforce spiked by 140,000 to 4,528,000, or 3.2% of the entire U.S. workforce:  So why are teens making out so well in this first month of summer while everyone else, well, isn’t? The Daily Kos reports from 5 May 2012:  President Obama’s Jobs program, which is lining up commitments from the private sector and from government to create summer jobs and internships for young people, has announced commitments for 90,000 paying jobs, up from the 70,000 previously announced in January.

Apple’s Visionary Steve Jobs Dies at Age 56

Monday, October 10th, 2011

Apple’s iconic co-founder and CEO Steve Jobs, who altered the habits of millions by reinventing computing, music and mobile phones, has died at the age of 56.  With Jobs’ passing, Apple has lost a visionary leader who inspired personal computing and products such as the iPod, iPhone and iPad.  In the world of medicine, the iPad has made a significant impact. Chilmark Research estimates that 22% of United States doctors are using iPads as of the end of 2010. A survey by Aptilon indicates that 80% of the remainder plan to buy an iPad sometime in 2011.  These innovations made Jobs one of his generation’s most significant industry leaders.  His death, following a long fight with a rare form of pancreatic cancer and a liver transplant, set off an outpouring of tributes as world leaders, business rivals and customers mourned his early death and celebrated his historic achievements.

“The world has lost a visionary.  And there may be no greater tribute to Steve’s success than the fact that much of the world learned of his passing on a device he invented,” said President Barack Obama.  Even Bill Gates, his rival at Microsoft, joined in the laments.  “For those of us lucky enough to get to work with him, it’s been an insanely great honor,” Gates said.

With a passion for minimalist design and a genius for marketing, Jobs laid the groundwork for Apple to flourish after his death, according to analysts and investors.  A college drop-out, Jobs altered technology in the late 1970s, when the Apple II became the first personal computer to gain a wide following.  He repeated his early success in 1984 with the Macintosh, which built on the breakthrough technologies developed partially at Xerox Parc to create the personal computing experience.

“Steve’s brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve,” Apple said.  “His greatest love was for his wife, Laurene, and his family.  Our hearts go out to them and to all who were touched by his extraordinary gifts.”

According to Apple co-founder Steve Wozniak, “We’ve lost something we won’t get back,” he said.  “The way I see it, though, the way people love products he put so much into creating means he brought a lot of life to the world.”  Wozniak said that Jobs told him around the time he left Apple in 1985 that he had a feeling he would not live beyond the age of 40.  Because of that, “a lot of his life was focused on trying to get things done quickly,” Wozniak said.  “I think what made Apple products special was very much one person, but he left a legacy,” he said.  Wozniak hopes the company can continue to succeed despite Jobs’ death.

Computerworld raises the question “Where will that excitement come from now?”  When Jobs stepped down as CEO in August, industry analysts said that Apple, with a team of talented, creative employees, will be able to continue his tradition for ingenuity, if not all of his passion, perfectionism and energy.  “Steve’s excitement for technology will still come from Apple and from the team that Jobs carefully built that worked with him to give us the iPhone and iPad and many other successful products,” said Carolina Milanesi, a Gartner analyst.

“Jobs didn’t just change mobile phones — he reinvented them,” said Ken Dulaney, an analyst at Gartner.  “That was typical Steve.”  In another example, the iPad took user-centric values inherent in the touch-screen iPhone and larger-screen laptops, and found a useful compromise — a classic expression of Jobs’ ability to combine technological concepts, art and ideas and deliver a product that was termed “magical,” according to analysts.  “Apple, under Jobs’ leadership, focused on the user experience first and the technology second,” said Jack Gold, an analyst at J. Gold Associates.  “This focus was groundbreaking in that most tech companies were just the opposite.  Apple pioneered hiring many usability specialists, human factor engineers and designers before it was fashionable to do so.  Jobs’ vision of technology was to make a smooth intersection into our lives and our work, and that was what put Apple ahead of the pack.  He redirected engineering from technical engineering to engineering for usability.”

One question that has industry analysts abuzz is whether Apple will be able to maintain its dominant position now that Jobs is gone. Jobs’ passing and the industry’s mixed response to the recent iPhone 4S model create challenges for Apple in coming quarters,” said Neil Mawston, an analyst with Strategy Analytics.  “Industry eyes will inevitably turn to the iPad 3 launch next year to see whether Apple can continue the company’s impressive legacy of innovation created by Steve Jobs,” he said.  In a sign of deepening competition, Amazon.com recently unveiled its Kindle Fire tablet at an affordable $199 that could pose a serious threat to the iPad.  “Apple is facing a competitive firestorm from not just one company but a coalition of rivals that are trying to beat it, including some of the largest consumer electronics companies on the planet,” said Ben Wood, head of research at British mobile consultancy CCS Insight.

Writing in the Washington Post, Melissa Bell believes that one of Jobs’ longest-standing legacy will be the recognition that his illness and death are bringing to pancreatic cancer.  According to Bell, “Steve Jobs knew the art of keeping your cards close to your chest.  Though  leaks did spring from the closely guarded Apple world, Jobs was a master at unveiling his secrets only when the time was right for him.  As with his business ventures, so it was with his cancer.  Jobs ‘kept his illness behind a firewall,’ the Associated Press reported.  Apple released no more of a statement than that they lost a ‘visionary and creative genius, and the world … lost an amazing human being.’  It was not known whether Jobs died from the rare form of pancreatic cancer that plagued him for seven years, or from complications from a liver transplant two years ago.  Despite the lack of details, Jobs’ role as the very public face of Apple put his illness on display along with his products.”

Budget Cuts Put Medicaid, CHIP at Risk

Tuesday, August 23rd, 2011

With Medicaid due to cover millions of uninsured Americans in just three years,  state funding cuts may undermine how much care the government-run healthcare insurance program for the poor will offer new enrollees.  As many as 24 states plan to slash a minimum of $4.7 billion from their Medicaid plans thanks to four years of budget shortfalls, according to data provided by the nonpartisan Center on Budget and Policy Priorities and Families USA, a consumer-advocacy group.  The cuts might include reductions of as much as 15 percent in reimbursement rates for physicians, hospitals and other care providers, higher co-pays for beneficiaries, including children, and the loss of optional benefits, including preventive care as well as dental and vision services.  Some states plan to restrict eligibility under enhanced Medicaid plans that offer services beyond the basics. 

“The provider rate cuts are going to mean that fewer providers will offer Medicaid services by the time we get to 2014, and that’s bad. It pulls in the opposite direction of where healthcare reform’s trying to go,” said Mike Leachman of the Center on Budget and Policy Priorities. 

As Congress works to cut the federal deficit to meet a November deadline, additional cuts to the $427 billion Medicaid program also are likely.  Medicaid is funded jointly by federal and state governments but administered by the states with federal oversight.  The growing pressures mean access to healthcare services under Medicaid may be restricted, despite its role in expanding health coverage to 32 million more people under President Barack Obama’s Patient Protection and Affordable Care Act (ACA).  Medicaid and the Children’s Health Insurance Program (CHIP) are expected to add 17 million uninsured Americans starting in 2014, when the ACA requires that a majority of people carry health insurance.  

“We do see a lot of rate cuts,” according to a senior administration official.  “Some of them are going to be more temporary, some of them are going to be more permanent.  Some of them are going to hold and some of them may not hold based on access concerns.  We ought to proceed in a thoughtful way, both we at the federal level and states at the state level,” the official said. 

Already, 10 states have passed laws that cut reimbursement rates for either inpatient or outpatient children’s services provided by Medicaid.  Another nine states have passed laws that will cut children’s access to healthcare or erect new barriers to obtaining coverage.  Illinois, for one, has a two-year moratorium on expanding Medicaid and limited eligibility for CHIP to 300 percent of the federal poverty level.  Indiana slashed its standard for CHIP to 250 percent of the poverty line.  Other state laws want agencies to seek waivers from federal eligibility requirements.

Making a bad situation even worse, Standard & Poor’s recent downgrade of American debt adds to the uncertainty about the future of Medicaid and CHIP.  A bipartisan super committee, composed of 12 Congressmen and Senators –six from each party — must recommend as much as $1.5 trillion in federal budget cuts over the next 10 years.  That is likely to put Medicaid and CHIP, which were supposed to be off the table, into play.  “They’re talking about trillions — with a ‘t’ — in cuts,” said Matt Salo, executive director of the National Association of Medicaid Directors.  “And when you’re talking about trillions in cuts, almost everything has to be on the table.” 

The American Academy of Pediatrics is concerned that some of the aspects of the debt-ceiling proposal will make it into the final cuts for this reason: “Children make up half of all Medicaid enrollees.  It is a lifeline for kids in low-income families and children with special healthcare needs, such as those with congenital heart diseases, spina bifida or cerebral palsy,” said O. Marion Burton, MD, the academy’s president. 

The upside is the fact that Medicaid, as well as Medicare and Social Security, remain popular with the public, according to a recent Pew Research Center survey.

Not surprisingly, there is also a downside.   The number of adult Americans who have health insurance declined in 2010, according to the National Center for Health Statistics, a division of the Centers for Disease Control and Prevention.  Americans of all ages who were uninsured at any point during the last year totaled 60.3 million in 2010, an increase of almost two million when compared 2009.  Private healthcare coverage declined, while public coverage rose, especially for children.  Of non-elderly adults, 61.1 percent had private coverage in 2010, a decline of 1.7 percent.  The percentage of privately covered children fell by 1.9 percent to 53.8 percent.  Fewer children in general lost coverage, because the percentage of children in Medicaid and the Children’s Health Insurance Program rose to 39.8 percent.  The uninsured rate for those earning 100 to 200 percent of the federal poverty level rose to 43 percent in 2010.

Michael Lee Stallard and Jason Pankau on Happiness in the Workplace

Monday, January 31st, 2011

“The life you live trains you for the life you’re going to lead.”  This is the opinion of Michael Lee Stallard and Jason Pankau, partners in E Pluribus Partners, the world’s leading experts on how rational and emotional connections can boost productivity, innovation and organizational performance in the workplace.

In a recent interview for the Alter+Care Inspire Podcasts, Stallard and Pankau cited a Gallup Poll that ranked 132 countries in terms of happiness.  The United States ranked 12th, which was lower than the Scandinavian nations of Denmark and Finland and even Costa Rica.  According to Stallard and Pankau, “If you look at what’s happening, people are working longer and harder days.  We spend the bulk of our waking lives in certain kinds of relational environments – this has an enormous impact on our happiness and ability to connect with others.”

Using a number of systems, including humanist psychologist Abraham Maslow’s hierarchy of needs, Stallard and Pankau have created a list of six universal human needs that people want to experience in the workplace.  They include:

  • Respect – When we are with people who are condescending, patronizing, passive-aggressive or who look down on us in some relational way, there is a negative emotional impact.  No one can thrive in that kind of environment, because humans need a basic level of respect in the workplace.
  • Recognition – We rely on the interactions of people around us to recharge our internal batteries.  Authentic, positive affirmation – not false – is the most effective.  Otherwise, employees are drained of energy.
  • Sense of belonging – Everyone needs people who have our backs and who are trustworthy.  These people help us live up to the values that we aspire to, support us and are with us through the ups and downs of life.
  • Autonomy – This gives us the freedom and flexibility to do our work free of bureaucratic red tape and without the presence of over-controlling personalities.  Autonomy allows us to master our tasks and assists with personal growth.
  • A challenging environment – When people are over challenged, they are stressed; conversely, people are bored when they are not challenged.  When work provides the right degree of challenge, people are so immersed in the task at hand that time flies and it is energizing.
  • Need for meaning – People typically derive meaning from work that is consistent with a mission that is important to them.  Additionally, they find meaning in the relational connections they have in the workplace; this provides a connection with their personal life.

Leading hospitals across the country recognize the need to create connections between management, physicians, nurses, staff, patients and – importantly – their families, because it positively impacts the quality of care and medical outcomes.  A primary proponent of fostering connections in healthcare environments is Herb Pardes, M.D., a psychiatrist who is president and CEO of New York-Presbyterian Hospital and New York-Presbyterian Healthcare System.  Other hospitals that are proactively creating workplace connections are the Yale New Haven Health System and the Cleveland Clinic.  To sign up for Michael Lee Stallard’s and Jason Pankau’s newsletter and receive a free digital download of their book, click here.

To listen to Michael Lee Stallard’s and Jason Pankau’s full interview on happiness in the workplace, click here.

FDA to Put Gruesome Warning Labels on Cigarette Packs

Tuesday, November 23rd, 2010

FDA is ramping up its anti-smoking efforts with extremely graphic new warning labels.  The Food and Drug Administration (FDA) has concluded that years of warnings about the dangers of smoking cigarettes, the availability of nicotine patches and gum has not worked.  Instead, the FDA is proposing to put gruesome images on cigarette packs that warn of the consequences of smoking.  Tobacco is the leading cause of early and preventable deaths in the United States, accounting for 433,000 annual deaths and approximately 33 percent of all cancer deaths.  The healthcare reform law provides free access to anti-smoking therapies; the stimulus bill included $225 million to support local, state and national anti-smoking programs.

The proposed images, which include one of a man suffering a heart attack and another of a mother blowing smoke in her baby’s face, would cover half the front and back of each pack if adopted.  “When the rule takes effect, the health consequences of smoking will be obvious every time someone picks up a pack of cigarettes,” said Margaret A. Hamburg, FDA Commissioner.  The FDA plans to choose nine images by June 22.  After October 22, 2012, cigarette manufacturers who refuse to put the new warnings on their product will be banned from selling their brands in the United States.  Anti-tobacco activists applauded the move.  “In implementing the new warnings, the United States is catching up to scientific best practices,” said Matthew Myers of the Campaign for Tobacco-Free Kids.

Not surprisingly, some tobacco companies are not thrilled.  R. J. Reynolds Tobacco Company, which is already suing the government over tobacco regulations, is reviewing the proposed warnings.  “It is worth noting that the legality of requiring larger and graphic warnings is part of our lawsuit that is currently pending,” said company spokesman David Howard.  Philip Morris USA, on the other hand, has been supportive of FDA regulations; the company “has actively participated in the FDA’s rule-making and public comment process and plans to do the same on this proposal.”

Canada, which has used graphic warnings since 2000, has seen a significant reduction in smoking.  “It’s always difficult to point to a particular policy and say it’s due to that,” said David Hammond, a researcher of the University of Waterloo in Ontario.  In fact, smoking rates in Canada have fallen approximately 20 percent since 1985.  “But all the evidence does point to the fact that these things do help.  The bottom line is that there’s no magic bullet.  But about one-third of smokers say this increases their motivation to quit, and about the same proportion of former smokers say they remind them why they quit.”

Older Americans Tend to Be Sicker than Britons – Until Their 70th Birthdays

Wednesday, November 17th, 2010

Americans are sicker than Britons until they are 70.  Older Americans tend to be sicker than their British counterparts.  Once they celebrate their 70th birthdays, however, Americans can expect to live longer.  This is one finding in a study conducted by RAND Corporation, the California-based research institute. American longevity could be due to their country’s expensive healthcare system, said James P. Smith, a Rand economist and demographics expert.  “We actually get something from it,” Smith said.  “We are sicker than the English and we have to spend a lot.”  Apparently, all those expensive tests “diagnosing chronic illnesses early, and how aggressive we treat those things” make the difference.

Healthcare spending in the United States ate up $2.3 trillion in 2008 – comprising 16 percent of the total economy.  By contrast, British healthcare spending was just 8.7 percent of that nation’s significantly smaller GDP.  According to James Banks, an economist at the Institute for Fiscal Studies in London, mortality rates for cancer and stroke are higher in Britain than in continental Europe.  Healthcare spending in Europe is “a few percentage points higher” than in Britain.  Healthcare rationing is another issue.  “There is more rationing in the U.K. than there is here,” said Dr. Peter A. Meunnig, a health policy expert at Columbia University’s Mailman School of Public Health.

According to Banks’ study, Americans in their 70s were twice as likely to have cancer and diabetes as their British counterparts.  Americans were also more apt to have high blood pressure, heart disease, heart attacks, strokes and chronic lung disease.  In both countries, the groups studied were older, white and had insurance coverage.  Banks believes that more healthcare is “focused on the elderly” in the United States than in England, although this may be changing.  “The (British) government in recent years has been targeting cancer, heart disease and stroke,” he said.

Hospital Executives’ Priority Is to Control Costs

Tuesday, October 19th, 2010

Hospital CEOs’ top priority is to bring their costs in line with Medicare payment levels. The American College of Healthcare Executives (ACHE) tested the waters of how its members feel about the Affordable Care and Patient Protection Act by conducting an in-depth survey.  The primary finding is that hospital executives are reacting to healthcare reform by slashing expenses. Their goal is to bring their per-patient costs into line with Medicare payment levels.

Based in Chicago, the trade association for hospital and healthcare system executives, queried 539 CEOs and learned that more than 75 percent plan to cut per-patient costs.  Additionally, they intend to study means to avoid penalties for preventable readmissions over the next year as a response to the healthcare reform law.

Thomas Dolan, ACHE President and CEO, said “Hospital CEOs are actively taking steps to ensure their communities are going to benefit from the advantages offered by healthcare reform legislation.”

Approximately 72 percent of executives who took the survey plan to build closer relationships with physicians so all can benefit from incentives for care coordination, enhanced quality, patient safety and reduced costs.  Another 68 percent plan to apply for subsidies through the American Recovery and Reinvestment Act to purchase electronic health record systems.  Fully two-thirds are investigating ways to prevent infections and avoid penalties.  Almost 50 percent of respondents plan to look into ways to decrease the average patient stay or partner with community organizations to promote wellness.