At an intimate gathering of health care executives and business leaders on March 8, the Business Journal participated in an economic summit, in roundtable format, about the state and future of health care. Hosted by MemorialCare Health System in Newport Beach, the discussion was moderated by Chas Roades, co-founder and CEO of Gist Healthcare and a national expert on health policy. The two-hour event largely focused on what hasn’t been working in health care – namely, legislative uncertainties, high costs and a lack of transparency for those costs – and possible solutions.


Roundtable participants included: Dr. Barry Arbuckle, president and CEO of MemorialCare Health System; Dr. James Leo, medical director of best practices and clinical outcomes for MemorialCare and chair of the MemorialCare Physician Society Board of Directors; Lucy Dunn, president and CEO of the Orange County Business Council; and Paul Keckley, health care economist and managing editor of The Keckley Report, a weekly blog covering the health care industry. Media participants included hosts and editors from PBS SoCal, the Orange County Business Journal, California Healthline/Kaiser Health News and the Long Beach Business Journal.

Dr. Barry Arbuckle (center), president and CEO of MemorialCare Health System, speaks about the future of the health care industry during an economic roundtable event in Newport Beach. (Photograph provided by MemorialCare Health System)


The start of the discussion centered around legislative uncertainties about health care. Although the Trump administration was unable to drum up enough congressional support to repeal the Affordable Care Act, it did succeed in pushing for the repeal of the individual mandate to purchase health care, which will sunset in 2019 as a part of recently passed tax reform.


Dunn found it unlikely that Washington, D.C., would be the source of any further tumult for the health care industry this year, and instead looked to the State of California, where the discussion over moving the state to a single-payer health care system is still going strong. She pointed out that the frontrunner in the campaign for governor, Lt. Gov. Gavin Newsom, supports a single-payer system. “But the bottom line is there is zero path on financing [for single-payer], and frankly California can’t afford, from the business community’s perspective, to pay new taxes on this,” she said.


Arbuckle interjected to say that Roades had made a tongue-in-cheek bet with him over the phone about single-payer health care in California and asked him to repeat it. “I said I’d bet my house that that would never happen,” Roades obliged, causing laughter to erupt.


Dunn, however, pointed out that the California Nurses Association, an organization she said has “big money” behind it, has come out in support of Newsom because he supports single-payer. “So as a political issue, it may get some play,” she said.


Arbuckle said the idea of moving to a single-payer system has “been brought up and shot down so many times I can’t count,” and that the idea of being able to see any doctor at any time for free is a beautiful concept, yet one that is ridiculous in practicality.


Legislative uncertainties may be at play in the consolidation of physician groups, Leo pointed out. “For physicians, the key question is: in what structure am I going to practice? What is going to allow me to take care of my patients, have a stable living profession? And that is obviously put into question every time the rules change,” he said.


Arbuckle said that, even in times of uncertainty, MemorialCare and other health systems have to keep moving forward. “We decided, you know what, let’s just focus on what’s right. Let’s focus on value, and let’s hope that that prevails,” he said, adding that he is banking on the overall health care system in the nation “finally making its way to value-based health care.”


Asked about how to address exorbitant costs for health care services and the transparency of those costs, Keckley posited that the health care industry was at a crossroads of sorts as he illustrated its quandary. “Health care is operating in a false economy,” he said. “So, do we make it a market where consumers make rational judgments about the cost and quality of the service they buy and they have the tools by which they can make comparisons? . . .  Can we create that marketplace? Or do we want to just incrementally move to a Medicare for all single-payer models like the other developed systems of the world?”


Dunn pointed out that the business community perceives Kaiser Permanente to be successful in cost containment. Arbuckle responded that Kaiser has a wholly integrated system. “The health plan partnered with the physicians, [and] partnered with the hospitals, and they are all moving in the same direction together,” he said. “Our system and a lot of health systems in the nation are trying to move in that direction. I think that’s a good model. That gives Kaiser a certain benefit.”


However, Arbuckle said one thing about Kaiser that is not often brought up is that for decades it has been caring for a disproportionately low share of underinsured patients, Medicaid patients and Medicare patients. “That gives them an enormous advantage that they can take to the market. And they can underprice Anthem [Blue Cross] and United [Healthcare] and others,” Arbuckle said.


“The model to me that works well is where the providers are aligned with the payer – whether it be the employer or the health plan – and the consumer, and we’re all marching in the same direction,” Arbuckle said. “Short of that, I don’t have a lot of hope.”


The conversation eventually turned to the potential for the technology industry to transform health care. As Roades put it, “Something really interesting is happening now in health care, which is every time Jeff Bezos [CEO of Amazon] or Tim Cook [CEO of Apple] rolls over in the middle of the night, everybody in health care wakes up in a cold sweat because the thought is they are about to come into our business.”


Roades pointed out that Amazon recently teamed up with Berkshire Hathaway and JPMorgan (JPM) Chase with the intention of providing better, lower-cost health care to their employees and in doing so perhaps identified a model that would work better for the country. “Are the real solutions to the problems that we’re talking about going to come from inside health care, or are they going to come from Seattle and Silicon Valley?” Roades asked.


Keckley suggested that health care organizations across the country would be spurred by the threat of the tech industry coming into their market to leverage their own expertise to effect change. “But the rank and file providers are not going to be a real answer here,” he added.


“Amazon is a $700 billion market cap company. With Berkshire and JPM and Amazon, you’ve got 1.4 million employees that plan in two years to change their entire benefit design to a very different model of health,” Keckley said. “They will set the course for public discussion and the capabilities of systems of health that can harness the clinical expertise, the administrative efficiencies and the total population’s health. I think it’s going to be the way our markets evolve.”


Roades asked if tech companies represented competition to Arbuckle and Leo, or if they could be seen as partners.


“I think it’s more of a tool,” Arbuckle said. “I think they could actually have a beneficial impact on the system. And I think that healthy tension is good for the system.”