How Healthy is Healthcare in Hawaii? – Extended Version

Leading doctors and other experts discuss major trends and problems in Hawaii healthcare

April, 2012

Bill Spencer (Hawaii Venture Capital Association): Welcome to the Hawaii Venture Capital Association/ThinkTech Hawaii Program on “How Healthy is Healthcare in Hawaii?” We hope to answer this question during today’s luncheon and I am happy to have you here.

There are many new faces, and that also pleases me greatly to see who came for this healthcare topic issue. I hope this is a good introduction to what Hawaii Venture Capital Association and ThinkTech do every month. We are devoted to bringing together Hawaii’s community and investors and entrepreneurs and service providers and people such as yourself to be able to engage in discussions and networking and really take advantage of this opportunity to get to know each other and know about the important issues such as healthcare.

I would also just like to take a moment to warmly thank our sponsors. We do have sponsors that support these activities and they include Hawaii Business Magazine, the Pacific New Media Center at University of Hawaii, and the accounting firm of KMH.

Jay Fidell (ThinkTech): In December, The New York Times reported that Donald Berwick, who recently left the federal government as the official in charge of Medicare and Medicaid, said that 20 percent to 30 percent of health spending is wasted in this country. It yields no benefits to patients and that some of the needless spending is the result of onerous, archaic regulations. If he was right in the changes he sought, Medicare and Medicaid might have saved $150 to $250 billion a year.

There is more to the story than that but one thing is clear – we are due for healthcare reform both under federal and also on the state level. A local story reported recently that Hawaii has experienced the worst shortage of injectable cancer drugs nationwide.

We have had the highest year-over-year decline – 44 percent in short supply. By comparison, the national decline is 26 percent. What is going on? This drop is having a disruptive effect on the treatment of cancer patients in Hawaii. One of our moderators, Hawaii State Senate Health Chairman Josh Green, indicated that the disparity was unconscionable and that he would ask the Attorney General to initiate an investigation of the matter. So, these things just pop up in the papers. They are harbingers for the country and for Hawaii. At the least, it certainly seems that we – federal and state – have not paid enough attention to keeping the healthcare structure healthy.

It used to work better in Hawaii. We were among the best in the country but that seems to be less than the case now. We know two hospitals are in bankruptcy. We know the neighbor islands are losing doctors. We know insurance rates are going up. We do not know how the healthcare act — Obamacare — will change things, or how long Medicare and Medicaid will last in their present form.

If we are not due for a transformation, then what is? Consider the sweep of changing times, demographics and economics, the recession that won’t end, fiscal crises that won’t go away, the softening of the middle class, the coming and especially the going of physicians, new technologies that are both remarkable and expensive, bureaucracy, overregulation, and the jury system in our free society, increasing complexity of insurance in general especially healthcare insurance, ever higher expectations of life expectancy and quality of life, actions of the Congress we have come to worry about, and what do you get? You get a healthcare system that has developed a bad, bad cold. Is it healthy? Is it as healthy as it was?

So, why should we care? You know, most people would limit their concern to how their healthcare insurance rates are doing. Most employers limit their concern to that and they are concerned also about what happens to them personally in the doctor’s office, but we need to go further. We all need to go further. We have to look at the system itself – the healthcare industry in our state. Can technology help? Can tort reform help? What should we do and who needs to do it? And what exactly will happen to us if we do nothing? How about a warm welcome for the moderator of the first panel, Ginny Pressler.

Ginny Pressler (Hawaii Pacific Health): Let me start by making a few comments related to the economic transformation of healthcare before we get into our panelists. I think all of those of you here today are familiar with the OACD. That is the 34-nation Organization for Economic Cooperation and Development. It just came out with their most recent study on the comparative data on quality and cost of healthcare in these 34 OACD nations and by every measure the United States pays more for its medical system, more dollars per person, a greater percentage of gross domestic products, and higher prices for doctors, hospitals and administrative costs, and drugs.

The U.S. spends anywhere from two to three times as much as the average for the other OACD countries. Total healthcare spending in the United States costs about $8,000 per person for healthcare and the next highest spender is Norway, which spends less than $5,500 per person per year. No matter how you measure it the United States in a major outlier from the rest of the OACD countries. So, what about quality? Well, when it comes to quality it is a mixed bag.

In the United States, we have the best five-year survival for breast cancer anywhere in the world and behind Japan we are the second when it comes to terms of colorectal cancer survival, yet when we look at other measures of quality we rank 27th out of 34 in life expectancy. We are 31st out of 34 in terms of premature mortality. We are 25th in the way of cardiovascular mortality. The U.S. has the second worst rate of adult diabetes behind Mexico and we have the highest rate of adult obesity at 34 percent of the United States adult population. Think about it.

On top of that, we have 50 million uninsured individuals in the United States today. Now, Hawaii has some of the best health statistics. You saw it in the paper today – the most recent study – ranking us as the fourth healthiest state in the nation. We also have one of the lowest healthcare insurance rates of uninsured of eight percent, and we have the second or third lowest healthcare premiums anywhere in the United States here in Hawaii. We have lots to be proud of.

Yet, Hawaii has huge ethnic and socioeconomic disparities when we start peeling away the onion and you do not just aggregate the statistics. We also have hospitals in bankruptcy. The future of healthcare must address the economic transformation of healthcare. We are seeing shifts to value-based purchasing meaning that both Medicare and other government payers as well as commercial payers are shifting from paying us for volume and instead beginning to pay us for the quality outcomes and not paying us when there are medical errors and when there are potentially preventable hospital admissions or potentially unnecessary tests. We are seeing major changes in the economics of healthcare.

Beth Giesting (Governor’s Office on Health Care): My word for the day is essential, in that healthcare is essential to each and every one of us as consumers and payers, but the cost of dragging down our economic flexibility and our future. We are not even getting very high quality care consistently. It is essential that we fix the system as soon as possible. Beyond why healthcare is important to us each individually, the part of our economy that healthcare is taking up is just unsustainable and growing out of control, and as Ginny mentioned very succinctly, the quality is not always there for us.

When we are looking at what we need to do about this, first we need to see how our healthcare system differs from other parts of the economy. Imagine any other part of the service sector that continues to grow while essentially ignoring its customers. The healthcare sector is largely created for the convenience and the benefit of providers, insurers, and the professionals in healthcare. There is almost no information available to consumers about cost and quality. Even when consumers get information from their insuring provider they may not know what to do with it or understand it. Certainly it is rather difficult for consumers to get the care that they need, the information that they need where and when they need it — so I would say consumer-driven healthcare is absolutely a mandate.

Now, another issue here – imagine any other major economic sector that does not use information technology improve its own business; that does not use information technology to share essential information with its partners.

A recent study shows that only about 10 percent of physicians across the country are using electronic health records in a really meaningful, fully capable way. If you do not have the use of electronic health records that is the basic building block, you are not going to be able exchange information. You are not going to be able to aggregate information and analyze it. You are not going to be able to improve your services and lower your costs if you do not really know where you are going. Imagine any other successful business that incentivizes pretty much all the wrong things. Our healthcare system pays extensively for specialty services, lots of procedures, and duplication in the system.

What it does not pay for is primary care, prevention. It does not pay for managing care so that you would maximize the benefit that you get from all of the services that are available. Those are some of the big issues that we need to take on. You may or may not know that the state purchases healthcare for more than half of the people who live in the state. Medicaid, EUTF (Hawaii Employees Union Health Care Trust Fund). We are the purchasers and it is time that we made sure that we got something for our money. I think it is fully appropriate for the state to take leadership working with the very intelligent people across our community. Regardless of what happens on the federal level with healthcare reform, we are going to change healthcare because we have to. It really is essential.

Pressler: Okay. Now, before you step down I would like to ask you a couple of questions. You have taken on this new role in the Governor’s Office with health transformation. Tell us if you can in a few sentences as to which you see the mission of that office. What are you trying to accomplish?

Giesting: Our mission really is to seize the best thoughts and the best leaders and models in our community and get them to work on how we are going to address the problem. Fundamentally, we need to develop a system of competent health information technology. We need to get everybody using electronic health records, exchanging information. We need to analyze the data and when we do that we will be able to change our healthcare delivery model and also payment model. But first and foremost I think we need more information.

Pressler: So, do you believe that we actually can create economic transformation of healthcare in Hawaii in say the next decade?

Giesting: Not only do I believe we can. I believe that we absolutely must. Otherwise, healthcare costs are going to eat our lunch.

Thomas Tsang (Health Care Senior Advisor to the Governor): Well, my one word is innovation. My role is to advise the governor and advise the Office of the Governor and Office of Health Care Transformation about all the best practices across the country including technology innovations as well as systems innovations and changes that are going across the national landscape and what we can bring in and adapt for at least for the state of Hawaii and to really prepare Hawaii to be the top – not number four but to be the number one state in healthcare in the country. So, that is my role.

A little bit about what I want to talk about in terms of innovations: I think this is as huge, huge opportunity at this juncture in time as Rahm Emanuel said, you know, let not us waste a crisis. I think it is embedded in the American culture, that when we do have a crisis, we take advantage of it and we have – we create and the pressure creates innovations. It is not a surprise that the rest of the world is using Google and Apple products and Facebook. There is something to be said about American ingenuity and capitalism and how the market actually creates and nurtures innovations.

I think this is a roomful of innovators, and I think there are lots of opportunities for you guys to take part of. What are the opportunities? The opportunities are there is $30 billion incentive money in terms of technology going into providers and hospitals in terms of urging the provider community to actually advance health information technology.  That is not part of the Affordable Care Act, it is part of the stimulus package. So $30 billion is there. It is going to be spread across the community. We can see it actually in the rise of healthcare stocks, technology stocks – 82 percent increase in health technology stocks.

The other thing is a little bit about the waste that Don Berwick talked about. If we look at the national budget of $2.6 trillion, if we take 20 percent of that, there is about $520 billion in waste that we need to reduce. Even if you look at one percent of that, it is a huge amount that we could actually save the country, if we could think of creative ways. We are actually seeing that in the industry; we see a lot of folks moving into two huge sectors.

The first sector is managing data, so this explosive field of data analytics and risk management. How can we harness and mine the power of data across the country to actually manage risk? It is risk management — being able to predict and target very, very few resources with a laser beam and target those high risks – those patients that have the co-morbidities, those patients who have the risk factors for becoming a second readmission patient.

We see that with United Healthcare buying up exchange information technology in Exilado. We see Aetna Healthcare buying up Medicity. We see Pfizer partnering with Humana and Medco to try to analyze millions of patients of data to look at new gene pool therapy. We see Walgreens partnering with iPads to engage patients. That is all about the data part and we see lots of partnerships.

The second pool is patient engagement. There is a huge new industry called gamification of healthcare and we see lots of games popping up with the X Box, mobile phones, etc., to really engage patients and consumers because that is what the next generation of healthcare will be driven by. It won’t be driven by providers, it will be driven by consumers. My bottom line is there are lots of opportunities for innovations and I think this room is full of people who could actually drive that process. So, thank you.

Pressler: Okay. So, before you step down I have a couple of questions for you. You have a national perspective. You’ve seen what is going on across the country and other states. What was it that drew you to be able to come to Hawaii and dedicate your life for the next year or so to our efforts here in Hawaii? What attracted you here?

Tsang: It’s the poke.

Pressler: Good answer but that is not the answer.

Tsang: Okay. I am a realist and in order to achieve tangible results you need to have the right components and when the governor called up and said, “How would you like to help me transform Hawaii’s healthcare system?” And after looking at the facts, from looking and meeting the people I really felt that this was a Petri dish of all the right substrates and you just need a little bit of a catalytic enzyme. I think all of the pieces are here and really we just need a little bit of spark to really go in the right direction and I think all the pieces and the right people are here. I think this is a great place to actually do something that could be accomplishable and we can actually do something here so.

Coral Andrews (Health Insurance Exchange): My word is the connector. As I talk about the Health Insurance Exchange, otherwise known as the connector, I really view it as a place where all other things will come together. Because the Health Insurance Exchange is relatively new, part of my five minutes is going to a bit of a 101 (course), so if you’ll bear with me I’m going to build that to getting into where the venture capitalist interest may lie.

The Health Insurance Exchange was created as the Hawaii Health Connector out of the 2011 legislative session and we’re unique in Hawaii if you look across other states because our state stood it up as a private nonprofit. It has created some interesting machinations in being able to move money to support the private nonprofit but we’re getting there. I think the idea behind it is to enable us to be fast on our feet, and we have great partners at the table and helping us to do so. We’ve talked about the Federal Health Reform Bill, a lot of different names for it: Obamacare, Affordable Care Act. ACA is usually the acronym you hear among healthcare folks but the idea behind Federal Health Reform was to create greater access to care and to expand coverage and the Health Insurance Exchange is an opportunity for us to be able to create access to healthcare utilizing technology like Dr. Tsang mentioned. And in Hawaii, we’ll have many partners at the table with us. The Insurance Commissioner will be regulating the healthcare plans.

The target market for the insurance exchange is small businesses and I imagine that is going to be many of you folks in the room. Individuals will also come to the Health Insurance Exchange. The small businesses will be companies with 50 or fewer employees, but the idea is to be a bit like Travelocity where you’ll have a front webpage screen where individuals or small businesses will be able to shop the exchange. The Insurance Commissioner will qualify the health plans. Based on them meeting the federal requirements and having essential or minimum health benefits they will be able to participate on the Health Insurance Exchange.

We do have a short timeframe to be able to get going by October 2013. The health plans need to be able to have themselves positioned with their health benefits to be posted on the website and by January 2014, we are going live. We’re very excited that Health and Human Services just awarded us a $14.4 million establishment grant.

When we talked in preparation today, I shared with the group that I have a son who is a senior in high school preparing for college and his interest is in engineering. So, I tried to imagine for venture capitalists, what would be the interest be in the Health Insurance Exchange and here’s what I would say to you is this – for those who are early into their careers, imagine that you’re going to need to have skill sets that are more interdisciplinary. We’ve heard about IT. We’ve heard about health. We’ve heard about economics. So, again working with our son and looking at engineering, we’re seeing colleges position themselves that way, where they offer interdisciplinary preparations.

I would encourage all of you as you’re anticipating the business models, don’t just look at a silo structure where it’s just healthcare, but IT is going to have a heavy role as you go forward and you’ve heard that from all of the panelists; efficiencies as well. We’re hoping to achieve those efficiencies with the Health Insurance Exchange. Five minutes isn’t a lot of time to tell you everything you want to know about the Health Insurance Exchange but we do look forward to pushing a lot more information out into the community about the connector and our focus of course is in assisting consumers to be able to access healthcare so we have a healthier Hawaii. Thank you very much.

Pressler: Coral, a couple of questions. First, the connector will be up and running in January 2014?

Andrews: Right, January 2014.

Pressler: Will we have everybody insured? Right now, we have about eight percent uninsured in the state. Will we go to zero percent uninsured ever?

Andrews: That is a good question. For those of you watching the news, we’re really not sure what is going to happen to the individual mandate that is being contested, which is part of the Affordable Care Act. So, I would say that conceptually the idea is to reduce that.

Pressler: About two percent?

Andrews: I will have to say fewer than five percent. But I think that we will have to see how it plays out. Certainly, it’s a goal.

Pressler: Okay, one other question. Right now, we have all this federal dollars to get the connector up and running. In 2014, we need to be able to pay for it ourselves. Is that correct? How do we sustain this after the federal dollars dry up?

Andrews: The Health Connector is governed by an interim board so we have a lot of voices at the table, including the insurance companies, and the consensus among the group is that we’re want it to be sustainable by fees assessed on the insurance carriers. As you can imagine, we need a large volume to pass through the exchange, so the ruling on whether or not the individual mandate stands up is going to be critical for us to anticipate how many users will be passing through the exchange.

Bruce Anderson (Hawaii Health Systems Corporation): I think the best single word that best summarizes what we do is safety net. Hawaii Health Systems Corporation or HHSC is the safety net of the care system in the state of Hawaii. We provide emergency services and other essential services to the uninsured, the underinsured, those on Medicaid, and others with special healthcare needs.

There are many other facilities that think of themselves as safety nets but our business is really to keep our doors open and make sure that people in Hawaii have the services they need. In many areas, particularly the rural areas, we are the only providers of healthcare. We work in partnership with physicians and clinics and others in all these communities, but we are the most important and largest provider of care on most of the neighbor islands and, in fact, HHSC is the fourth largest public health system in the United States.

People don’t realize that but it’s a very large system by any standard. We have 13 medical facilities. I’m going to share a little bit about what we are, because people on Oahu often don’t know about HHSC unless they’ve driven by Leahi or Maluhia, but we do provide care on most of the islands. West Hawaii, East Hawaii, Maui, Oahu, and Kauai are separate regions in the HHSC system. Each is very different and has different healthcare needs.

In Maui and the Big Island, we maintain three large acute care facilities that provide the full spectrum of healthcare and they are supported by critical access hospitals, which have an emergency room and provide long-term care to the communities that we serve. On Maui, we have a major facility in Kahului and also a long-term facility in Koloa. On Kauai, we have two facilities that provide care on the east and west side in collaboration with Wilcox, which is a partner of Hawaii Pacific Health. And on Oahu, we really just have two facilities, Leahi and Maluhia, which are primarily long-term care facilities. Kahuku is an affiliate of HHSC and we provide care for the North Shore community, emergency room services, and we have about 25 long-term care beds. So, that’s a basic picture of what we do and what we are, but again, our major function is to provide care and support to those communities in the rural areas. We’re not unlike many other mainland organizations in that respect. The major challenges that we face today are related to maintaining those critical services in view of cutbacks and state funding and the Medicaid QUEST and federal cuts to the Medicare program.

The majority of patients we see are Medicare patients. In fact more than 60 percent are Medicare or Medicaid patients, and as many of you know, funding for these programs are entitlements to the state regardless of the cost and the state received approximately a one-to-one match in federal funding to cover the cost of services to patients who qualify for these programs. If the state cuts back on the eligibility or coverage, the costs are then shifted exclusively to the state that is to you as taxpayers.

The Federal Health Care Reform will actually have a tremendous impact on HHSC. It is projected to adjust the reduction in the market basket. Those are the inflation area adjustments that are rejected, will cost HHSC approximately $56 million and lower Medicaid reimbursements over the next ten years. Exacerbating the situation is that Hawaii receives the lowest investment for hospitals overall. We have an annual budget of about $600 million, receive approximately $72 million from the state in taxpayer’s dollars. In other words about $9 out of $10 are reimbursed by the payers, but we are very concerned by the cutbacks and federal funding, assuming we need to maintain these services.

I just wanted to mention a couple of things we’re doing, in keeping with some of the suggestions that we have heard already. We recently signed a contract with Siemens Healthcare to assist in planning and installing a comprehensive electronic medical record system. We spent $58 million on this project and we will actually spend that much over the next five years, but that will facilitate the transfer of medical records and improve patient safety.

Pressler: Bruce, do you ever foresee a time when the Hawaii Health Systems Corp., the state hospitals — will be self-sufficient and not requiring appropriations every year from legislature?

Anderson: Candidly, no, I don’t. I think we can reduce our expenditures. We have actually looked at increasing efficiencies and we are trying to work more closely with the private sector facilities and coordinating care. So, I think we can work more efficiently. Our workforce is all unionized. Many of you know that. So, we are trying to figure out ways to be more efficient and more flexible in managing our workforce. So, we can reduce the cost but I think there is always going to be a need for a state subsidy to keep the safety net intact.

Pressler: Okay. One other question, which is a little harder, I think, I know there have been consultants that have looked at solutions to the ongoing costs of the State Health Hospital System and recommended privatization of the state hospitals. What are your thoughts on that?

Anderson: Stroudwater Consulting Group recommended that we eliminate the civil service system, which I don’t think is going to happen. My view is to try to make the system work. We are working closely with the unions to try to get that flexibility that the private sector has, going more toward a 30-day daytime off system instead of the excessive vacation and sick leave days that many state workers currently enjoy, but we are looking more to working like a private sector organization would. That’s been the focus for us for the last few months.

Pressler: Now I’m going to give the panelists an opportunity to field a few questions amongst themselves if they wish, and if they don’t wish to, we have lots of questions from the audience. Do any of you want to field any questions to each other? While you’re thinking about that, let me ask one that pertains to all of us. I’ve got quite a few questions here about prevention. Now, why aren’t we focusing on prevention? What are we doing about prevention? Let’s look at this from the perspective of the economic transformation. Who wants to address the issue of prevention?

Tsang: I could start. Prevention has had a slow uptake in terms of policies and that has largely to do with the evidence and in the literature in terms of the economics of prevention. The Congressional Budget Office, as well as a lot of the hardcore literature, hasn’t shown equivocal evidence or unequivocal evidence that prevention saves money. I know that’s counterintuitive but that’s what the evidence shows. But with that said, a lot of what Beth and I are doing does have a prevention aspect because you’re talking about care coordination and you’re talking about identifying outliers in the system that would benefit from interventions. That set of interventions would have a huge prevention piece of it. When you have 200,000 patients in the Medicaid system and you can identify, with the push of a button, which patients have not received a colonoscopy, that’s using technology to do population health and population health management in the area of prevention. We may not have said it explicitly in our talks but I think it’s definitely there.

Giesting: I would also like to bring in the aspect of engaging consumers more in their own healthcare. That really is one of the things we are working very hard on, and it really gets to the heart of prevention. If people are more engaged, if they’re more aware, if we can help them be partners, very competent partners in improving their own health, then that is a real positive direction that we can go. Regardless of the evidence, I think that will have an impact on health and eventually costs.

Andrews: I would like to build off at some of what Beth has said. You’re going to hear more and more with the Federal Health Reform implementation, the role the consumer is expected to play in his or her own health. I would push back on that question and on the way the way we define prevention. There’s a lot of preventive activity going on out there through consumer education. I know just standing in line I was talking with some of the business magazine folks and there was a recent conference that was held for women. So we’ve got to start thinking about what prevention looks like. I would also like to suggest that at least through efforts similar to the Health Insurance Exchange – the idea is to create access to care. By creating access to care, you help shape the behavior of the consumer in how they utilize their services as opposed to what we see in the system now — an over-utilization of the wrong kinds of services. An example would be the emergency rooms. I think that there is prevention going on. Just broadening what prevention means — this really is a lot about educating the consumer around healthcare.

Anderson: There’s one segment of the population that I think is critically important. That’s the elderly and I’ll just give you an example of a prevention effort that I think is important. We’ve been expanding our adult daycare, and just as an anecdote… (Reimbursement is a huge issue in this area) … but we charge $85 to drop your parent off for the day. If that parent were in the institution (for the day) it would probably cost us 10 times that amount per day. So the longer we can keep people at home and keep them healthy, particularly the elderly, I think the better off we’re going to be in reducing our institutional costs.

I do have a question to Beth, on the issue of continuity of care and continual care issue. I think one of the major issues I see is not having available services where they’re needed. You’re familiar with waitlist problem of not having skilled nursing in the community, which requires that hospitals keep patients longer in acute care beds than they should be because there is no place to put them where they get the appropriate level of care. That’s an area where I think the state can take an active role in trying to support the full spectrum of services that are needed in the community. I’m wondering what your view is on the role of government there?

Giesting: I believe that the direction that we are looking to the extent we can is more in the way of community and home services — like the adult daycare that you talked about. People want to stay in their own homes and we want to help facilitate that, and many of the things that we are trying to do in improving care management will help keep the whole system together.

Pressler: A question for Bruce. Someone asked how much of the state hospital budget goes to OHA?

Anderson: As far as I know, none goes directly to OHA. We have some facilities on ceded lands. We have to take care of all Hawaiians and it was a point in our ancestry so we’ve talked to OHA and others about the issues and we’re working closely with them.

Pressler: We have quite a few questions about the exchange, Coral, so let me start with just the simple one. What percent of consumers are expected to participate in the exchange?

Andrews: It’s early on and we don’t have numbers forecasted. The best benchmark would be looking at the current Medicaid utilization. What I haven’t shared with you is that part of what is going to attach to the connector IT functionality is going to be the Medicaid Eligibility System, which the state is working on transforming to an upgraded IT platform. At this time, we don’t have the demographics laid out yet but I look forward to sharing that with you all at a later date.

Pressler: Who are the eight percent uninsured and what are the projected annual operating costs for the exchange?

Giesting: I could probably say a few things about the eight percent uninsured. I think it is certainly not a monolithic group but there are many reasons why people remain uninsured in our state despite prepaid healthcare. Some of the folks are unemployed and can’t afford COBRA, or their working spouse can’t afford dependent care coverage. There are people who work part-time jobs, people who are self-employed, and then we have those people who can’t work with the system very effectively, such as homeless people and sometimes immigrants who are not working. We have a whole range of who are uninsured and providing affordable insurance products for them is going to be really a big boom.

Andrews: Thank you, Beth. Because the Medicaid component and the uninsured certainly is something the state has definitely dialed into. Let me just back out of the question a little bit because it appears that there is some expectation that we’re further along in the planning and preparation for the exchange then than we are. So, let me give you sort of an idea of where we are, to be able to achieve answers to those questions.

We’ve got to reach back and do a gap analysis as part of our implementation – planning and implementation of the Health Insurance Exchange. Through that gap analysis we hope to identify more specific information about who the users of the exchange are going to be and what the projected costs are going to be in the long term. But as we design the scope on the front end of the exchange, we have to be mindful not to build too big. Does this sound like something you all keep in mind when you create things? Because we have to ensure that the sustainable costs are ones that we are will to be able to cover in the long term. We do look forward to completing that gap analysis, and then we will be going back for a level II implementation grant. But at this point, we are just trying to stand up a nonprofit corporation and get the contracts for the IT functionality and get staff for the connector. So, keep in touch.

Pressler: How do you plan to deal with the issues of adverse selection and administrative overhead costs, which have been big problems for exchanges elsewhere?

Andrews: I believe that the concepts behind HHS setting up the regulatory structure of the Health Insurance Exchanges is an attempt to avoid some of those pitfalls. It has specifics about the kinds of benefits that must be included in their health plans. I anticipate that as the Insurance Commissioner is setting up some of the regulatory oversight of the plans that those kinds of conversations will be ones that we’re going to dive deeper into. The idea is that you want all comers to represent the health insurance plans, to participate on the exchange, and at the same time you recognize that there is going to be a cost structure that they have to consider in order to be able to participate and not lose money.

Pressler: Tom, who will be making the decisions regarding if hospitalization could be avoided or if a test is unnecessary?

Tsang: I guess we can talk about at least coming from CMS (Centers for Medicare & Medicaid Services), which would be applying it to Medicare patients and to Medicaid patients. That policy has already been set in terms of admissions or actually readmissions, so the policy for the readmissions is that within 30 days the second admission through that one patient would not be paid for by CMS and applied to at least three specific conditions: congestive heart failure, pneumonia, and heart attacks. On the commercial side, the evidence shows that 20 percent of all admissions end up being readmitted. That’s partly because of poor discharge planning from the hospitals and it’s partly because of the nature of the processes in place during the transitioning of care: medication lists are not handed over to the receiving doctor, planning and engagement of the patients, etc.; these things are not being done properly and that is why the patient comes back to the hospital within five days for the same exact symptoms. So, the policy is to ding and to kind of push the system forward into putting processes in place to eliminate or reduce the readmissions process.

Pressler: We were starting to run out of time. I have more questions I’d love to ask but we’re starting to run out of time. So, let me ask if payments to primary doctors were doubled, access would increase, hospitalizations would decrease, and millions of dollars would be saved. Why can’t doctors have control of their pay and their patients’ health instead of giving all of the resources to insurance and other companies? I think that was a statement but I think that many of you can address the issue about the focus on prevention and investing in patient-centered medical homes … Well, I think question has to do with improving payments to primary care and access to primary care.

Tsang: I think there’s an acknowledgment, at least nationally, from folks that primary care doctors need their payments and the reimbursement system needs to be realigned and redesigned. That’s why at least with Medicaid, the payments of primary care doctors are being increased through Medicare values.

Anderson: There’s a huge shortage of primary care physicians in Hawaii that we need to address and I’m sure in our next panel we’ll talk to some of those issues. But the really difficult part is getting physicians interested in working in many of the rural areas in Hawaii. This is from our perspective and we do need to find ways to compensate them.

Pressler: I think our second panel can address some of these questions. We each have one minute a piece to make closing comments if you wish before we pass this on to the next panel.

Anderson: I think maintaining our critical safety net service is extremely important, given the isolation of Hawaii and the challenges we have with the economy. We have to find ways to make the system work more efficiently. Now we see there are some opportunities there, but this is something we hope we can work with all of you on and I’m certainly welcome to any suggestions or comments you might have.

Andrews: After being in healthcare now for almost 30 years, it’s no wonder we’re so confusing as an industry — look at the complexity of our system. I’m looking forward to with the advancements of IT and as Dr. Tsang said with innovation that we are going to achieve greater efficiency. We’ll see better utilization of the dollars in the healthcare delivery system but we’re going to need the ideas and the forward-thinking types of environments that you all practice to come on board and help us out. Certainly within the connector, the philosophy that we have is we want to create opportunities to grow knowledge around health and around IT here in our own state.

Tsang: Hawaii could really serve as a model of excellence for the rest of the country. It is in some ways the gateway for Asia and as we look at all this new therapy in terms of genomics, bioengineering, and large molecular therapy in the pharmaceutical industry, I think there needs to be a consideration for the Asian-American/Pacific Islander native of Hawaii and segment of any clinical trial. So, I think there could be a whole new industry here in Hawaii in terms of biogenomics.

Giesting: I would like to remind everyone that the healthcare sector is very big, diverse, broad with lots of vested interests that might like to keep it the way it is, and while it is already taking up 17 percent of the GDP, it is slated to go higher and larger, much faster than inflation. We have just got to change it. Despite that it’s a very daunting job, I am really optimistic and that’s because there is an overwhelming number of people right here in this room and in our state who are allies in making sure that we can change the system for the better.

Pressler: Thank you. I’d like to thank our panelists for their participation and for those who had questions that were answered, glad to hear them and I’m going to pass on the ones I have written here to Josh because I think some of them pertained to the second panel so let’s hear it for our panel. Thank you.

Jay Fidell (ThinkTech Hawaii): How about a warm welcome for the moderator of our second panel, Senator Josh Green.

Senator Josh Green (Chair, Senate Health Committee): Aloha, everyone! I’m going to layout a few facts, large concepts, and then we’re going to dive right into our panelists.

So, does the healthcare system work in America? Well, it works for a lot of people. Let’s be candid about that. It does work for a lot of people. But we’re also talking about for whom it doesn’t work. It doesn’t work for the working poor very well. It doesn’t work for children that live below the poverty line. That’s two large groups. And it doesn’t work for a solid part of the middle class that has really serious health problems that are extremely costly and pushes them over the edge, so keep that in mind.

Another thing to keep in mind also because the group here is very focused on economics as well as the humanitarian issue is that in 2001, America spent $1.3 trillion on healthcare. In 2011, we spent twice that — $2.6 trillion — on healthcare. What does that tell you? It tells you that there is incredible expansion. It tells you there’s an incredible opportunity to get involved in solutions. It tells you that number could continue to grow and therefore, people should be very attentive from a business model standpoint, of helping to be a part of the solution because it’s a good place to have a career. In Hawaii, we’re 750 doctors short right now, a very large number.

Hawaii has about 3,000 practicing physicians. I’m one of them and I’m sitting in the Senate — so we have a very serious shortage. By 2020, we will be 1,500 physicians short, and that is a very big problem. I want you to keep that in mind when we talk about the scope of what the healthcare system will look like and what kind of solutions my panel might be recommending to deal with that. I would also toss out another number.

In 2020, 43 percent of the physicians in this state will be 65 years or older. That’s a very big problem when you think about the grind that goes on in healthcare and the taxing nature of delivering healthcare in a challenging system. When those people retire, the problem could get much larger. And I would tell you this, if we can’t deliver healthcare to people – primary healthcare – all the mandates in the world are not going to be worth anything.

So from my perspective, our solutions have to be focused at least on that provider base. What I would recommend is that we’re going to need a primary care renaissance. We’re going to need to drive the next generation of healthcare providers. I don’t just mean doctors. I mean nurse practitioners and all the rest toward primary care and I hope that some people will be able to address that today.

When we talk about giant expenditures in our country for anything, one thing that’s important to people is that they get their money’s worth when they spend it. I’m not particularly concerned — and this may sound a little leftwing or crazy — but I’m not particularly concerned about spending trillions of dollars in healthcare.

I’m concerned about spending it badly, or not spending it on what people actually need. Two percent of the population consumes 65 percent of our healthcare resources. That’s one study. It is certainly bad. But is it that bad? We could debate that for hours, but in no other business is that tolerated and in no other system will that be sustainable. So, that has to be addressed as well, but I’m willing to see large percentages of our domestic – our GDP and so on spent, because if people value the service, if it makes a difference in their life, if it creates good jobs and professions, then frankly, I think it’s good from a moral standpoint to get those people to healthcare.

If you told me today that my 4-year-old had leukemia, what percent of the dollars that I earn from my three jobs would I spend on that leukemia? If I could get her well, if I had a good oncologist, I might spend all of it. Think about that. Think about what healthcare means to people and what its actual value is, and then think about how we get that healthcare to the people who need it. On our panel today we have Jerris Hedges, Dean of the John Burns School of Medicine at UH; we have Hilton Raethel, a senior vice-president at HMSA; we have Dr. Nadine Tenn Salle, a practicing physician and President of the board of the Hawaii Independent Physicians Association; and we have Art Ushijima, the CEO of Queen’s Hospital.

Jerris Hedges (Dean, John Burns School of Medicine): This is an exciting time even though we are all facing some significant challenges. The fact that people come together for these forums gives me great enthusiasm. In keeping with the last panel, we were asked to come up with a word to symbolize what we’re going to speak on, and my word is transform. I’m hoping that we will inspire you and others to transform what we’re doing. I’m going to talk a little bit about the role of the medical school and a significant opportunity that we have that has added simplicity in terms of concept that I think will play into what you heard from Sen. Green. But we cannot continue doing what we’re currently doing. We don’t have enough funding and we don’t have enough providers to implement care in the way that it should be delivered. So how do we get there? What can we do collectively around that? You’ve heard a little bit about the shortage of providers here in Hawaii but it’s not just here in Hawaii. It’s a national shortage.

In 2025, it’s anticipated that there’ll be 120,000 fewer providers than what the demographics in the U.S. will require. So we cannot simply pull from other states to meet the needs of Hawaii. We need to be able to build programs here that will help us train, recruit, and retain physicians for our needs and other healthcare providers to help us deliver the healthcare that we need for the future.

What can we do here through the medical school? We can incrementally increase the class and the size for the medical school and we’ve been working at that. However, that’s challenging because our model needs to be addressed and we also need to look at supplemental models that will help us leverage what we do have. It’s an expensive proposition to train additional physicians and there’s a limit to how much we can do that.

Can we create a more efficient model of training? I think we can and if we look at this from a revolutionary standpoint, I think what’s needed is to work with both the legislature and Hawaii Medical Board to develop a new category of physician that is not constrained by some of the processes that we have now in national accreditation requirements, but will allow us to supplement what we’re doing in our medical education and it can be tailored to our needs on the neighbor islands and other rural sites.

It should be primary-care based and ambulatory-focused. It should be one that is more economical to implement and one that will result in trainees with both less educational debt at the completion of their training and with anticipation for a more modest salary. I would like to outline a concept that was proposed by Daniel Hunt who is the Executive Director for the accrediting body for medical schools in the U.S. He proposed a Doctor of Clinical Practice degree, to be done in conjunction with current medical schools — essentially a streamlined path into becoming licensed, so instead of the four years of medical school training, there will be three years.

The three years would be based on the clinical knowledge set that we now provide but would be focused more on application and less on the basic science elements. The anticipation is that the in-hospital subsequent training would be more attenuated and would focus on what one needs to do for continuity of care. The bottom line is it would complete your training and become ready for license in four years rather than the four years in medical school plus the three or four additional years in residency training. I think this is something we can do in Hawaii.

This has another tremendous benefit if we can do this in conjunction with our current medical school and residency training. The one great benefit is the trainees that come out of such a program would be targeted specifically for Hawaii. Hawaii would be the site in which they could be licensed and we wouldn’t be losing physician trainees to other parts of the nation. I have other things that we can talk about — more specifics related to such a proposal — but the foundation for this has already been built. The medical school has a problem-based learning integrated curriculum that can be adopted with minor modifications to allow this sort of program to develop. I’ll stop there.

Green: Dean, stay for one question. How many students graduate a year from the medical school? If you have all the financing you needed, how many could you possibly expand to in five years, and does it make any sense to start including mid-level providers in some of the training — physician assistants, nurse practitioners, and so on — at the medical schools?

Hedges: Under the current system, 66 students enter a four-year program each year. Anywhere from 62 to the full 66 complete the training. We could expand with supplemental funding to at least 75, if not 80, students. I think we could do better with expansion if we do this supplemental program, and have two tracks for people to enter, and with such a program I think we could have closer to 100 trainees per year in Hawaii, which would get us closer to what we need to maintain a steady state. Could we do this in conjunction with other professions? Absolutely, in fact, I think the pathway into such a program would be one that would normally welcome those who came from either advanced nurse practice programs or pharmacy into such a program as a conjoined effort. So, I think it is something that we could implement and more broadly include other disciplines in the program itself.

Hilton Raethel (Senior Vice-President, Hawaii Medical Service Association): You’ve heard a lot about the issues in healthcare and you’ve heard a lot about what could be done and what maybe should be done. I’m going to spend a few minutes today talking about some of the things that are being done right now. Specifically, I want to talk about the issues of cost and quality that everyone has talked about, the increasing costs and the issues with quality.

We recognize that at HMSA. We’ve been serving the community as a nonprofit mutual benefit society for 73 years. I’m proud to be part of HMSA and we have embarked in a new direction to help solve these problems, including a new program across our hospital network.

Historically, healthcare in Hawaii has been paid predominantly on a fee-for-service basis and what that means is it’s basically a piece-meal program. In other words, the more you do, the more you get paid, and you get paid based on volume, not value, and on quantity, not quality. Now, that is a terrible set of incentives for healthcare, but that’s the way healthcare has been reimbursed in Hawaii and across the United States for many decades.

We’re going in the process of transforming that and you didn’t ask me about my word, Josh, but my word is transformation, so which is not quite transformed but it is transformation. We’re in the process of transforming healthcare and if you want to change behavior, you have to change incentives. So, we’re changing incentives. What I mean by that is that we are paying hospitals and doctors now for how well they treat patients. We’re paying them for taking care of a patient population. We’re paying them for quality, safety, efficiency, reducing harm.

This is not something you change overnight. You can’t change a whole system of care in just a few months or a couple of years. We started last year working with every hospital in our provider network across the state, setting a goal of having 15 percent of their reimbursement tied to these outcomes for quality, safety, and efficiency.

That’s one of the initiatives. I also want to talk about primary care. We believe that as a nation, we have underinvested in primary care, and we’re working actively to fix that. We have two programs in place. One of them is a pay-for-quality program where we are looking at what is the best evidence-based care for patients with chronic diseases such as diabetes, asthma, heart disease — what does the best evidence say about what those members should be getting every year. We’re putting those metrics out there. We’re saying to the doctors, here’s the metrics, here’s the threshold, here’s your population. This is how many diabetic members you have. This is the scoring on those metrics and we’re going to pay you to take care of those members, to bring those patients in, to make sure they get their eye exams, to make sure they get their foot exams, etc. We’re paying them to take care of their patients.

In addition to that, we have another program for primary care physicians, who are dealing with patients in a medical home. That program runs in concert with the pay-for-quality program and helps physicians support or develop the infrastructure needed to take care of their patients. So that’s another revenue stream in addition to our pay-for-quality, so we are putting double-digit increases into our budget, year-over-year increases for primary care. We believe we need to emphasize more primary care. We believe we need to strengthen the relationship between the patient and the member, especially patients with chronic disease. We’re working with the employer groups across the state to get the employers and employees engaged because that’s a huge issue. We have to get patients connected with their doctors, especially patients with chronic disease.

So again, HMSA has already embarked on these initiatives statewide. We’re proud of these initiatives. We’re proud of what we’re doing. We’re proud of our partnerships with organizations such as Queen’s, Hawaii Pacific Health, HHSC, Kuakini, and Castle. They are all involved and we’re proud of that partnership with our primary care physicians to help transform the healthcare delivery system in Hawaii.

Green: One question that comes to mind is as you try to realize savings and move money towards primary care, what’s the prospect of sharing savings with businesses, the business community, or the providers themselves should you realize those achievements?

Raethel: We absolutely believe that we can bend the cost to it. In other words, we can reduce the rate of healthcare inflation in the country. In terms of cost saving, you are talking about two particular groups. One is employers; the other is providers. With employers, the cost savings come from the reduction in healthcare premiums, so the rate of inflation comes down and we believe we’re already starting to see evidence of that. Employers get the benefit because they end up paying less year-over-year in terms of rate increases.

Now, in terms of sharing savings with providers, this is a huge issue. Because every time a provider prevents a re-admission, that’s a loss of revenue. Every time they reduce a complication or eliminate a complication that is reduced revenue. So we are working with our providers to come up with mechanisms to make sure that as they go through the transition from a volume-based model to a value-based model that they have the revenue to support that transition.

Dr. Nadine Tenn Salle (Hawaii Independent Physicians Association): I’m supposed to be the one in the group to sort of bring it all together, because after this entire transformation takes place, the question is, will you be satisfied? Can I actually practice under the model that is created? In five or 10 years, will you, I, your child, your parents, be able to find a quality physician and be able to access treatment in a timely manner?

To give you a sense of what perspective I’m coming from, I’m in solo practice. I practice at Queen’s. I’m involved with internal medicine, which is adults, and pediatrics. So, I’m a little bit of a typical private practitioner here in Hawaii. I’m in a non-group practice. I’m located fairly close to a major hospital but I’m also a dying breed. I am actually a breed that may not survive this healthcare transformation because practitioners such as myself, despite the reimbursement that is being put in place, can’t afford the overhead. In addition to that, as Dean Hedges referred to, my young colleagues are choosing to go elsewhere.

They’re going out of private practice. They’re deciding not to practice within the state of Hawaii, much less the neighbor islands. It’s important that as we develop the models, as we come together, as we try to collaborate to make this system work — because it is that important and it is that lucrative, and it is as Dr. Tsang, said a petri dish that if we do it right it could actually work — I would like to keep at least four things in mind. No. 1 is the patient-physician relationship. We have to remember that this is what it’s all about.

The second is that we do create a system that will serve our entire community — not just the working middle class, and to create government policy that says that we have to take care of the indigent and the poor and the medically complex.

The third thing I would like to put before you is this: As venture capitalists and people who like to practice at the top of business, physicians also like to practice at the top of their game. When this model is created, I think physicians will want to be able to practice at the top of their game and not be surrounded by things placed on them by business models and insurances. The final thing I want you to remember is something that has permeated both panels today, and that is a re-evaluation of preventative care, which we believe will probably be housed under the patient family-centered medical home.

Understand that there might not be immediate economic payback on preventative care but I think just common sense tells us that there is a long-term payback for preventative care. Preventing people from being obese so they will not become diabetic, or if they do, they will become an easily controlled diabetic, and will not have hospitalizations and cardiac complications. Oh, I forgot my word. My word was sustainability. Can we create a system that can actually last and actually survive practically?

Green: Dr. Tenn Salle, what’s the toughest part of your day as a provider, and in that context, is there something that comes to mind that someone who is a big thinker or an investment broker or an investment capital-type person in this room might be able to help with that? So, what’s the toughest part of being a doctor today for you?

Tenn Salle: Everybody sort of knows the tale of being a physician. It is a very difficult life to lead. It’s hard work but what keeps physicians doing it is a certain amount of love for what they do. What is happening — and I’m young enough yet old enough to see a contrast — is physicians are increasingly being pulled away from what they love to do, which is actually take care of patients. My day often starts around 4:30 in the morning, and I just get home to put my children to bed around 7:30 or 8 at night — and that’s if I don’t get called back to the hospital. My day is popping in and out of rooms — literally. I’m taking care of a patient, and then I have to step out because I need to speak to the insurance company — because they work in an 8 to 4 job. My medical staff can’t justify why I need to transfer my patient who has a complication of Hodgkin’s lymphoma in radiation therapy. It is me that has to sit down and do that. I am being more and more involved in administrative things. That’s not necessarily a complaint, but it’s also not calculated into the reimbursement that doctors get either personally or into the model that we’re supposed to be responsible for.

Green: So, you’re saying that they need technology to help alleviate that problem of taking you from one of your patients?

Tenn Salle: Absolutely, I’m a big fan of technology.

Art Ushijima (Queen’s Medical Center): My two words (I’m going to cheat) are aging and beds. Recently, I heard a statistic that there are 70,000 Americans who are 100 years or older today. By the year 2050, which is less than 40 years from now, that number will grow to one million. Some of you in here today will live to be 100. I’m going to share some statistics today and you may challenge the validity or reliability of this statistics, but the magnitude I think is what you really need to be attentive to and I’m really focusing on the Medicare population.

So today, there are about 45 million Americans who are Medicare beneficiaries. Historically they have been growing about 500,000 beneficiaries per year and at an annual cost to the U.S. Treasury of about $600-plus billion a year. Now, there are 77 million aging baby boomers — people who were born between 1946 and 1964. The first year of that group — those born in 1946, those people turned 65 in 2011. If you average the birth rate of those born between 1946 and 1964 — there will be more than four million people per year turning 65 for the next 27 years, So the Medicare enrollment is going to increase substantially.

So the cost impact of the Medicare program is going to continue to escalate and that’s really the big financial issue that is facing the country today with respect to Medicare population. In Hawaii, we have more than 1.2 million people today and approximately 16 percent of the population is 65 and older and that the annual cost of Medicare is about $850 million or close to $1 billion a year.

Hawaii has one of the lowest reimbursements in the nation for Medicare. The cost per enrollee for Medicare is about $5,300 per enrollee in the state of Hawaii. Nationally, it’s about $9,300. In the city of Miami, it’s about $16,500; there are significant disparities in the cost of Medicare across the country. By 2030, about 22 percent of the population of Hawaii (which itself is expected to increase to more than 1.5 million) is expected to be 65 or older, and just using today’s costs, the annual costs of Medicare will rise to approximately $2 billion.

At Queen’s, we’re trying to anticipate what the care delivery needs will be, what the bed needs will be, and what the ancillary service needs will be. Today, the age group from 64 to 74 has between 23,000 and 25,000 inpatient admissions each year. If you project that forward to 2030 that number goes to nearly 50,000 inpatient admissions. That’s assuming that things continue as is and so that age group – that demand for in-patient beds will increase. Right now, we’re estimating about 350 more additional beds will be needed statewide, on top of the 3,000 beds in the state today. How do we deal with that?

At Queen’s, what we deal with is the most expensive part of the healthcare system and that is inpatient (hospitalization) area and we will continue to see increasing demand as the population ages. I think strategically we need to look at how we’re going to function and to improve services at the primary care level to keep patients out of the hospital. We need to concentrate services to achieve scale and to provide as much of the services on an outpatient basis. I think we also need to collaborate and work together as a community of providers and payers. I’m a firm believer also in investment in technology — not just information technology but technology to improve care in terms of diagnosis and treatment.

Green: So far today, we’ve heard from our panel, from Jerris, about a new way to train more physicians and basically a new track of physician training. From Hilton, we’ve heard an expansion of a new model that is pushing money towards primary care and prevention. From Dr. Tenn Salle, we’ve heard what is really like to practice in the trenches and what the difficult part about being a physician is, about the time that you lose with your patients these days, and then from Art, we’ve heard about the crisis that may exist for long-term care and the economics of the hospital. And that takes me to our first question. Art, someone asked, if we do our job to keep patients out of the hospital, then why will we need more beds?

Ushijima: It’s not so much that we’re not trying to keep patients out of the hospital, because there are lots of efforts going on throughout the community and nation to do that, but people will still just get sick, and will get injured from trauma. People age and our bodies deteriorate over time and some point in time people are going to have to be hospitalized.

Green: And have you seen more people being admitted or less over the last 10 years?

Ushijima: Statewide the numbers are increasing. Hawaii has low utilization rates compared to the national, but the total number of admissions is growing statewide, although at a slower rate than nationally. We need to continue to invest in technology because as we’ve invested in technology we then have been able to keep patients out of the hospital. For example, when I started in healthcare back in 1973, there was one CT scanner per million in our population. What I’ve seen over time with investment in technology is that there is little or no exploratory surgery on the surgical schedules today. We’ve been able to by investing in technology and the capabilities of people that we’ve been able to provide better care and also keep people out. At the same time, the demand still continues to increase.

Green: Now I’m going to rapid fire questions and if we can get 15-second answers… I just want to see how many questions I can get to for our audience. I think this is to Hilton. Why don’t the payers alleviate the burden to providers by standardizing pre-auth and administrative forms to decrease cost?

Raethel: Good question. I don’t really have a good answer for that, but there is a group of health plans that are working on doing that. There are a lot of complexities, and the payers all have their own rules. Medicaid, Medicare, Quest plans, Quest Expanded Access plans, Worker’s Comp — a lot of different players. It would be great if we could simplify that. There have been attempts to do that but to date we’ve not been successful but it’s something we do need to continue pushing for the standardization route and reducing administrative overhead.

Green: How much would that help you, Dr. Tenn Salle, if the forms were standardized? Would that change your day?

Tenn Salle: I think most practitioners look forward to that. Electronics or previously, we’re filling out forms. If billing, administrative work, pre-authorizations, understanding of benefits, etc., could be done online this could be done outside of time (with patients) and it would streamline an incredible amount of work.

Green: If someone asked you today, would you rather have more money for your practice or more time, what would you answer?

Tenn Salle: Time.

Green: To the Dean: What are we going to do when doctors no longer wish to practice medicine? How are you going to convince primary care doctors to go into that discipline if the insurance companies propose programs with lots of hoops and then the doctor has to tweak each individual patient?

Hedges: The generation of the future physician is looking at having a balanced life. Although, reimbursement is important, paying educational debt is critical. There’s still the reality that there will be more group practice, more shared practice activity of the future. So, one of the attractors for the current generation of trainees will be practice environments that allow sharing of responsibilities and more personal time and so as we build such activities we really need to focus on how they work now as a solo practitioner but as collective physicians.

Green: Why are Hawaii’s healthcare costs lower than other states? Are we offering the right level of care or can they go even lower? Hilton?

Raethel: We are very fortunate with the rate of healthcare spending in Hawaii even though we do have issues, but one of the reasons we have a lower overall spend is the Prepaid Healthcare Act that does require health insurance. So, between the Prepaid Healthcare, Quest, Medicare, and the Quest Expanded Access Programs, we do have very broad coverage and that does spread the cost of healthcare. And before we had that, we had genetic factors because of the population here. We (generally) have a very healthy lifestyle. We have a healthy environment. I’m not saying we don’t have a lot of issues but those are some of the factors that would contribute to us having a lower spend in many other parts of the country.

Green: If you want to become a physician, you go through medical school. First, you go through college. So, four years of college, four years of medical school, plus three years of residency at the minimum. You are at least 30 years old before you’ve had your first job, and then you have to pay those education loans back, which now average well over $150,000 I think. Dean, what’s the average number or minimum amount of debt for a graduate this year?

Hedges: Well, nationally it’s about $180,000 upon graduation. We are doing a bit better here. It’s about $80,000 in Hawaii in the large forecast because most of our students are from Hawaii and many of them are living with family. Of course that creates a burden on the family but they’re ending up with only about an $80,000 debt upon graduation.

Green: I just wanted to punctuate that point. I don’t think physicians send you a complaint about salaries. I don’t, but if you do that quick calculation, you’re really talking about from the age of 20 until 40 averaging out those costs and debt and so on. Physicians are making $70,000 or $80,000 per year, in which those are the years you want to start a family and I think therein lies one of the issues, though nobody should complain about making a decent living and taking care of their family. That’s an important take-home message when you hear doctors complaining about the system or complaining about going into a special discipline, because they vary very greatly. That is one of the conundrums of getting people to go into primary care when they’re dealing with those regular questions of how are they going to pay back their debt? Would this panel support absolute loan repayment for all primary care individuals and would their organizations be willing to contribute some either mentorship or dollars to that private initiative to get people into primary care? Dean Hedges?

Hedges: It is a challenge because you want to make sure that this is a sustainable operation and having it at a point where people are ready to take that first job and this is tied to their first job — I think that is an incredibly important motivator.

Green: Hilton, is it working investing dollars in primary care training? Is it from an economic standpoint?

Raethel: Absolutely, we as I said in my five minutes, we’re investing very heavily in primary care. We believe that there is a lot of unmatched opportunity to expand the role of primary care and we are looking at a variety of avenues to support the expansion of primary care in the state of Hawaii including working with the school of medicine.

Green: Nadine, would it be worth taking on a student with you in practice even if it took some of your time, if it meant getting that student into primary care and paying back their loans?

Tenn Salle: Absolutely. Having incentives both on a medical school level, residency level, and later on as professionals to encourage individuals to go to primary care are all excellent choices. The one thing though that does need to be put in place is you can have scholarships. You can have incentives that will encourage young physicians to go into primary care. The question is not whether they will go in, it’s whether they will stay and we’re dealing with very intelligent people here. At some point, they’re going to look at the business model and if the business model doesn’t make sense they won’t stay. If they’re working 12 to 14 hours a day, Saturdays included if you’re in primary care, and you are barely making what your contemporaries are making, they’re going to question why should I do that? Why should I be away from my children?

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