Episode Transcript
Written by Courtney Collen
Alan Helgeson (announcer):
“Reimagining Rural Health,” a podcast series brought to you by Sanford Health. In this series, we explore the challenges facing health care systems across the country from improving access to equitable care, building a sustainable workforce, and discovering innovative ways to deliver high-quality, low-cost services in rural and underserved populations. Each episode examines how Sanford Health and other health systems are advancing care for the unique communities they serve.
In this episode, Courtney Collen with Sanford Health News talks with Ford Koles, a national spokesperson with the Advisory Board for a conversation on the state of today’s health care economy.
Courtney Collen (host):
I have Ford Koles joining me now. Thank you so much for your time. Welcome to Sioux Falls.
Ford Koles (guest):
Thanks, Courtney. Good to be here.
Courtney Collen:
You are a health economist by training. You’re well versed in health care history and the many reform initiatives we have been through over the past few decades. Ford, what do leaders need to know today to shape the future of health care beyond 2024?
Ford Koles:
Courtney, I think the most, I mean the most fundamental truth is that we built a health care system in the United States with the assumption of commercial reimbursement. Right? When I was in econ school and you wanted to understand how much commercial payers paid for a surgery, we would plug in 120% of Medicare, not on the medical side. On the surgical side, that number now according to Rand Corporation is 2.7 times higher. It was 20% higher. Now it’s 2.7 times higher, meaning commercial.
The cross-subsidy model is under immense strain to keep up with growing government payment. So more and more of our future is Medicare and Medicaid, and that’s a fundamental challenge to the cost structure we built in America. We have to change it.
Courtney Collen (host):
What do you see as the industry’s most urgent challenges and greatest opportunities?
Ford Koles:
Wow. So many amazing things going on in this industry. As always, I think that the need to remake costs per my last point – there are three things. We spend most of our money on labor, which was an unholy mess in COVID. And we’re just getting it back, you know, to a place of maybe not sustainability, but calm supplies and purchase services where we were making immense progress before COVID, by the way. You know, unifying the spend under different vendors, getting better, long-term relationships. All of that went out the window with COVID because of the collapse of the supply chain. And lastly, capital spending, which as you know, Courtney is it, and buildings, right? Yep. So we need a lot of progression.
There’s not much on the labor front right now. We’re reinventing the social contract, hopefully using artificial intelligence. So I think there are long-term savings there and good things, but most of the progress we’re making right now has to be in the supply chain.
Courtney Collen:
You talk about an increasingly tough business climate dominated by those increasing costs and prices tightening margins and other headwinds. Ford, how will these disruptive market forces affect decision making and outcomes for patients?
Ford Koles:
We went through a phase. If you look at the patients themselves, and the numbers are bad, the quality numbers held, Courtney – really strong for the first few years of COVID in a way that I think people don’t talk about enough. We held it together in an unbelievably ugly time for health care, and the quality numbers stayed pretty strong in the last year. They’ve really started to drop. And I think what you’re looking at is not some long-term crisis. I think it’s exhaustion, frankly.
It’s like somebody holds it together in a tough situation in their life for a few years, and then when things finally improve, they kind of fall apart. I think that’s sort of what’s happened. So I’m not as worried about it long-term for the health of America. You know, lifespan has stopped improving, but that’s largely, those are COVID deaths, you know? And that’s not the fault of the health care system, right? Americans tend to blame the health care system for things that are largely lifestyle-related issues.
Courtney Collen:
How do these challenges and opportunities play out for nonprofit health care systems in particular?
Ford Koles:
Yeah. I mean, the truth is it’s still, to me a wonderful model. It’s a mission-driven model. Yeah. We need a workforce. This workforce keeps telling us the people coming out of school that they want purpose, and they want motivation. What’s more purposeful and motivating than the mission of most, not-for-profit hospitals and health systems and providers, right? So I think we have some natural advantages there, right? Not-for-profits tend to be far better at physician integration. The for-profits generally don’t do much of that. That’s not their history. That’s not been their business model. That’s not a criticism. It’s just a difference between not-for-profits and for-profits.
But I think so much of what happens in health care is local and has to do with our relationship with the medical staff. I like Sanford as a regional player. I like what they do. They have rural challenges, you know, that are far more aggressive than a lot of the urban systems I work with. But I like the relationship they have with the medical staff.
Courtney Collen:
You spoke here in Sioux Falls, South Dakota, to a number of Sanford’s top leaders. What was your one key takeaway or golden nugget as I like to say, that we can take home?
Ford Koles:
Relatively speaking, American health care is in better shape, way better shape than a year or two ago. Sanford’s in much better shape than most so I guess I’d want them to take the win in that sense. You know, Sanford’s numbers are better than most numbers.
The biggest issues that I hear about at Sanford are largely workforce issues that have to do, not with Sanford, but with South Dakota. They have to do with, you know, population growth or lack of it. They have to do with the cost of living increases that have been huge between Sioux Falls and Omaha. So I think that there are challenges here, but they’re not the challenges I think of a poorly run health care system. Let me put it that way. I like the leaders here impressed me.
Courtney Collen:
Good to hear. What excites you the most about the future of health care?
Ford Koles:
I said it in my talk, which is we are on the cusp of some major advances, both in treating obesity and in treating Alzheimer’s. Both of those things are present in my family. And I would typify them as the two great health care challenges of our lifetimes. And the fact that we’re making significant progress in both of them, to me is miraculous and wonderful and they come with all kinds of reimbursement and spending challenges, but I refuse to look them in the face as something bad. I think we’re seeing amazing progress here.
Courtney Collen:
Ford Koles, I really appreciate your time. Your insight is so valuable, and we thank you for being here and for joining us for this podcast.
Ford Koles:
My pleasure, Courtney. Thank you.
Alan Helgeson:
You’ve been listening to “Reimagining Rural Health,” a podcast series brought to you by Sanford Health. Hear more episodes in this series or other Sanford Health series on Apple, Spotify, and news.sanfordhealth.org.
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Posted In Corporate Services & Administration, General, Leadership in Health Care, News, Rural Health
