Banner Health, even in a difficult environment, has come a long way since 2000. President and CEO Peter Fine predicts the organization will experience even more significant challenges in healthcare’s current quickly changing environment. “Obviously, there are major, major changes occurring in this world of healthcare… disruptive changes,” Fine says, “I think the next few years are going to be the most disruptive environment healthcare has ever seen, certainly in my career.”
Fine points out that these changes will require healthcare organizations across America to dramatically reduce cost per unit of service, and says, “This issue of cutting healthcare cost, to me, is a singular issue. It’s how to cut usage.” He explains that cutting cost by buying equipment in bulk and saving money on supplies is no longer good enough; “If you are a big system you are there already. The next wave is ‘how do you cut usage?’ It’s all about cutting usage. And people have to recognize there are ways to reduce the usage of healthcare dollars without reducing the care to individuals.”
Fine goes on to explain that “as healthcare organizations begin to take on more responsibility for care by taking on and creating ACOs and by taking on contracts that shift the risk to healthcare providers, they need to learn how to reduce the cost of care by reducing inappropriate usage during care.” According to Fine, Banner Health has been working very hard to cut operating costs by hundreds of millions of dollars over the last several years, and has made significant progress.
Fine predicts that, “over the next decade we will see the greatest movement of mergers and consolidations we have ever seen in the industry.” In his opinion, the “sweet spot” will be within the next few years. “I think we’re going to see tremendous movement during that period of time.” Fine believes that there is still plenty of room to grow in the Banner Health system, and he expects to see a lot of that growth over the next several years.
Regarding the Patient Protection and Affordable Care Act, Fine says, “This obviously affects everybody.” He believes that one of the most significant concerns in light of “Obamacare” is the debate around Medicaid and Medicare, which has tremendous ramifications regarding the financial stability of healthcare organizations across America. Fine notes that, “healthcare organizations are going to continue to have huge budgetary problems with Medicare because the expansion of Medicaid is being funded off the back of Medicare.” He explains that the challenge lies in the balancing act, “where we have cost shifted from payer insurance contracts to cross-subsidized Medicare, Medicaid, and the uninsured. And since Medicare, Medicaid, and the uninsured have been the growing portion of the business, that balancing act is getting skewed. So it’s getting more difficult, and it’s going to continue getting increasingly difficult.”
Adding to the challenges healthcare organizations across America are facing is the ambiguity and uncertainty surrounding the more than 2,500 pages that make up the healthcare bill. Fine points out that a significant challenge created by the healthcare bill is just “understanding what we have to do to live within a world with over 2,500 pages detailing new regulatory environments.” Dealing with the unknowns, complexity and ambiguity is probably the most stressful and challenging aspect of the controversial healthcare bill. With that in mind, Fine says, “There are many, many unknowns, but we have tried to position Banner as an organization that is flexible enough that it can move in any direction and deal with any issue that is thrown its way.”
The Banner Health system has come a long way since Fine was hired as the president and CEO in 2000, and Fine has full confidence that the organization will continue to thrive even in the increasingly disruptive environment the healthcare industry finds itself in today. He says, “We, as a company, actually are comfortable with a disruptive environment, because we think it creates opportunity.”