Executive Interview: Student of the Business

Mary Grealy, the president of the Healthcare Leadership Council, advocates a broad perspective on healthcare.

Mary Grealy has looked at healthcare any number of ways. As president of the Washington, D.C.-based Healthcare Leadership Council (HLC), she still does.

Founded in 1988, the HLC comprises chief executive officers from 36 companies and organizations, representing virtually all sectors of healthcare – IDNs, medical device and pharmaceutical manufacturers, distributors, group purchasing organizations, insurers and CVS, the drug store chain. It’s that broad perspective that gives the group its strength and unique approach to solving the problems facing U.S. healthcare today, says Grealy.

At one time a speech pathologist, Grealy switched gears to go to law school. While attending school, she worked summers for Dan Rostenkowski, then a Congressman from Illinois and chairman of the House Ways and Means Subcommittee on Health. Immediately after graduating from law school in 1980, she joined the Federation of American Hospitals, the association for for-profit hospitals and health systems. She stayed there 15 years, then left to become Washington counsel for the American Hospital Association.

In 1999, Grealy joined the HLC. “It was a great opportunity to head up an organization, and I really liked the idea of learning more about the different sectors of healthcare,” she says. “I’m also known for forming coalitions and doing things in a collaborative way, and this seemed like the perfect place to do it.”

The HLC is a policy advocacy organization dedicated to the achievement of a consumer-centered and quality-driven healthcare system, built on the strengths of the private sector. It is active on a variety of issues, including coverage for the uninsured, Medicare reform, medical liability reform, patient safety and health information technology. It carries out its mission in a number of ways, including research, direct contact with legislators, and local healthcare leadership teams, which comprise HLC field directors and member companies, local business allies and community health advocates.

The following is an edited portion of a recent conversation with Mary Grealy, conducted by The Journal of Healthcare Contracting.

The Journal of Healthcare Contracting: Can you describe the Healthcare Leadership Council?

Mary Grealy: The Healthcare Leadership Council is unique in two ways; First, our members are the chief executive officers of many of America’s leading healthcare companies and organizations, both for-profit and non-profit. The other unique aspect about our organization is this: We represent the various sectors of healthcare. I describe us as the healthcare business roundtable.

People ask, “How do you get all these groups to agree?” The answer is that they share a vision of what they think the healthcare system should be – one that is consumer-centered, based on the private sector and competition, and most important, innovation.

JHC: How and why was it founded?

Grealy: It was founded in 1988. [Approximately 10] years earlier, President Carter had proposed what was known as the Carter Hospital Cost-Containment Bill. At the time, Medicare was under a cost-based reimbursement system, in which there were no incentives to control costs. This bill called for across-the-board price controls for hospitals. I was with the Federation of American Hospitals at the time. We realized that while the bill called for price controls on us today, it could lead to price controls on everyone else the next day [that is, medical device companies, insurers, etc.]. But there was no way to bring all the sectors together. That is the purpose of HLC – to bring together those who have a shared vision of the type of healthcare system we want.

We still see pressure for price controls today, such as pharmaceuticals. HLC is beneficial because these different sectors are talking to each other. When one sector is under attack, they know there are others who share their vision on innovation, and are willing to speak on their behalf.

JHC: What made you decide to join the HLC?

Grealy: When I was being interviewed, I was impressed that their top-priority issue was the uninsured. They told me, “We have to solve this problem because, first, morally, it’s the right thing to do; and second, there’s a business case, and that is, if we don’t solve it, we’ll face a government solution that isn’t good for the patient or the industry.

JHC: What makes you optimistic about the future of our country’s healthcare system?

Grealy: We have long supported comprehensive reform of the Medicare program, with more private plan participation, so beneficiaries have more choice. We worked very hard for passage of the Medicare Prescription Drug Benefit. (Certainly, any modern program should have a pharmacy benefit.)

I look at private health plans and benefit packages provided by employers, and I compare that with what has happened over the years with Medicare. Employers have provided prescription drug coverage for years, and they’ve been very flexible in trying to reduce costs and improve quality. Then you come over to Medicare. It took 40 years to get a prescription drug benefit for a population that needs it the most. That is a clear example of why we so strongly support a private sector approach to healthcare, one with choice, competition and flexibility.

Competition brings down prices and costs to the Medicare program. We wanted to make sure there was an appropriate role for the private sector [in the Medicare Prescription Drug Benefit], and we feel we were successful in our efforts, insofar as it is not a one-plan-fits-all approach. Since then, we’ve formed a broad coalition of 350 organizations to educate Medicare beneficiaries and get them enrolled in the program. At the end of the day, it provides a lot of help for a lot of people. But I worry that it is being used as a political issue, and that that’s discouraging those who need it from signing up.

[We are optimistic about] health information technology, which we see as a tool to improve quality and efficiency. We’re seeing bipartisan support for it, which is great. We think it’s important to get a diverse group together to establish standards.

Because our members are leaders, they are the early adopters. They have implemented electronic health records, but are very concerned about how to make sure that smaller community hospitals, rural hospitals and small group practices also access this tool and technology. We’re trying to come up with creative ways to do that. It’s clear that in this deficit environment, Congress won’t come up with tens of billions of dollars for it. But are there creative ways to look to the government for seed money?

You’re hearing a lot about pay-for-performance and value-based purchasing. It’s really all about how we can get the best clinical information in the hands of every provider as quickly as possible.

JHC: Does the HLC support health savings accounts?

Grealy: This issue relates to that of the uninsured. We’re trying to find private sector solutions, rather than expanding public programs for the uninsured. We did a five-month study identifying just who the uninsured are. We found that eight out of 10 live in a household where at least one is employed. We found that nearly half were offered insurance but didn’t take it, or they took it for themselves, but not for their family. For the other half, the employer didn’t offer it.

Our focus is on how to make insurance affordable and accessible. There is no silver bullet; but there are a variety of approaches. Health savings accounts are part of the solution, perhaps in the form of a premium, which might be more affordable for the small-business owner. Perhaps owners could contribute to their employees’ health savings accounts and get certain tax deductions. HSAs provide protection for employees, and they also get employees more involved in managing their healthcare. We have to figure out how we can get people more involved in the actual cost of care and whether they are using the system appropriately.

We also strongly support tax credits to make health insurance more affordable for low-income people, as an alternative to expanding Medicaid. [The problem with Medicaid is that] whenever states have a budget problem, they cut back on the program, so fewer physicians participate in it.

We have spent a lot of time doing education and outreach to small-business owners. Many of them lack human-resources people. They may have two to five employees, so there’s not a lot of administrative overhead. We set up what we call the Main Street Initiative through a grant from the Robert Wood Johnson Foundation. We developed a brochure that gives general information about the different type of health insurance available, including health savings accounts. More important, we include information about what plans are available in their geographic area, and what the premiums are for a single person, a family, etc. Many times we find that small-business owners overestimate the cost of health insurance. [Note: The Main Street Initiative for Virginia, where the concept was pilot-tested, can be viewed at http://gunston.gmu.edu/chpre/SmallBusinessGuide/index.html.

All of this speaks to our goal of a consumer-oriented, patient-centered healthcare system, and really viewing patient as partners in their healthcare.

JHC: Many people are alarmed at the percentage of the U.S. gross domestic product that goes toward healthcare. Is this country paying too much for healthcare?

Grealy: Sometimes we need to step back and ask, “What are we getting for the money we spend on healthcare?” Two years ago, HLC worked with several other trade associations to look at the value of investment in healthcare over the last 20 years. We looked at four different disease categories – heart attack, stroke, Type 2 diabetes and breast cancer. The study looked at how much we are spending on healthcare and what the return is. Probably the most startling fact was this: Hospital days have been reduced 56 percent during that 20-year period. Not only are fewer dollars being spent in hospitals, but people are becoming productive and getting back to work sooner. Per capital health expenses have increased, but each additional health dollar spent during that time produced a return of up to $3 in deaths avoided and increased longevity. [Editor’s note: The study, “The Value of Investment in Health Care,” can be viewed on HLC’s Web site at www.hlc.org.]

Have we really asked the American people if we’re spending too much? At the end of the day, maybe people feel this is a valuable investment. Our healthcare system today isn’t what it was five years ago, 10 years ago. It definitely offers better quality, but we can constantly be improving it. And in many respects, it is more efficient. We feel the best way to continue improving the system is to provide incentives instead of controls and mandates. I keep coming back to the Prescription Drug Benefit as a clear example of how competition can bring down costs. The initial estimates were that the premium for a standard plan would be $37 a month. But as a result of plans competing, the average fell to $35; and it will fall lower.

JHC: Is medical technology part of the problem or the solution? Some people believe that with a good physical exam, an internist can diagnose many patients without the need for expensive MRI tests.

Grealy: There are several facets to this. One is defensive medicine. The other is that patients are insulated from cost. HSAs might make people think twice about [undergoing expensive tests].

JHC: How critical is medical liability reform to HLC?

Grealy: Medical liability reform is a high priority for us. But it’s frustrating. The American people support liability reform. Maybe we need to start looking at a different approach than a cap on non-economic damages. But until we are able to get 51 votes in the Senate, I don’t see it happening.

JHC: It’s surprising you would support legislative caps on non-economic damages. That sounds like a mandate.

Grealy: We’re dealing with juries at the state level. If cases were moved to federal court, it would be different story. The Vioxx case is an example. In federal court, the judge followed the facts.

JHC: Can you comment on the role of group purchasing organizations in today’s healthcare system? They have faced a lot of scrutiny on Capitol Hill and the media in recent years.

Grealy: Group purchasing is another clear example of how the marketplace has spoken. If groups did not bring value to those participating in them, they would not exist. I think they will play an even bigger role as we talk about pay-for-performance and value-based purchasing. There will be a strong need to show cost efficiency and clinical value.