Halfway between the cities of Colorado Springs and Pueblo, Colorado, nestled between Interstate 25 and the foothills of the Rocky Mountains, lies the Pikes Peak International Raceway. An idyllic setting where racecar enthusiasts spend exciting Sunday afternoons under blue skies speckled with bright white clouds, the kind of sky you only get at elevations above 5,000 feet.
A successful venture – the state made the owners build their own freeway off-ramp to handle the crowds – Pikes Peak International Raceway was built by C.C. Myers, who paid the $10 million construction bill in cash. No investors. No loans.
Where did C.C. Myers get $10 million? From the state of California and the city of Los Angeles.
Just before 5:00 am on Monday, January 17, 1994, the Martin Luther King, Jr. holiday, a magnitude 6.7 Earthquake centered in Northridge, California took 57 lives and destroyed large sections of the Santa Monica Freeway. As soon as the work week commenced on Tuesday, traffic congestion that was impossible in the best of times became impassible as Angelinos tried to figure out how to get to work via surface streets never intended for such volume. The City of Angels calculated that it was losing a million dollars a day in lost commerce and worker productivity.
Consequently, and wisely, when bids went out to find a contractor to rebuild the freeways, the city and state included an unprecedented incentive. The contract specified that the work had to be completed in 140 days but offered a $200,000 per day bonus if the freeways opened early.
C.C. Myers won the bid. He bought spotlights, hired enough workers to keep repairs continuing around the clock, and completed the project in 66 days, 74 days ahead of schedule.
His creative thinking cost California an additional $14.8 million over the initial contract…and they were happy to pay it, knowing their million dollar per day nightmare was ending 74 days early. Myers brought his bonus to Colorado, built the Pikes Peak International Raceway, and had over $4 million left over.
Interpreting the parable
Rational minds have no trouble understanding the fiscal wisdom behind California’s arrangement with Myers. Not all minds, however, seem to be equipped to translate the lesson of the C.C. Myers parable from freeway repair to healthcare.
Who among you would not spend $14.80 instead of $74 for the same end result?
What healthcare payer would refuse to write a California style contract?
The sad answer to what should have been a rhetorical question gets to the heart of the plight in which the entire healthcare at home industry finds itself today. Poised and equipped to save the U.S. healthcare system well in excess of L.A.’s million dollars a day, healthcare at home providers hear from the taxpayer-supported entities named above, “We can’t pay you $200,000 to save us $1 million because, well, that would cost us $200,000.”
Hope on the horizon?
Glimmers of hope are appearing from commercial insurance providers, who appear to be showing early understanding of the wisdom of spending a dollar on healthcare at home services in order to avoid spending ten for hospital stays and emergency department visits. That understanding has only begun to dawn on insurance executives, however, thanks to persistent and repeated explanations and expositions of hard data by in-home care providers over a period of years.
The MedPAC approach to funding healthcare for seniors, the approach that does not permit in-home care providers to play the part of C.C. Myers, may soon be confronted by a contrary voice from within CMS itself. When former CMS Administrator Marilyn Tavenner quit last February to take a 7-figure position as CEO of American Health Insurance Providers, the industry’s lobbying arm, she was replaced by acting administrator Andrew M. Slavitt, previously a top executive at Optum, a unit of UnitedHealthcare.
While it may appear at first glance that the Washington revolving door is about to smack healthcare providers in the backside yet again, two comments Mr. Slavitt made in introducing himself to the healthcare community may give healthcare at home providers reason to be optimistic.
“If there’s one thing local communities want from us, it’s to simplify things to allow caregivers to spend more productive time with patients, keeping them well and keeping them at home.”
“Today CMS serves 140 million beneficiaries and consumers. I wake-up every day thinking about them. How many are in a hospital, aching to go home?”
President Obama’s nominee will probably move from acting to permanent administrator. If not, the next President may nominate someone else in 2017. I vote for C.C. Myers.
©2015 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Tim Rowan's Home Care Technology Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. email@example.com