Rich Miller recently retired as the president and CEO of Virtua, where he was at the helm for 21 years. He reflects on the struggles facing the health care industry, a looming threat of replacing the Affordable Care Act and his accomplishments being a leader in the field. Business Correspondent Rhonda Schaffler spoke with him and asked what he thinks the most dramatic change to health care has been in the past 20 years.
Miller: Well frankly, I think the dramatic changes are probably most happening in the last couple of years and it’s a lot to do with the merger and acquisition activity that we are seeing in the industry is a major change. The Affordable Care Act was a major change in the industry over the last few years. So, when you’re really thinking about growth in health care, reduction in payment, Medicare and Medicaid issues probably the most challenging were the last two or three years.
Schaffler: And, we’re going to try to get to a lot of these topics that you’ve mentioned, mergers being one. A lot of people in New Jersey, their hospital now merges with somebody else. It’s hard to keep up with it. You were a pioneer in merging some community hospitals in South Jersey. Is it leading to better patient care in this state?
Miller: It’s a great question Rhonda, and I think the key to remember is are patients getting value out of these mergers and acquisitions? Sometimes they are and I have to say sometimes they aren’t. You see hospitals that are getting bigger by acquiring other hospitals. What we’re seeing in the industry now is the downturn in inpatient care. We’re seeing less patients in our hospitals, so what happens to all these hospital beds in five to 10 years and all of the capital that has been invested in them? So, you really have to think about is it producing higher quality and is it producing lower payment for the consumer in the marketplace? If we’re not reaching those goals, then it isn’t successful.
Schaffler: I’m worried when you say that in some cases it hasn’t been better. So, what are those cases?
Miller: Well, there may be cases where hospitals have acquired other hospitals, their systems have gotten bigger. There’s examples around the country where hospitals have bought hospitals that are already 50 percent occupied. So, in that case, when you’re buying a hospital that doesn’t have the bed need.
Schaffler: And, there has been financial strains on some of these hospitals.
Miller: Exactly, and that’s a great point, Rhonda. Some of these hospitals are not financially sound. So, you really have to wonder what are you acquiring when you acquire a hospital that’s not financially sound and that they’re 50 percent occupied. So, eventually you are going to have to make a decision about that hospital.
Schaffler: Rich, you also were very intuitive in seeing the shift from inpatient to outpatient and ambulatory surgery is definitely on a rise across the country. What did you see early on that made you realize perhaps that some of that care can move out of the hospital?
Miller: Well, what I found was that technology was growing rapidly in the marketplace and was moving surgeries from inpatient to outpatient. A great example of that is orthopedic surgery for knee replacement and hip replacement. At Virtua, we are doing those the same day now. So, they will be done at some point, it’s probably done now in many outpatient centers. We’re going to see more vascular surgery, more heart type surgery, done in an outpatient setting. The inpatient setting is very expensive. Once a person comes in to the inpatient setting, that’s where the cost is. So, this movement to outpatient is a good thing for the consumer and it’s very high quality. So we have 17, I am saying we meaning Virtua, we have 17 surgery centers statewide from Bergen County all the way down to Cape May County. So, we’re going to be ready for that movement to outpatient because you are going to see more surgical procedures go outpatient. And, that’s going to be more of a struggle for hospitals because the profitable business in hospitals is the surgery business. And, what’s left is your medical business, your pulmonary infectious disease, which is not profitable.
Schaffler: Let’s talk about really what everyone is and that’s the Affordable Care Act, the future of paying for health care. People in New Jersey are worried. It doesn’t matter whether you have insurance or not, even if you have it things are expensive. How are we going to fix this? How do we keep it not political and make patients first and still be able to pay for innovation and better care?
Miller: I think this idea of tearing up the Affordable Care Act and starting over probably isn’t the best idea from my perspective. I think that one of the positives that came out of the Affordable Care Act was Medicaid coverage for the underinsured. And, a lot of people in New Jersey are now covered by Medicaid and can access health care. I think that’s a good thing. And one of the fears of health care organizations around the state is if that goes away, and let’s say for example, we start block granting states Medicaid money, New Jersey won’t get its fair share. So, there’s a real concern about that, and I have a concern that a lot of our people won’t be served. But, we also, on the flip side of that Rhonda, we have to fix the ability to get health insurance for the average person in the street. It’s too expensive, there’s too much dollars, too much copay and deductible being paid by the consumer. We need to look at that model as well and make sure it’s affordable.
Schaffler: Well, how do we do that? I mean we’re already hearing a lot out of Washington. You’ve mentioned some of the government programs in the budget bill that’s being cut, some of that money that goes to Medicaid and Medicare. And on the insurance side, you have insurance companies that say they need to charge what they have to charge to make money. It just seems like it’s such a conundrum and not really moving forward. It comes very frustrating for people.
Miller: And, that’s a great point Rhonda because the Affordable Care Act was a bill designed to provide access to care and also it was also an insurance bill. On the delivery side is the important piece of this where health care providers now can look at health care delivery and change the delivery model to a less expensive model. And a lot of health care providers, doctors and hospitals have started to move in that direction. More care at home, more care at coordination, keeping people out of the emergency room, caring for them in less expensive venues like urgent care. So, we’re starting to see that movement on the delivery model. I mentioned before the outpatient model, that’s the movement to less expensive care that we’re going to see. It’s going to take time because there’s still a lot of inpatient hospitals that are out there that are high-cost and very expensive, but I think we’re moving in the right direction. But it’s going to take a little time.
Schaffler: Are you optimistic about the state of health care in New Jersey for most of our residents?
Miller: Well, I am. I am actually from the provider side, the hospital side, because I know a lot of the providers in New Jersey and they provide great health care. They care about quality, we have great physicians in New Jersey. We are very blessed to have great physicians. So, I’m excited that people on the provider side get the fact that they have to move to an outpatient, less expensive model and they’re moving. So, I’m very excited about what I see in the future for health care in New Jersey.
Schaffler: Rich Miller, so good to talk to you. Thank you.
Miller: Nice talking with you, Rhonda. Thank you.