It was once said that lobbyists are the people we hire to protect us from the people we elect. If that’s all you’re using your government relations team for you’re not getting full value for the resources you devote to this important effort. Think of your government relations program as the drone that flies over the terrain and lets the army commanders know where the traps and opportunities are. Most companies devote a fair amount of money, time and effort to market research and business intelligence. With government (at all levels) now pays nearly half of all healthcare costs in the United States and policies adopted by government are frequently adopted by private sector payers as well.
Where the Conversation Happens
The DC Beltway is a hotbed of public policy research. Federal agencies, private foundations and industry trade groups employ thousands of brilliant people whose job it is to tackle the problems of healthcare costs, access and affordability. Some of what results from all this thinking eventually finds its way into practice, either through Medicare and Medicaid demonstration projects, or through legislation. Often, what starts out as a good idea ends up unrecognizable as a result of compromises among interested parties. However, the debate often leads us to discover opportunities and new ways to inform our marketing and strategy efforts.
Most major public programs began as conversations between people and interest groups that lasted years, if not decades. If business had been listening to these conversations early on with the same attentive ear that they listen to market signals, few would have been caught off guard when major change finally arrived. Think most recently of the Affordable Care Act, none of which was particularly novel and much of which had been previously embraced by both Republicans and Democrats.
Real Life Example
The long-term care industry, primarily nursing homes, is an industry on a slow decline. Monthly censuses continue to fall, while the payer mix began to turn toward lower-margin Medicaid stays and away from the higher-margin Medicare Part A rehabilitation business. Managed care, traditionally lingering in the low single digits as a percentage of payers for nursing care, began to increase and with it a trend toward lower payments. State Medicaid officials continued to clamor for more options in long-term care, specifically more use of home and community-based services, where eligible recipients could avoid nursing home care and receive services at home.
State and federal agencies charged with oversight of nursing home operators continued to criticize nursing homes for low quality of care, a lack of appropriate staffing and a troubling trend toward inappropriate use of antipsychotic drugs. Criticism soon turned to regulation and nursing homes were forced to comply with regulatory standards that were expensive to implement and could have been avoided had the industry seen the implications sooner.
Like many industries, the nursing home industry saw the trends in public policy. They saw declining census, less favorable payer mix, higher public dissatisfaction with nursing home quality and conversations among Medicaid officials to move away from institutionalized long-term care. The response was to fight for the status quo. This strategy is not unique to nursing homes, it is common for large companies and industries to resist change, believing that if they fight hard enough and long enough they can prevail against their critics. Pharmaceutical companies have held to this strategy for decades and have had unusual success in fending off the most heavy-handed government pushback.
Looking back, most of what happened to the nursing home industry was easily foreseen and avoided. The government relations professionals in the industry saw the signs and many warned senior executives of the danger that awaited them. Had the industry been more proactive it might have made the determination that the discontent being heard among elected officials and government and non-profit executives was not only real, but not likely to abate. It might also have advanced its own initiatives to solve many of the obvious problems in ways that would have been less intrusive than the government-mandated solutions that followed.
The industry might also have accepted the notion that, at best, Americans see nursing homes as necessary evils; they are glad they are available, but are not anxious to reside in one, or see their loved ones as residents. We love the familiarity of home and the comfort of having friends and relatives close at hand. When the Affordable Care Act became law, states received incentives and funding to move Medicaid recipients out of nursing homes and into home and community-based care alternatives, and the nursing home industry didn’t have an alternative to offer. The federal government now spends more money on non-institutional long-term care than it spends on nursing homes.
Analogies to Today
There are unmistakable trends in the healthcare environment today and many industries insist on ignoring them, perhaps with consequences similar to the long-term care industry.
Consider the current state of healthcare. Consumers now pay higher premiums (or higher contributions to employer-sponsored health benefits) and have higher deductibles and cost sharing than ever before. Many healthcare providers and industry segments appear to be oblivious to this. While health economists and strategists talk about insurance subsidies, essential health benefits and provider networks, the public sees one thing; uncontrolled cost at the physician’s office, the pharmacy and the hospital. Public officials will eventually react to this and they will react in a way that the industry won’t like.
This might be the golden age of healthcare. Healthcare companies are in a unique position to write their own destinies. Public officials are frustrated and are inviting industry professionals to help solve the problems their constituents are struggling with. This is an environment where the private sector will get some credit for engaging, and lots of blame (and punishment) for standing back.
Your government relations effort can be a vital tool in positioning yourself to be the change agent rather than a victim of government overreach.