FEAR and HOPING in health care-WEB ONLY

Former Mayor Bart Peterson outlines the pitch Eli Lilly will make in D.C.

For the first time in 15 years, lawmakers in Washington have plunged into a debate about overhauling the nation’s health care system.

New proposals come out every week, with bills filed in Congress running longer than 600 pages and 10-year cost estimates for the ideas topping $1 trillion. In Indianapolis, where health care accounts for one in every nine jobs, massive employers like Eli Lilly and Co., WellPoint Inc., the Indiana University School of Medicine, private hospitals and myriad life sciences firms all know their fortunes hang on the outcome of the national debate.

So IBJ talked to leaders in all of those organizations, asking them for their greatest hopes and biggest fears about health care reform.

Read the responses of Lilly CEO John Lechleiter, Cook Group President Kem Hawkins, hospital chiefs Bob Brody and Dan Evans and many others.

John Lechleiter, CEO, Eli Lilly and Co., pharmaceutical giant based in Indianaplolis

It’s no surprise that Lechleiter hopes health care reform preserves the favorable economics for “medical innovation”-the bread and butter of Lilly’s pharmaceutical business. “What we’re saying clearly is, we want to see improvements in access, improvements in quality and we want to see costs contained. But a key component of that must be and remain the medical innovation that has been key to actually making those things happen,” Lechleiter said. Pharmaceuticals make up about 10 percent of America’s total health care spending. Lilly and its peers wouldn’t mind having the government pay for health care coverage for more Americans, because it would create more customers who could afford its drugs. But Lilly could also see its profits crimped if health care reform allows government programs like Medicare and Medicaid to bargain for steeper discounts from drugmakers. Those programs make up 18 percent of Lilly’s revenue-more than for any other American drugmaker, according to Zack’s Equity Research analyst Jason Napodano. Partly to pay for the higher cost of extending coverage, President Obama wants to tax foreign profits at U.S. rates and cut tax credits for research and development. Those plans could hack off as much as 30 percent from each drugmaker’s profits. It’s things like that that concern Lechleiter. “My biggest fear is that medical innovation gets left behind,” he said. “That either new systems or incentives or penalties that come in to play essentially undermine the risktaking and the types of investments needed to sustain the risks that our industry takes to bring these innovative new medicines to market.”

Dr. David Wilkes, executive associate dean of research affairs at the Indiana University School of Medicine and chief scientific officer of Indianapolis-based biotech firm ImmuneWorks Inc.

Wilkes is hoping for two things: guaranteeing basic, front-end health care for every American, and government-led research that compares the effectiveness of drugs and medical practices against one another to determine which are worthwhile and which are not.

“The basics of health care-to provide wellness and prevention-needs to be there,” said Wilkes, looking out the window of his sixth-floor office at Fairbanks Hall, the new home for the executive offices of the medical school and its hospital partner Clarian Health.

Wilkes said comparative-effectiveness research, which President Obama has advocated, should be “front and center” in proposals to reduce health care costs-particularly at the end of patients’ lives.

“So much money is spent in the last few weeks of life, that we really need to make some decisions about, are we treating the right things?” he said. Wilkes thinks IU is well-positioned to perform some of the comparative-effectiveness research studies-through the IU School of Informatics and the IU-affiliated Regenstrief Institute Inc. What Wilkes fears is “a system that’s less efficient and more bureaucratic,” he said. “We don’t need that. We need things streamlined. If it’s more streamlined with greater government involvement, then that’s fine.”

Dr. Virginia Caine, director of the Marion County Health Department, professor of infectious diseases at IU Medical School C aine has no fears about the outcome of health care reform.

“This is our greatest opportunity, and I just can’t see us missing that opportunity,” she said. “I believe intelligent people will make the right decision at the right time.”

The right decision, in her mind, is that more of the uninsured get health care coverage and that they receive more attention for preventing diseases rather than treating them once they occur.

“We basically have a sick system. We will take care of you if you’re really, really sick. That’s a lot of cost,” she said. “So I think you can see huge savings if you reverse that from having people on a sick system to treating people so that they don’t get that sick.”

But Caine isn’t hoping merely for doctors to get more time to work on prevention. She wants more resources spent on public health efforts to curb unhealthy lifestyles.

Discouraging smoking is a good example. Promoting nutritious diets is another.

“I hope we’re going to focus more health care resources on population-based health care interventions-where we’re changing community norms-and less on patientdoctor interventions,” she said.

“That’s way more effective that way. When you do it the individual way, it takes years to make an impact on health outcomes.”

Brad Fluegel, chief strategy and external affairs officer, WellPoint Inc., health insurer based in Indianapolis T alk about providing subsidies to help the uninsured to get health cov erage sounds great to companies like WellPoint.

It could mean 46 million people suddenly become customers of an industry that’s been losing customers as the recession has taken hold.

“Our hope is, we’ll actually execute a set of initiatives that will ultimately lead to more affordable care, better quality and safety, and more access to coverage,” Fluegel said.

But Fluegel wants to see reforms that expand coverage without pricing health insurers out of the business.

He said WellPoint is open to having a rule that guarantees coverage for everyone-even people in the midst of battling cancer or with a history of high medical costs.

Health insurers can now exclude such patients.

But if Congress mandates so-called “guaranteed issue” on insurers, Fluegel said, it must also mandate that all Americans buy coverage.

“If we’re going to have guaranteed issue, we just have to be sure that everybody’s included,” he said. “If you don’t have that, then people will wait until they’re sick before they get coverage.”

That trend would force insurers to hike premiums to handle the added risk, which would make insurance even less affordable.

Fluegel also worries about proposals to create a public health insurance plan financed by the government and offered to working adults. Such a plan would look to reduce costs by using the government’s size to cut reimbursement to doctors and hospitals, he contends.

Such competition with private health insures, Fluegel said, would destabilize the private insurance market.

“It’s a threat not just to our industry, it’s a threat to the existing coverage that Americans have today. Most of them are quite happy with it,” he said.

Bob Brody, CEO, St. Francis Hospital & Health Centers, Indianapolis H s excited about the opportunity to an “unsustainable” system.

He wants to see health coverage for all citizens and a fairer way to pay for it.

“Those who are insured are in many cases subsidizing those who are uninsured or underinsured or the portion of the population covered by the federal programs [Medicare and Medicaid],” Brody said. “Clearly, the existing economics are unsustainable.”

But Brody draws a line between not-forprofit hospitals like his own, which he says are committed to serving all in need, and “entrepreneurial” health care providers, which he says have capitalized on the “insatiable appetite” for health care services.

His biggest fear is that health care reform won’t appreciate the difference.

“There are elements of the provider community that have acted responsibly and have continued to serve communities across this nation through thick and thin, and aren’t driven by an entrepreneurial motive,” he said. “To the extent that they are characterized as part of the problem and are penalized through cutbacks or further payment reductions, I think that would be a huge mistake.”

He also worries that reform proposals will cut pay for physicians “to the point where we will no longer attract the brightest to the medical field.”

“Using physicians as a convenient target to take money out of the system is my greatest fear,” he said.

Ron Ellis, CEO of Endocyte Inc., a West Lafayette firm developing cancer drugs “T he big elephant in the room is the cost issue ” Ellis said. “You can work on [cov erage and choice], but you’ve first got to work on the cost issue. My hope is they maybe let the others go for now and work on the cost.”

His hope runs counter to most rhetoric in Washington, which has focused on covering the 46 million uninsured and giving consumers added choices by creating insurance exchanges and even launching a new “public plan option,” a government-run insurance program for working adults.

Conservatives have argued that the public plan option would lead, eventually, to a point where all Americans get their health insurance from the federal government. If that were to happen, Ellis said, it would be a “disaster” for biotech firms like his.

“We’d be gone in a minute,” he said, noting the paucity of biotech firms in Europe, where single-payer insurance systems are common. “There wouldn’t be money going from venture capital into biotech. There would be no payoff.”

Ellis supports some aggressive measures to reduce costs or raise money for health care coverage.

He thinks the government should take away the tax deduction from employers to provide health insurance, should simply ban all cigarettes, and should use comparative-effectiveness research to favor medical therapies that prove best.

Above all, he said, the health care system must allow consumers to compare quality and cost data, so health care can operate more like a market.

But given the proposals and rhetoric in Washington so far, Ellis said, “you have to be fearful.”

Veronica Martin, president of Humana Indiana, a unit of the Louisville-based health insurer M artin wants to see policy changes shift health care from treating illnesses to promoting health and wellness. She says health insurers have been trying to make that shift for years and have valuable experiences to share.

“We’re very reactive today,” she said. “We need to change the focus to achieving and maintaining wellness.”

But Martin worries that the health care reform debate is stuck focusing on who should pay for health care rather than addressing why it’s so expensive. Sixteen percent of the entire U.S. economy goes toward health care-a percentage twice as high as some peer countries like the United Kingdom.

“All we will do is shift the problem, because we will shift who pays for it, but not how much we pay,” Martin said.

That applies to proposals to create a public health insurance plan, which would be run and financed by the federal government, she said. “A government-run health plan, in and of itself, would likely lead to the end of employer-based coverage, increasing costs for everyone,” she said. Such an outcome would kill the profits of health insurers, of course, but Martin lamented that it would cause the health care system to miss out on the innovations of health insurance companies-including wellness programs, the promotion of electronic medical records, and real-time decisions on medical claims. Instead, she wants health care reform to preserve and promote the consumerism movement the insurance industry has embraced this decade. “Give them the same decision-making ability for health care as they have when they go out to buy a car or a computer or any other product,” she said.

Dan Evans, CEO of Clarian Health, Indianapolis-based hospital system W ith Clarian deriving 43 percent of its revenue from Medicare, Medicaid or un insured patients, its officers perk up when the government starts talking reform-particularly about covering the more than 700,000 uninsured Hoosiers.

“At Clarian, we see the consequences of patients and families not having adequate health insurance every day,” Evans said. “We share President Obama’s desire to expand coverage to the millions of uninsured and offer them the peace of mind that comes with that coverage.”

But he worries health care reform might unintentionally change health care incentives and payments for the worse.

“Getting the incentives and payment schemes right is critical if Congress is to achieve the de sired aim of universal or near-universal coverage, while also improving quality and more effectively managing cost,” he said.

Evans would like to see new payment incentives that reward Clarian and all health care providers for the quality of their care, rather than merely how much care they provide.

“Right now, the economic incentive is to do repetitive tests [and procedures],” Evans said. That favors costly specialist doctors and hurts primary care doctors, who Evans said are key to providing the kind of coordinated care that has proven to improve health and reduce costs.

“I’m worried about our growing federal deficits and how we are going to pay for health care reform in a way that does not harm our country’s long-term economic prospects,” he said.

Kem Hawkins, president of Cook Group Inc., a maker of medical devices in Bloomington H awkins sees the stakes as incredibly high in the health care debate.

“It’s not sustainable as it is,” he said of the health care system, “but certainly it could be made better and it could be made worse. This is a huge industry. If we screw this up, it will have ramifications for generations to come that will be unthinkable.”

Hawkins wants to see a more efficient system. That means requiring insurance coverage for everyone as well as requiring everyone to have insurance.

Such a system also would stop paying companies like Cook-as well as doctors and hospitals-solely based on the number of products they sell or procedures they perform. Instead, companies, doctors and hospitals would be paid more based on how well their products or procedures improve patients’ health.

Hawkins has confidence in Cook’s ability to succeed no matter what happens.

“Businesses will adapt in order to continue to provide the innovation for all Americans for better health in the future,” he said.

But he worries that, as a nation, health care reform could produce “a system that is not sustainable with good fiscal policy and could break us.”