Health Care Reform Will Drive Recruitment: Are You Ready?

February 15

Since late last fall, I've been tracking health care reform on behalf of our TMP Worldwide Federal government and industry clients. Of course, recruitment usually wasn't top of mind during the debates. But now that the Patient Protection and Affordable Care Act has become Public Law (PL) 111-148, many people are wondering if America has the human resources capacity to pull off the sweeping changes required. This article offers an early attempt to help you consider your new workforce needs sooner rather than later.

Some provisions, such as coverage for children with pre-existing conditions and elimination of coverage gaps, will happen this year. Others will phase in throughout the decade. In any case, expanded coverage will translate into more usage, which means stretching capacity. And that will call for more resources, i.e., recruitment.

As I've reflected on the situation, I've tried to separate the governmental from the industry impact. Yet that approach can't be fully successful. As with Medicare and Medicaid, the new Law fashions an interwoven environment of reciprocal interests. Guidelines being written today at the U. S. Department of Health and Human Services (HHS) will rapidly ripple into health care provider and insurance offices. Proponents and opponents of the legislation have this same assurance: We're all in for a big-time transformation.

The Law will require workforce expansions at many levels: Federal and state as well as in payer and delivery industries. Bringing 32 million more Americans, previously uninsured, into an already beleaguered healthcare system will demand many skills and competencies in the government, non-profit and for-profit world.

First off, let's look at the vortex where the transformation is already beginning: inside the Beltway. (If you wish to skip to the private and non-profit sector implication, scroll down to Providers, payers and people: Another workforce transformation.

Adding Thousands to Federal Transformation

Along with HHS, the Office of Personnel Management (OPM), Department of Treasury and Department of Justice (DOJ) could be increasing the civil service by thousands of employees.

Consider that the new legislation could have a bigger impact than Public Law 89-97, the Social Security Act of 1965, which established Medicare Benefits. Although the Center for Medicare and Medicaid Services (CMS), housed within the Department of Health and Human Services, only employs 4,100 employees, it forms the hub of infrastructure that stretches throughout the public and private sector, serving 46 million Americans. Government contractors, hospital, payers, physician offices, pharmacies, fraud investigators and many other organizations employ functions that simply did not exist before Medicare and its subsequent expansions.

A similar situation exists now. For months before its passage, experts have been trying to figure out the talent needs required by the Act. Here are a few ways the Federal government alone could be seeing changes even this year that call for not only more people, but the most skilled:

Wanted: dedicated collaborators. Last November, the Government Business Council, under the aegis of Government Executive Magazine, polled federal decision makers about increased responsibilities brought about by pending reforms. More than half of the respondents said they "are not confident that the government could successfully take on new roles, including enforcing penalties for the uninsured and enforcing insurance practices." They felt that the most important challenge for "managing and enforcing health care initiatives" was achieving "collaboration, both across agencies and with state governments."

This finding highlights a key concern about the legislation. Nationwide expansion of health care benefits demands unprecedented cooperation.

In an interview with Federal News Radio, Andrew Croshaw, Managing Director for the Health Care Practice at Leavitt Partners, the consultancy run by former HHS Secretary Michael Leavitt, said "There really isn't any aspect of government the reform doesn't affect."

According to Croshaw, who advised Leavitt at HHS, "The legislation is incredibly far-reaching in its impact on the delivery of health care, the structure of the health care system, the way that we as consumers and individuals interact and, quite frankly, the role of government in organizing that system."

HHS: "Beefing up." Croshaw sees HHS as the hub for developing regulations for benefits. HHS as well as well as its subsidiaries, like the Center for Disease Control (CDC), Food and Drug Administration (FDA) and the National Institutes of Health (NIH) all have parts in the interwoven scenario.

Former HHS Secretary and current President of the University of Miami, Donna Shalala, told Federal News Radio that "it's going to be a bear to implement, at least the initial implementation." Nonetheless, she has confidence in the civil service to work together as a team to get it done. Yet she also acknowledges the need for more resources: "They're going to have to do some beefing up of staffing and some careful coordination."

Even so, Croshaw points out that HHS does not have the capacity to handle it all alone.

A major mission for OPM. The Office of Personnel Management, which administers the Federal Employees Health Benefit Program (FEHBP), will be an integral part of the plan. The Law calls for state marketplace exchanges — where those not covered by an employer's insurance plan or Medicaid can purchase insurance. By 2014, OPM, the Executive Branch's human capital office, will extend beyond its usual activities to supervise the federally-funded American Health Benefit Exchanges. To do so will require strengthening its own human resources.

In July 2009, Washington Post writer Ezra Klein laid out the logic insurance exchanges have as the most important feature of health care reform:

"Compared with the crazy-quilt system we have now, the idea behind the health insurance exchange is almost weirdly simple: It's a single market, structured for consumer convenience, in which you choose between the products of competing health insurers (both public and private). This is not a new idea. It is how we buy everything from books to socks to soup. Everything, that is, except health insurance. The benefits of reversing that bit of accidental exceptionalism are obvious to anyone who has ever stepped inside a Target: Consumers will benefit from more choice, from direct competition between insurance providers hungry for their business, from regulations meant to protect them from deceptive products, from efficiencies of scale, and from the sort of purchasing power that only a large base of customers can provide. They will benefit, in other words, from an actual, working market — something health insurers have managed to avoid for far too long."

Croshaw describes it as "a kind of Travelocity for people who don't have insurance with an employer." OPM will be directed to contract with private sector plans to administer an alternative insurance product within those state exchanges. OPM will ultimately have to stretch its capacity to handle this pivotal role.

In an interview with Federal Times before the Senate passage of its bill last December, former OPM Director Linda Springer expressed doubts that OPM could "be an insurance company." The publication noted, "Making OPM responsible for setting up and managing an insurance program for tens of millions of uninsured Americans would be a mammoth undertaking for an agency of 5,800 people — and only 184 of those manage the health insurance program for Federal employees, retirees and dependents."

Under FEHBP, OPM currently negotiates among national and regional insurance plans to set rates for covering some eight million Americans. Each year, during "open season," they choose from among nearly 300 health insurance plans.

President Obama has called OPM's new role a "creative framework" for solving the problem. But some say that the agency must vastly amplify its resources to do the job.

In the same article, another former OPM Director Mike Hager said that OPM would have to add thousands of new employees and maybe even have to double in size. Hagar, also a former chief human capital officer (CHCO) at the Veterans Affairs Department (VA) drew a comparison between VA and OPM. VA's 5,000 employees administer benefits for more than 23 million veterans. Hager feels that OPM would either have to hire a similar number of new employees or add large numbers of contractors.

Expanding enforcement in DOJ and IRS. Fraud and waste continue to be the nemeses for the health care infrastructure. They plague Medicare alone to the tune of about $60 billion a year. In October, a CBS "60 Minutes" story said that Medicare fraud has become "one of, if not the most profitable crime in America." President Obama has said that there is sufficient waste and fraud.

In addressing Congress on health care reform as debates began, President Obama pledged to "eliminate the hundreds of billions of dollars in waste and fraud."

Two departments will loom large in making sure that the right Americans receive appropriate coverage. HHS will determine the mandated coverage, which other agencies will enforce.

The Department of the Treasury and especially the Internal Revenue Service (IRS) will spend an estimated $5 to $10 billion dollars (Congressional Budget Office) over ten years in administrative costs for enforcing health care reform measures. Although the number of new agents required has become somewhat of a political football (with some calculations over 16,000), non-partisan Politifact estimates the number could be more like half that amount, which is still a sizable recruitment challenge.

Because the new law mandates individual insurance (with some exemptions), it requires that tax returns declare the amount of insurance coverage. This declaration must be measured against the HHS guidelines for "acceptable coverage." By 2016, those without coverage could see fines as high as two percent of their income.

On March 26, IRS Commissioner Douglas Shulman testified before Congress that the IRS is in the process of determining "the proper resources" necessary for the job.

Eugene B. Steurle of the non-partisan Urban Institute, has written, "Health reform ... is as much about welfare and taxation as it is about health."

The Department of Justice has not released figures. Its role, however, in prosecuting reform-related crime, will be significant. According to an article by Brian Boyle, partner of O'Melveney and Meyers LLP, posted on Life Sciences site, "The President's proposed budget sets aside $1.7 billion, and the reform package provides an additional $350 million over the next ten years, to fund a number of enforcement agencies tasked with fighting health care fraud, including the U.S. Department of Health and Human Services' Office of Inspector General and the U.S. Department of Justice."

In a word: opportunity. The civil service is presently riding a crest of interest in working for the federal government. Apart from job availability in a recession, one of the prime movers for new candidates remains "challenge." Implementing the new law certainly fits the bill.

As Donna Shalala confirms, "This is a wonderful opportunity."

Providers and payers: Another workforce transformation.

In spite of the complexity of the 2,500-page law, the people factors are straightforward. Not since the advent of Medicare and Medicaid, which now cumulatively insure some 97 million Americans, has the Federal government redrawn the delivery and payment landscape. Those reforms have necessitated a vast payment and delivery infrastructure, which is still evolving. Now bringing 32 million more Americans into the health care system and expanding coverage for millions will require a similar workforce transformation.

To get an understanding of how things will change, think back nearly 40 years to another Act: Public Law 99-222: the Health Maintenance Organization Act of 1973, pushed by President Richard Nixon and backed by Senator Ted Kennedy. It defined the HMO as a non-profit organization in which all members paid the same monthly premium for a specified list of benefits. Over the ensuing decades, the concept of "managed care" has altered virtually every type of insurance offering in America, such as the ubiquitous Preferred Provider Organizations (PPOs). Yet, if we are inclined to take this infrastructure for granted, we need to think back to the early 1970s when HMOs had only four million members and were considered a "West coast thing."

Managed care achieved stability by narrowing the gap between patient, provider and payer. Each party cooperates in accepting limitations for the good of the "system". Health care reform challenges these relationships by ushering in the millions of uninsured while removing many limits for the already insured. In an already over-taxed, under-staffed system, expansion might seem a prescription for disaster. Fortunately, the new law offers remedies as well as posing problems.

Title V: Bolstering the "Health Care Workforce." Title V of the Act aims at "increasing the supply of qualified health care workforce to improve access to and the delivery of — health care options for all individuals." It includes educational and training provisions that encourage people to pursue careers in health care, especially in the following areas:

  • Primary care. The biggest need to meet the influx of expanded care is for primary care providers, the entry point for most people into the system. The number of primary care physicians has been dwindling relative to specializations to a ratio of 2:1. The Act has incentives not only for doctors, but for other professionals, chiefly physician assistants and nurse practitioners. For example, the Act creates grants to establish Nurse-Managed Health Clinics (NMHC), run by advanced practice nurses, affiliated with an institution of learning and providing primary care to under-served or vulnerable populations.
  • Rural and other under-served populations. According to Fitzhugh Mullan, M.D., Murdock Head Professor of Medicine and Health Policy at George Washington University, "The distribution of physicians in the U.S. heavily favors urban areas. Metropolitan areas have two to five times as many physicians as non-metropolitan areas. Economically disadvantaged areas have significant physician access problems." Although problems are most pronounced among the underserved, Mullan also points to an overall "zone of inadequacy" in physician-to-population ratios. Here again, the Act provides measures, such as student loan forgiveness, to rebalance and increase primary care.
  • Advancing nursing. Section 5309 of the law has special significance for the entire health care industry, addressing the shortage and retention of nurses by increasing the capacity for education, supporting training programs, providing loan repayment and retention grants and creating a "career ladder for nurses". The ladder will help licensed practical nurses, certified nurse assistants, associate degree nurses and others become baccalaureate- prepared registered nurses or advanced education nurses in order to meet the needs of the registered nurse workforce. Not surprisingly the American Nurses Association (ANA) was a strong advocate for and advisor of the legislation. Last August President Obama commented, "We have the American Nurses Association and the American Medical Association on board, because our nation's nurses and doctors know firsthand how badly we need reform."
  • Physician Assistants (PAs). The legislation recognizes and supports PAs as key players in primary care. The field has already received media attention and encouragement: U.S. News & World Report placed it among its best careers in 2009. O Magazine has called it a "smart choice" due to the doctor shortage. Kiplinger and Money have called it a great job for a recession. The new law carves out a projected15 percent for PA educational programs in the funding cluster on primary care medicine. It updates the definition of PA educational programs and makes PA educational programs eligible for faculty loan repayment grants as part of Title VII of the Health Professions Programs in the Public Health Service Act.
  • Public health professionals. The Act strengthens programs for recruitment, training and retention of public health professionals. It also creates a student loan repayment program.

A strategic approach to the workforce. During the course of the health care debate, there has also been a call for a "workforce strategy," a unified and comprehensive view of capacity needs and the human capital necessary to meet them.

To that end, Section 5101 creates a National Health Care Workforce Commission that develops and commissions evaluations of education and training activities to determine whether the demand for health care workers is being met. The 15 members of the Commission will represent the major parties concerned with health care workforce issues, such as health professionals, third-party payers, educators and consumers. The Act asks that appointees be in place by September 30 of this year.

The Act also sets an ambitious agenda for the new Commissioners, who will serve three years, i.e., past the 2012 election. Topics go beyond short- and long-term workforce needs to address integrated health care, quality, student loan repayment as well as "nursing workforce capacity at all levels."

For the first time, the country will have a single body accountable for recommending strategies helpful to health care delivery and payment.

A need for expertise: administration, finance and IT. As you can guess by now, all sides of this undertaking need financial management, IT and administrative skills. Mirroring the arrival of Medicare and Medicaid, the private and non-profit sectors will need more financial experts and administrators to comply with the Act. They will also need creativity and innovation to compensate for what present reform measures do not contain.

Financial issues have drawn concern from proponents and opponents of the new Law. A Gallup Poll, released March 31, 2010 noted, "Both groups agree that the bill didn't do enough to deal with rising health care costs." Payers and providers have struggled with mounting costs that constitute an ever increasing share of the nation's GDP. Furthermore, since about half of health care costs derive from government funds, health care figures into the national debt and deficit. This situation weighs heavily on having attractive careers and available jobs in the health care sector.

I think Michael E. Chernew, PhD, Professor of Health Care Policy in the Department of Health Care Policy at Harvard Medical School makes a lot of sense in this regard. He feels that federal spending on Medicare and Medicaid has become one of the principal drivers in long-term national debt and deficits. Writing in the April 1 edition of The New England Journal of Medicine, he sees, however, several key strategies for reducing health care costs. The new law contains several of them, some of which are especially relevant to recruiting a new generation of capable administrators and financial experts:

  • The state insurance exchanges, federally-funded marketplaces where many of the uninsured will choose among government-approved plans.
  • Reduction of fraud and abuse within the Medicare program, which accounts for billions of dollars each year and will need private sector expertise to match federal efforts.
  • Investment in information technology and comparative-effectiveness research, which will enable institutions and consumers to ensure more value for health-care dollars spent.

Payers and providers: seeking creative actuaries. The traditional image of insurance recruitment usually emphasizes analytic left-brain caution rather than the quest for new solutions. But unprecedented challenges call for new thinking, and that is the conundrum facing the interconnected world of insurance companies and those whom they pay.

Only genuine cost reductions will ameliorate the shifting of burdens between providers and payers. Under the present system, hospital emergency room admissions assume the high cost of many uninsured. In fact, certain hospitals cover a disproportionate share due to the populations they serve. The American Hospital Association, therefore, has urged for a more equitable sharing of these costs. Mandated health insurance, which, when added to employer plans, will ultimately cover 94 percent of Americans and should create pools that absorb most of these costs.

The insurance industry, however, finds "mandates" not as easily achieved as many would hope. To make the law work, healthier people will need to enroll. Otherwise, risk management will not work: the less healthy will enroll while their healthier fellow citizens will be willing to pay penalties. Without provisions for cost containment, reform would then lead to much more being paid out than going in, undermining the risk management principles of insurance.

Since the government will not directly go into the insurance business (the so-called "public option"), the insurance industry has found itself in the middle of new contradictory forces: managing health care expenditures while being the nucleus of expanded coverage via state-run exchanges.

In late March, America's Health Insurance Plans (AHIP) President and CEO Karen Ignagni, who represents the nation's insurance firms, said, "Ultimately, the success of health care reform will depend on whether or not soaring costs are brought under control and coverage becomes more affordable for working families and small businesses." Yet, in order to maintain reform on a fiscally sound base, AHIP has announced that it will join with consumer group FAMILIES USA in its Enroll America outreach campaign to make it easy for states and their residents to get onboard.

Although Ignagni has warned that the crunch insurance companies face could lead to layoffs, executive search firms see industry hiring opportunities demanded by the transition to a new way of doing things. These hires will not be business-as-usual types. They could be a part of a paradigm shift as when HMOs entered the market in the 1980s.

Julie Steinberg, writing on March 25 on the FINS career site, owned by Dow Jones, pointed out how the reform is spurring hiring for network managers, actuaries and even CFOs with a flare for innovation and creativity.

She quotes Amanda Fox, a consultant at Spencer Stuart about "the effort to keep medical-loss ratios low by managing the cost of care more effectively. Steinberg notes that the bind places a "premium" on candidates who are not only experienced but are innovative and creative.

Heidi Leeds, senior client partner in the health-care practice at Korn/Ferry, an executive-search firm, told Steinberg that insurance companies have been gearing for a ramp-up since Obama took office: "The speculation about the outcome from a strategic standpoint has had companies preparing for over a year."

Leeds said that industry outsiders might be the apt hires as insurance companies seek someone, even for positions as high as CFO, who can think outside the box.

A new prescription to thrive. I thought the Kaiser Permanente story might be helpful in comprehending how a large health care model can resiliently absorb change. In 1937, Henry J. Kaiser (1982-1967) began the west coast style of payment to be known as HMOs. Kaiser, the "father of modern shipbuilding," received an offer from Sidney Garfield, a visionary California doctor for prepaid medical services for his construction employees in southern California. During WWII, when Kaiser hired thousands of people to build his Liberty ships, he created the first big HMO: Kaiser Permanente, which he then expanded to public membership. Today Kaiser is the nation's largest not-for-profit health plan, serving more than 8.6 million members, with headquarters in Oakland, Calif.

I found that Kaiser Permanente, which is both a provider and payer, has taken an upbeat approach to the reform. While hoping that some provisions in the Act might be revisited, it summed up the positive aspects of a new approach to taking care of Americans, citing these principles:

  • the belief that health coverage should be universal
  • an obligation to obtain coverage creates a corresponding obligation to make coverage available
  • health plans should compete based on quality, service and efficiency, not the avoidance of risk
  • consumers should have a broad choice of plans through exchanges and the data to make informed choices
  • care delivery systems should be paid in a manner that rewards improved performance on quality and efficiency

Could it be a hoped for meshing of government guidance and market forces that get American health care on a sound and sure footing? Could it further help turn out the next generation of industry professionals? Whether you are on the government or industry side, TMP Worldwide looks forward to working with you through this unprecedented change.

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