The Most Dangerous Addiction

Don't believe that heroin, cocaine, morphine, methamphetamines and oxycodone are the most dangerous addictions in health care.

The most dangerous addiction is cash flow on which health care systems, insurers, HMOs and providers depend. Improving cash flow induces an endorphin glow; a dimishing cash flow causes cash and credit to become unavailable resulting in acute deprivation symptoms. Analysts devalue health-related stocks and bonds, boards berate executives and their administrations, chief financial officers get fired, providers get paid less with the expectation that they will do more, and health system employees lose their jobs, homes, communities, family health insurance, and social connections. All this without ever smoking, snorting, inhaling or taking a "hit".

As our recession worsens, layoffs will cause loss of health insurance with appropriate medical diagnostic, treatment and pharmaceutical services and products (and leave the former employee with no recourse under ERISA). As employment rolls dwindle and with available global options to save money, employers will change health insurance programs which, in turn, will add higher copayments, restrict benefits, insert more difficult administrative barriers to authorizations and contract with insurers and HMOs which may not have the most qualified physicians, hospitals and health care providers. Providers will find that insurers and HMOs become more difficult to satisfy when claims for payment are made. When a recession is coupled with inflation, a few days' delay in payment to providers may means thousands (or millions) in "float" to payers and wreck providers' cash flows.

Systems which are closely linked to specific manufacturing or service industries may be the most vulnerable to a downturn. HMOs and insurers dependent on stable enrollment will experience the shock of lower membership rolls and cash flows. The impact will be directly felt throughout health care.

See Kaiser Network's article on the vulnerability of UnitedHealth Group which announced its lower profit outlook and said that it will undertake some restructuring at http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=53110