THE BLOG
11/21/2016 05:10 pm ET Updated Nov 09, 2017

It's Not the ACA that Needs a Fix; It's the Health Care System

Here are two certain outcomes of the Presidential election: Even with subsidies, health care in America is becoming more and more unaffordable, and in the first 100 days in office the winning candidate will have to propose significant changes to reverse this situation.

Rather than totally obliterating the Affordable Care Act, as Donald Trump has vowed to do immediately upon being sworn in as President, or expanding on it by offering such options as tax credits to offset out-of-pocket expenses, allowing people to buy into Medicare at age 55, and establishing federal oversight for prescription drug increases, as Hillary Clinton has proposed, I would argue that what really needs to be remedied is the vast amount of inefficiencies in the health care delivery system.

Indeed, it is estimated by a number of economists that one-third of our health care dollars - over $900 billion of the $3 trillion in health care expenditures - are wasted because of inefficiencies in the system. While some of this is attributed to over-treatment - unnecessary tests and procedures - as well as a completely archaic reimbursement system between insurers and health care providers, a more significant percentage of the inefficiency is due to the lack of adoption of technological innovations in the industry.

Is it any wonder that a recent Congressional Budget Office analysis forecasts the overwhelming majority of acute care hospitals in the U.S. will have negative profit margins in 2025 unless they improve productivity or otherwise reduce cost growth. The report attributes the problem to the effects that scheduled cuts to Medicare payments, the Affordable Care Act's insurance expansions, and the aging of the population would have on hospitals' bottom lines.

But while these reasons may very well have merit, it would also be true that health care systems should be investing much more in innovative technologies in order to reduce costs while maintaining the highest quality of care. For example, hospitals can implement standardized practices across all divisions and programs in such areas as purchasing and other backroom operations. They can adapt best "customer service" practices from other industries. They can partner with companies such as Pager, Castlight Health, and Hometeam that are maximizing the use of technology to connect consumers with professionals to help determine the appropriate type and delivery of their care. And they can improve communication between primary care providers and specialists as patients transition from the hospital to home care or long-term care facilities to reduce errors and unnecessary costs.

Equally, if not more importantly, hospitals need to address what has become a revolving door of care providers. Workforce instability, in the form of high rates of staff turnover and lingering vacancy rates, continues to be a major challenge for health care organizations. The average hospital faces employee turnover rates of about 17 percent according to a 2016 Nursing Solutions, Inc. report, and that number can range from five to almost 30 percent. In post-acute care and skilled nursing, those numbers can be meaningfully higher.

High caregiver turnover can result in inefficiencies and less productivity, delays and mistakes in delivering patient care, reduced quality of care, longer patient stays, and higher complication and infection rates, to name a few. All of these factors have profound effects on patient safety, and can severely impact an institution's HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) scores, thereby effecting its bottom line. Indeed, hospitals can be financially penalized for low HCAHPS scores -- which, in turn, can translate into higher health care costs.

Already, people costs consume the largest chunk of the typical hospital's operating revenue. Since 2006, Fitch Rating has reported that personnel costs have absorbed 50 percent of revenue on average, and in 2012 they comprised 54.2 percent of hospital operating revenue, one of the highest figures of the past several years.

That's why hiring the right talent is so important. Arena , the company I founded, collects, analyzes and incorporates substantial volumes of data and employs predictive analytics to match an institution's needs and desired culture with large amounts of information on applicants. By relying on data from a range of sources to analyze candidates, we are dramatically reducing bias from the hiring process, thereby eliminating one of the costliest mistakes a healthcare institution can make. In fact, we've helped over 400 healthcare organizations achieve a median decrease in turnover of 38 percent, and we have a 100 percent success rate across every job, department, and facility at reducing turnover.

Of course, ours is not the only way to reduce high turnover, avoid hiring the wrong people, improve patient satisfaction, and enhance productivity and efficiency. But at a time when premiums are soaring, when high costs seem to have become part of the fabric of receiving medical care; when many hospitals are hemorrhaging money or even closing; and when there is a bleak outlook for health care institutions, ensuring patients are getting the best care delivered by the best people and best teams is a financially - and medically - sound investment. I know if it were on the Presidential ballot, it would definitely get my vote.

Michael Rosenbaum is founder and CEO of Arena, a national company what utilizes algorithms and analytics to enhance recruitment and improve retention at more than 450 health care systems and institutions across the country www.arena.io