Voters in Massachusetts took to the polls on Tuesday for a special Massachusetts Senate election that resulted in Republican Scott Brown’s upset victory over Democratic candidate Martha Coakley. One of the biggest issues of the campaign for the seat long held by the late Sen. Edward Kennedy was the healthcare reform debate—Coakley supported the current healthcare reform bill, Brown has vowed to vote against it. With Brown, Republicans now have 41 votes in the 100-member Senate.
We caught up with Kim Slocum, president of KDS Consulting LLC, a healthcare consulting firm in West Chester, Pa., the morning after the election to get his reaction and find out how the meetings and the life sciences industry might be affected by this electoral turn of events. His prediction: Pharma and med-device meeting professionals should expect more hurdles ahead.
For more on the healthcare reform debate and how it will affect meetings, don’t miss Slocum’s keynote address at the upcoming Sixth Annual Pharmaceutical Meetings Management Forum March 14–16, at the Philadelphia Marriott Downtown. To register, visit the conference Web site or call (800) 817-8601.
Kim Slocum’s Morning-After Perspective
The situation is pretty fluid at the moment, [but] the legislative process of healthcare reform is clearly in trouble. It may or may not be dead—we probably won’t know for a few more days. If it is dead, though, nobody who is a healthcare provider or supplier (including the bio-pharmas or device firms) should be pleased. The underlying trends in healthcare that triggered the national interest in healthcare reform have not been addressed. In the event that the legislative process fails, these will continue unabated and the effect on the medical supply and life sciences industry will be largely negative.
The overarching concern for both average Americans and society as a whole is the cost of healthcare. While the proposed reform legislation is far from perfect, it does begin to focus the U.S. healthcare system on being able to better define, measure, and reward “value.” The rationale (as yet unproven, but certainly intriguing) is that higher-quality care should be less expensive. While this represents a somewhat Darwinian environment for healthcare suppliers (products have to prove their worth by some objective standard to achieve market acceptance), at least it offers a means of rewarding real innovation. This helps keep the research-centric core of the drug and device industries intact. The only other really viable option for the system is to purchase care on the basis of unit cost. For firms with relatively high fixed costs (like life sciences and diagnostics firms) this is not a favorable environment.
Third-party payers like health plans or the government default to looking at how much various elements of care cost rather than how much (or how little) they improve clinical results. We have been moving in this direction for some time now and the effects have been pretty negative, especially for the biopharmaceutical industry. This is because one of the other core elements involved with a “unit price”–focused healthcare delivery system is cost shifting to patients.
Unfortunately, healthcare is increasingly unaffordable for average Americans. This isn’t just a theoretical number associated with the cost of insurance, but it also entails hard-dollar out-of-pocket spending. All the policy research and the experience of the past decade show us that when consumers are asked to pay more for healthcare (often described as having “skin in the game”) they don’t become better shoppers—they stop shopping altogether. This means reduced demand for all sorts of healthcare goods and services, including those that are of high value and those that are more marginal in roughly equal proportions.
That’s the “macro” financial picture. As for how this affects meeting planners, there is just one word to remember: less. Without reform, uncertainties about the environment increase, and we also know that companies tend to take a lot fewer chances in such situations. More pragmatically, when revenue growth slows (or goes away entirely), budgets get cut—and “discretionary” spending such as that for meetings is near the top of such budget reduction lists.
It’s also important to remember that at least two major opinion polls have shown us that the general public still sees supplier industries like biopharmaceuticals as bearing a lot of responsibility for the problems we face in the U.S. healthcare system. People simply don’t trust these industries to do the right thing. As a result, anything that carries even a whiff of opulence becomes a target for public ire. Since few senior executives want to face that sort of inquiry, avoidance becomes the default response. If you don’t hold a meeting, you can’t be criticized later for engaging in behavior that a reporter (or an elected representative) might see as being over the top. The net result is that while meeting planners aren’t the cause of any of these ills, what they do has such a public face that meetings make convenient scapegoats. Without reform, meeting planners will need to work harder than ever to show a return on investment. This is clearly not easy, but in the more economically austere world we’re likely to face, it will be necessary
Agree? Disagree? We'd love to hear your thoughts. Please feel free to leave a comment below, or e-maileditor Sue Pelleter.