In this part of our interview, Phil talks about why it’s rational for many welfare recipients to choose not to work, why Medicare for all would be financially problematic for his hospital right now, why single-payment will probably come before single-payer (and what that is!), why the ACA is flawed even for hospital employees, and how the health care system might get “really, really ugly” before it gets better.
While we don’t agree with everything Phil Ennen says in this interview, we think it’s important to get his perspective as a leader in his field and someone who’s trying to do the right thing. If “statesman” was still a thing, Phil would be it.
This is Part 2 of our interview with Phil Ennen, president and CEO of Community Hospitals and Wellness Centers’ Bryan (Ohio) Hospital, and former chair of the board of trustees of the Ohio Hospital Association. Ennen is also on a statewide task force on the opioid epidemic. See part 1 here. A shorter part 3 is still to come.
What kind of stories do you tell [about Medicaid]?
I’ll give you my usual spiel. So I’ll go to a local service club, like a rotary or something like that. I’ll say, “Over 60% of our business is Medicare and Medicaid, so if you’re opposed to socialized medicine… too late?” And they kinda look at me, because I know they don’t see Medicare as socialized medicine. They just don’t. They see Medicaid as socialized medicine, but they don’t see Medicare as socialized medicine. So they’re fibbing, right? They’re not being honest because, “Don’t mess with that – don’t mess with my Medicare.”
I don’t know if this is true or not, but something that got popular during the election was a guy from Florida saying something like, “Get your government hands off of my Medicare.”
When Clinton was president and they made the attempt to change the system, I went to meetings where they said, “Tell the government to get out of my Medicare.” And I’d have to say, “That actually is the government in your Medicare. So the health care program that you guys like more than any other health care program we have is a governmental socialized medicine program.” “Oh well that can’t be.”
So then what I say to them is, “You guys have this expectation for people to behave in a certain way, to have a certain set of values. To feel this drive to work, this drive to contribute. I deal with people with multi-multi-generational Medicaid families. “Well, why don’t they want to work?” “Well that’s where they’re actually making a really really rational decision. Quite honestly, you got a crappy, ten dollar an hour job out here, with no health care tied to it. So they sit there and they say, “I gotta go show up, five days a week, I gotta clock in at a certain time, I gotta stay a certain amount of time and then I get to go home.”
Work a shitty job, kinda be humiliated…
And I get this amount of money in my paycheck. And then I look at what I could’ve made if I just stayed on the welfare programs, and it ain’t that much of a difference. I might do a little bit better if I went to work, but I can do everything on my own time. And 98% of the world makes that same decision. So, don’t knock these people. They’re making a really rational decision.
“Well, then we need to take the benefit away from them.”
I said, “I feel like it took us 50, 60, 70 years to get into this mess; we ain’t gonna get out in five or six or seven years.” You can’t just suddenly change.
“Well, why not?”
And I say, ‘cause my hospital is really gonna get hurt. And my hospital is kinda one of the last places around here that’s employing a lot of people and providing good benefit. So, where’s the balancing act here?
Maybe companies have to pay a little more.
Well, so I was at a forum a few months ago, in Defiance.
We’re going through this whole forum and I finally said at the end, “You know what I don’t get is why can’t we be just all honest about this, why can’t we be honest about the social contract? Why can’t we be honest that if we were starting from scratch we would never ever had designed the health care system that we have today? And why can’t we just accept the fact that being enrolled and being in means that you were born, and being dis-enrolled and being out means that you died? And a bunch of people in the room going like (clapping hands and applauding).
And I said, “I gotta tell you guys it won’t be easy to get there because there’s a whole bunch of people in the world that kinda like things the way they got it.” But, what I also say is that if you switched me right now to: “no matter who you serve Phil, we’ll pay the Medicare rate,” I can’t make it. That’s the thing that’s always confused me about the business side of this deal, they’ve been so unwilling to confront the national government about how much they cross-subsidize health care. If I only got paid Medicare rates starting tomorrow, I’m 30% underwater and that’s probably 95% of all US hospitals would immediately be a money-losing situation.
If all your patients were Medicare?
If we all got paid Medicare rates. No matter who came through the door, I got paid Medicare rates: I’m under water. So what I say to the business people is, you’re already paying for this. You’re paying for this in more premiums because you’re cross-subsidizing the governmental patients, so why do you care how you pay this? Whether it’s a payroll tax – why do you want to do something on top of that? Your employees don’t look at it as a benefit. No matter what you have for them, it doesn’t cover what they want it to cover, it doesn’t work the way they want it to work. They don’t get the choices they want to have. Why do you want to provide this benefit that nobody actually thinks is much of a benefit? I mean until they actually do get sick, then they think it’s a pretty good benefit.
But it’s hard! It’s hard in a community like this, because it’s been so – like, you guys describe yourselves as being in this bubble, right? We have a bubble out here. It’s just not your bubble; it’s a different one… When I go east, and I watch what’s happening in the east, I don’t necessarily get excited about what I see there either. But when are we gonna have our Detroit moment? Detroit finally had its moment – can’t pay the bills anymore. Finally had its moment of honesty, and now Detroit seems to have scraped the bottom, and it’s coming back again. But it’s coming back as a city of 400,000 people when it was a city of a million and a half.
When are we gonna have our Detroit moment as a nation? About how this works. And I don’t know when that’s gonna come. The state representative that represents our area is whipping votes to heavily curtail the Medicaid expansion. I’m on the phone with him:
“Rob [Latta], this is gonna hurt.”
“Phil, we can’t keep doing this.”
“Rob, I’m not even gonna try to justify what’s going on – I’m just gonna tell you, I gotta live in the real world while you guys try to figure this out. What you’re about to do, it’s gonna hurt. We’re kinda one of the last institutions that’s working for Williams County!”
“Phil, we can’t keep doing this.”
“Rob, you’re worried about something that’s gonna happen four or five years from now – I’m worried about the next four or five months.”
So, then we hang up – and all I ever ask legislators to do for me is just listen to me. I never got upset that they didn’t do what I thought they should do, I just want them to listen to me. Hey, I got through to him a little bit. Doesn’t mean they won’t do it. ‘Cause the Republicans are really upset with the governor [John Kasich], and they wanna get back at him because he expanded Medicaid in Ohio, and he shouldn’t have done it.
Why shouldn’t he have?
Because the money’s really not there. I mean, we could have a wonderful academic conversation and we could all reach agreement: god, we can’t keep doing this. But then there’s real life. I was actually deep into that whole thing when expansion happened, because I was chair of the board of Ohio Hospital Association board of directors at the time. So when John [Kasich] made the move, he actually – he’s a very dramatic guy. So we’re in our meeting, and the governor’s on his way over. So he walks in, storms into the middle: “I’ve done all I can do. I set it up for you, but you’re gonna have to finish this; I’m not gonna finish this for you.” Walks out. And then we pulled that funky controlling board maneuver and expanded [Medicaid]. And the right wing Republicans just went nuts, absolutely nuts, and have tried since then to scale it back. But as a statewide committee, we’ve been able to basically more than anything else, convince Portman that everything that’s being proposed isn’t making any sense. And Portman has some real personal issues associated with opioids; he sees nice improvements in trying to confront opioids that are associated with expansion, and he doesn’t want to pull us back. Doesn’t mean he won’t suddenly vote with the rest of them at some point, but at least one week at a time we kinda hold Portman where he is.
So you said if everyone came in with Medicare you’d be under water – what’s the solution to that, if you believe in Medicare for All?
I think that, first of all, I really haven’t seen any system anywhere in the world that I think is “Wow we oughta do that.” Everybody for the most part is as happy and as unhappy with their system as we are – they spend less than we do – but their happiness factors [are about the same].
But their outcomes…
I think you’d have to look at different outcomes, you’d find that different parts of the world are better at some. There definitely are systems that spend a lot less per capita than we do, and get better outcomes. I’m with you there.
But I’ve been to Harvard and Stanford, because I want to mess with these guys from around the world. I’ve sat with the guys from the UK, I’ve sat with the Canadians, I’ve sat with South Africans, I’ve sat with Australians. What I keep coming back to is I think the first direction that we’re headed to is not single-payer, but single-payment.
What does that mean?
Just, whatever the rate is, is what the rate is. There isn’t any more, “Anthem pays me this much, and United pays me this much, and Medicaid pays me this much, and Medicare…” It’s just a single rate, and then there’s these private companies that administer a big chunk of the health care, but under this payment structure.
Then I think we try that for a while, and we’re not happy with that either; then we head toward what I call the heavily regulated utility model. Which means hospitals become gas companies, electric companies. You know the electric world has FERC, the Federal Energy Regulatory Commission, and if we had some kind of federal health care FERC: I get the budget, I work the budget.
But different from Canada, there will always be a private pay option in the States, for a long, long time to come. The Canadians don’t allow it. The Brits allow it; they kinda fib about that. There’s the National Health Service (NHS) until 5 o’clock, and then someone else is using the building from 5 o’clock on. But I think there will always be – because this is America, right – there will always be this “If I have the money, then I can go where I wanna go.” Which means, pragmatically what I would do as a hospital is I would have a side door, so if you’re private pay you come in this way. Which is NHS…
The industry’s not really trying to plan for it; they’re just trying to cope. And the only way they know to cope is to just keep consolidating so they can have leverage. And then the payers keep consolidating so we can have leverage. So, as you came out here, you drove past hospital after hospital after hospital that used to be on its own, and it’s not anymore. We’re still independent and on our own, but we’re not supposed to be. That’s not part of the plan. We’re supposed to become part of somebody else. So then the problem with that is, now the owners don’t live here anymore.
I’ve been here 30 years; I’ve been CEO for nine years. In the nine years I’ve been CEO, the hospital 20 miles south has had six CEOs. It’s part of a system. It’s just a two year rotation. So I am actually the dean of hospital CEOs, with nine years of tenure. Everybody else has switched since then. So it’s a give and a take.
And then, there’s people working in this building, that if we were part of a system, their jobs wouldn’t be here. Because what happens is, when you consolidate, then you haul back office out, right? So I have people here who do billing, I have people here who do coding, I have people [points back toward cafeteria workers]. And they know it; they know why they have the job they have, and they know what’s gonna happen if they get taken over by somebody else. Food service people are employed by us; if we get contracted that would be Marriott or Sodexo, or something like that. Cleaning would be some national hospital housekeeping service. So, it just changes us. But I’m not afraid of the direction that you wanna go [Medicare for all]; I’m not afraid of it, because I think we’re gonna get there anyways. I’d like to get there in some sort of rational way. It’s not feeling very rational right now.
It’s feeling more rational than what’s being proposed on the other side.
Oh yeah. Yeah, but ACA is flawed; it needs to be fixed. Anybody who thinks “leave ACA alone,” they’re wrong. The ACA didn’t do enough for the private insurance market. And so if we’re gonna have a private insurance market, you better do something.
As someone who both sees the business and the politics that’s going on, what’s actually going to drive the decisions that get made on health care? I’m kind of asking a crystal ball question – do you think it’s going to continue to be politics, which is completely polarized, or do you think at some point the business of running hospitals or how you make money off of health care is going to kick in?
Well I will say this, whatever my current feeling about the whole thing is, it’s not going to be pretty. It’s going to be really, really ugly. The reason for that is that the individuals we send to Washington, DC as our representatives are not people who are geared toward cooperation and compromise. They are geared to winning. And that’s both sides.
Katie: And raising money and winning and raising money and winning.
Sam: I think the Democrats are more into losing…
Well I get irritated with them sometimes. They tried to have the hearing on the Hill and the demonstrators interrupted and the Republicans walked out. And the Democrats are cheering them on and I’m looking at [Senator] Sherrod [Brown], “OK Sherrod next time there’s Republican demonstrators in the room and you get up and walk out. Can you at least be consistent here?”
But these are not people who were wired in any way shape or form to work it out. They’re wired to win. So their concept is: skirmish, skirmish, skirmish, skirmish. And then check: we won that one, lost that one, won that one, lost that one.
I don’t know what to do about that because of the way that the districts have been gerrymandered – by both parties – the whole key in a state was to figure out some way to be in control at the end of the decade so that you got to set the boundaries. And then these computer modeling things are scary, wicked wicked scary.
So I’m talking with my Republican congressman and they’d just done the apportionment. Ohio lost two seats. And I noticed that he picked up a chunk of Lucas County. So I’m saying, “Bob, historically you’re a 53-47 guy. Looks 51-49 to me now.” And he said, “Didn’t you look at the other end of the district?” And they gave him big swaths of rural Ohio to balance out the thing. But they compressed [the neighboring] district and shoved up the lake towards Cleveland in this weird thing.
So I don’t see this coming from the Congress.
I feel like what’s going to happen is there’s going to be some real emotional moments. That’s gonna sort of drive up this “We just can’t keep on doing this anymore” [dynamic],
and at some point the employers in little groups and then in bigger and bigger groups are going to start staying, “I don’t wanna do health care anymore.”
‘Cause I ran the numbers. Because there’s an option in the ACA, there’s supposed to be ability to buy healthcare through the exchanges. So we ran the numbers because at that point we were spending, the hospital, not the employees [were spending], $9 million a year on health care. And we’re a hospital! Of course what that means is our employees are really good at consuming it… So I said, let’s take the 9 million bucks, and I went to a local insurance agent and I said give me some monthly premiums [on the] individual market. So he gave that to me and I came up with a way of averaging what it was going to cost, for a single individual policy, for a family policy, on the individual market. And then I looked at the $9 million bucks and I said how much of the $9 million bucks would I have to just give to the employees in order to do this. But I wanted to keep some of it, to be honest I wanted to keep a million and a half of it [for the hospital].
And I could not give the employees enough money to go buy a premium on their own and get out of health care. And then of course the employee is getting a little freaked out, “Well what do you mean you’re gonna put me into the market?” And I said, “Well I’m just trying to be honest with you guys. If you can get it on your own, why can’t you buy health insurance like you buy car insurance? Like you buy life insurance?” It doesn’t really make any sense.
Katie: I’ve been buying my insurance off the market for the past 5 years…saved so much for my employer.
Sam: And I was paying more [than Katie was] for worse coverage, through my employer.
Yeah. I’m just trying to say, maybe there’s a rational path through here. The problem was then the board members said, “but you’re not calculating the fine.” Remember if the employers got out they’re going to have to pay that penalty. But the penalty number was really low. And then I was talking with some people down in Columbus [the capital of Ohio] about it and they said, “You don’t understand. The Fed set that penalty number. If they think too many employers are opting out they’re going to raise the fee and you’re going to be on the outside looking in.”
But I would love to have a situation right now, where basically I paid the employer tax for health care and the employees probably have an employee tax for health care which probably I pay too, right? And then they’re just getting it from someplace else, not from me. And then I’m looking at that, I’m probably spending as much money as I’m spending now, but I just think it’s a more rational path.
The Germans are cool with how much they get taxed for it. They really are. I was talking to a guy from Germany, ’cause the tax rate in Germany by the time you add it all up is like 54%. [He said,] “But Phil, I don’t have to do this, and I don’t have to fill out that form, if I’ve got a kid I can take them to the doctor. You get paid leave.”
I don’t think it’s going to be pretty getting from here to there. I think what you’ll see is, the way they’re going to try to do this is, they’re going to massively consolidate the industry. The industry is going to consolidate down into about 50 healthcare companies that take care of the entire country and about five health care plans outside of Medicaid and Medicare. And they’re gonna think that that’s gonna work – and then the quality of care is going to really dive. And then they’re gonna say, “OK that didn’t work, what are we gonna do now?” But a lot of hospital systems that I’m aware of, the only reason they’re acquiring the way they’re acquiring, quite honestly, is they’re just trying to get too big to fail.