HEALTH CARE

How to Fix Health Care

Inc. 500 CEO John Baackes of Senior Whole Health has the answer to fixing the broken health care system.
THERE MUST BE A BETTER WAY: Some 2,700 people lined up in July for free medical treatment at the Virginia-Kentucky Fairgrouds.

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John Baackes knows a thing or two about the U.S. health care system. Baackes is CEO of Senior Whole Health, the No. 1 Inc. 500 company in 2008. (It was No. 177 this year.) The Cambridge, Massachusetts, company coordinates health care for patients who receive both Medicare and Medicaid, a business that has given Baackes an up-front look at the flaws of the current system. In a conversation with contributing writer Darren Dahl, Baackes shares his ideas for solving the ongoing health care quandary.

Is the health care system broken?

Yes, it's terribly broken. When we compare our system in the U.S. to what other countries have, like the United Kingdom, Malaysia, and the Netherlands, we see that ours is antiquated, messy, and inefficient. The way the system is financed and organized here doesn't work well. Even though we remain world leaders in developing medical technology, drugs, and procedures, we have very little else to celebrate.

But your company benefits from the current system, right?

Senior Whole Health is a niche organization that offers a rational response to an irrational system. There are about 7.5 million people who fit our target market, people who are the beneficiaries of Medicare and Medicaid. As a society, we spend an enormous amount on these people, but we don't get good results. It's a complicated system, and people get lost in it. That's where we come in. We help people find the services they need, and we do it more efficiently and cost effectively than the government can do it alone.

What do you think of President Obama's plan?

The problem is that the topics being discussed in Washington are focused on reforming health insurance, not health care. They are not addressing the underlying cost structure or inefficiencies in the system.

What's the biggest flaw of the current system?

The fact that we have employers central to our system is the biggest problem. And it exists this way all because of a historical accident. During World War II, companies couldn't raise wages to attract workers, so they began offering health insurance. The IRS then determined companies could consider that a business expense rather than counting it toward personal income. The result is that people now know more about their car- or homeowner's-insurance plan than they do about their health insurance. They are insulated from the true cost of their heath care.

What changes would you make to get people more involved?

I would get the employers out of the middle. I would convert existing benefits into wages that would be taxed as income. I would then impose a mandate where every individual would need to purchase an insurance plan, where those who can't afford it would get a voucher, similar to how Medicaid works. This would turn everyone into active consumers, where they would shop around for the best plan for them. It also wouldn't put the insurance companies out of business. They would simply need to shift from offering plans aimed at groups to plans based on the needs of individuals.

How do you think such a change would affect entrepreneurs and small-business owners?

They would see it as an opportunity to create new businesses. If we took the route to turn individuals into health care consumers, they will need new tools and access to more information, which creates a host of opportunities for entrepreneurs and investors. This would also encourage insurers to come up with a variety of products aimed at individuals. The other angle is cost. Most entrepreneurs don't want to be saddled with the costs of providing insurance to their employees. It's a huge problem. But if you eliminate the idea that they have to provide health benefits, that takes a huge burden off the cost of everyone who wants to start a business and become an employer.

Can new technology also help with the streamlining?

Absolutely. What I can't figure out is why we can't get electronic medical records that are private and accessible to any provider. This is something the finance industry figured out 20 years ago. I can go to Cambodia and use an ATM to extract money without worrying about my privacy, but we can't do the same with medical records to eliminate all the duplication and inefficiency. Maybe we need to get all these unemployed bankers out there to tell us how to do it.

Cost of Small-Business Health Benefits
IMAGE: Radhika Chalasani/Redux
Last updated: Nov 1, 2009

DARREN DAHL

Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.




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