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WORLD NEWS: Delivering healthcare

October 4, 2012

"The U. S. healthcare system remains one of the most effective in the world and it continues to be the case that people travel globally to receive worldclass medical care here," said Christopher McFadden in an interview with the Lake Placid News and The Virginia Gazette.

McFadden is a summer resident of Lake Placid.

"However," he added, "environmental factors have created significant upward pressure on healthcare costs. While health care reform at the state and federal level has addressed how to pay for healthcare and increase access, reducing the underlying cost of healthcare delivery, without sacrificing quality remains a national priority."

Wen McFadden talks, people, in the healthcare industry listen.

He is a managing partner with Health Evaluation Partners and a member, of its Executive Committee. He has over fifteen years of experience in healthcare industry and directs the firm's investment activities through its Spectrum Fund. Formerly, a vice president and managing director at Goldman Sachs, he directed debt and investments in private and public North American-based healthcare companies.

A graduate of the University of Richmond with a BA in political science, who earned a degree in economics at the Virginia Commonwealth University, McFadden is known as a hands-on manager who evaluates the healthcare industry on its merit, devoid of ideological bias.

When I asked him whether the healthcare system in any developed country could serve as a role model, he replied: "Like Canada, most Western nations have a national, single payer healthcare system administered by the government. Such models can realize economies related to healthcare information and purchasing and may avoid the administrative cost associated with billing and collection. However, these single payer systems can be slow to adopt new medical technologies and may under-invest in clinical capacity, limiting access to non-urgent care services. In my view, the private sector including non-profit healthcare systems, are best positioned to meet the needs of a dynamic market."

He explained that in retail business we understand that large companies, like Wal-Mart, invest heavily in systems that improve operating efficiency, in contrast to the general store. In healthcare, the situation is similar. "Most healthcare providers, physicians, clinics, hospitals are small businesses that often lack the capital and expertise to improve effectiveness of their organization. The long-term adoption of information technology in healthcare will have a meaningful impact on the productivity of the healthcare system," he said.

Guided by research, his investment firm seeks healthcare companies that have developed tools and operating strategies that can reduce the long-term cost of healthcare delivery. This includes ambulatory care providers, clinical and administrative facility services, managed care and many other fields. To accelerate connected health innovation and adoption, Health Evolution Partners recently joined forces with telecom provider Verizon.

"U. S. demand for connected health technologies is expected to grow rapidly as the industry seeks better manage costs and improve patient care by facilitating real-time care," states a press release issued by the partnership.

I asked McFadden, what effect, he thinks, the "The Affordable Care Act," upheld by the U. S. Supreme Court, would have on the healthcare delivery system in our country.

"The Act has two thrusts," he said. "It would increase coverage of healthcare for the uninsured and under-insured, having the effect of addressing what was viewed as social inequity in our country. But it would also increase the overall size and growth rate in the U. S. healthcare market as there will be more customers with the means to pay for healthcare services they need. Thus the industry is preparing for providing more services than it has historically."

But there is also another aspect of the Act, McFadden said, structural reform. For example, creating state healthcare insurance exchanges where individuals can purchase health insurance coverage. This is different from how the market has operated in the past and is expected to create a more competitive marketplace.

McFadden sees "The Affordable Care Act" as an important first installment in the transition of our healthcare system into one that is more sustainable than the current fee-for-services model.. "Hospitals have been traditionally reimbursed for the services they provided," he said. "The Act changes that. Hospitals would increasingly be reimbursed by the outcome of the patient's health rather than for individual procedures."

Frank Shatz lives in Williamsburg, Va. and Lake Placid. His column was reprinted with permission from The Virginia Gazette.



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