Keeping it LOCAL applied to healthcare!

A couple of years ago, the City of Amarillo experienced a slight dip in sales tax revenue, prompting our City, Chamber of Commerce, and Economic Development Corporation to launch a movement to inspire businesses, organizations and residents to buy local goods and services. That movement is called Buy The Way: Keep It Local

Butler Benefits is proud to support the movement, and we always try to work with local vendors and other businesses when possible vs. shopping online or using outside vendors. As a local business ourselves, we certainly understand and appreciate such initiatives. Here is the sticker on our office entrance window.

Other businesses, who aren’t headquartered in Amarillo, also contribute to our local economy and community, providing jobs, salaries, and benefits to local residents. That money is then spent, or at least a good part of it, at local businesses. Yes, we all understand how that works.

But in health care, we see that roughly $.75 out of every $1.00 spent is either extractive or provides no value to the patient or community. The vast majority is being exported out of local communities to companies headquartered in other places. That money largely goes to prescription drug supply chains, large health systems like Ardent, who owns BSA Hospital, and Universal Health Services (UHS), who owns Northwest, and large insurance companies like Blue Cross Blue Shield and Aetna.

With health care expenditures being one of the major sources of expenditures in our community, millions and millions of dollars each and every year are being extracted from our local economy to enrich corporations elsewhere.

What choice do we have?

I know what you’re thinking…..”There’s nothing we can do about that, the hospitals are owned by other companies and they’re the only hospitals we have!” While that’s true, there are many services those hospitals provide that local and independent physicians, surgeons, and other healthcare providers provide as well! This is the secondary point I want to make, but the primary point, that I’ll get to in just a moment, involves how much we all overpay for health care in general.

But back to this point about not having a choice. While it may be true if you have an emergent situation, say a heart attack……Yes, you’re going to be taken to and cared for at one of the two hospitals here in town. But a good deal of health care is not emergent, nor requires going to the hospital. For example, if you needed a simple gallbladder surgery. That could be done at the Surgery Center of Amarillo, a locally owned ambulatory outpatient surgery center. As a matter of fact, it could be done for far less cost as well! These types of outpatient facilities do far more than gallbladder surgery too.

Prescription drugs are another good example. How much money is being extracted away from the local economy when we purchase our meds from Walgreens, CVS, or Wal-Mart? Amarillo still has a host of good local pharmacies to choose from. I would encourage Amarilloans to seek out these locally owned health care providers, do business with them, and keep more of our health care dollars local.

The larger opportunity….

Yes, there are local, independent health care providers we can drive business to, and that will help. But the primary opportunity that exists to keep dollars local, in the context of health care, is the actual prices we are all paying for health care products and services. For every dollar we overspend in health care, that’s a dollar that is taken away from salaries, benefits, and other community initiatives, and exported out of our community.

Recently, Mayor Ginger Nelson, when speaking to a radio host about Proposition A, made a comment that resonated with me, “Every dollar we take in in sales tax is a dollar we do not have to collect in property tax.” She’s exactly right! I mean, revenue is revenue, right? In that spirit, I will say this….EVERY DOLLAR THE CITY REDUCES HEALTH CARE COSTS IS A DOLLAR THE CITY DOESN’T HAVE TO COLLECT THROUGH EITHER SALES OR PROPERTY TAX!!! Revenue is revenue. If we can generate it without raising taxes? Hell of a win for everyone, right?

Even the most conservative studies show that 20-30% of all health care expenditures are unnecessary, wasteful, or worse, fraudulent. We just have to deploy strategies and tactics that address issues like unnecessary care, waste, fraud, and abuse. We also must deploy strategies and tactics that address what we actually pay for necessary care. In a previous blog, I highlighted the latest Rand Study that shows hospitals, on average, are charging private plans 260% more than what Medicare pays them for the same services. Our local hospitals are charging private plans far more than that!

When the City and the Amarillo EDC launched the Buy The Way: Keep It Local campaign, they used this infographic to illustrate how meaningful it would be if the 79,000 households in Amarillo spent just $100, $250, $500, or $1000 more per year locally:

Wow! Look at that! If we increased local spending, on average, by $1000 per household per year, it would generate enough revenue to hire 16 new police officers! I love that they put things like this into this kind of context. I think it resonates with people. I mean, who doesn’t want more cops? Errr…..well, some places don’t I guess…..But I do! If you’re not into having more cops, well, replace it with Firemen or something with a similar salary or expense…..

The point is, if more of OUR DOLLARS are spent locally, the more opportunity we have to improve our local economy and community. Makes sense, and we all get it…..because it’s true.

Now the fun part!

Currently, the City of Amarillo is spending approximately $24 Million per year on health care for City employees, including pharmacy costs. That’s a lot of money, and it is one of our City’s largest expenses in the budget.

Reducing our City’s healthcare costs by 20% would yield a savings of $4.8 Million per year.

The question is “Can they do it?” We believe that not only COULD they do it, but that it wouldn’t be that difficult. As I mentioned before, even conservative estimates show that 20-30% of health care expenditures are unnecessary, wasteful, or fraudulent. Addressing just these three things in innovative ways is half of the solution. The other half requires proactive management of risk (claims). That’s not difficult to do, but it does require that we DO things differently in health care than we’ve always done them. We suggest that the City, and all local employers who are paying for health care/employee benefits, contemplate and begin to implement innovative solutions that are laser-focused on influencing two things: the frequency of medical claims, and the severity of medical claims. THAT’S THE ANSWER! To reduce health care costs, we must reduce the unit cost of care (pay less), and reduce the gross number of episodes of care (use less). It really is that simple, but it’s not easy.

Now, back to that infographic above. Increasing average annual expenditures of 79,000 families by $1000 per year would generate an additional sales tax revenue of $1,185,000, which is enough revenue to hire 16 new police officers.

Reducing current health care costs by 20% would yield $4,800,000, which is enough revenue to hire this many police officers:

I’ll save you some time, and an eyesore…..that’s 69 police officers. And yes, I believe saving that much in health care is completely possible for our City with the right strategies and the right partners.

Bottom line question: Which route is easier? Getting 79,000 Amarillo households to spend $1000 more each year locally than on Amazon? Or reducing the City’s health care spend by an equal or greater number? In order for the City to reduce costs by an EQUAL DOLLAR AMOUNT ($1,185,000) it would only require the City to reduce current health care expenditures by 4.94% to yield the same financial result. 5%! Saving $1.2M on a $24M spend is not difficult in health care. In fact, here’s a free tip for the City of Amarillo to reduce health care costs by more than $1M annually: Address your top 5 prescription meds by spend, which are: Humira, Aubagio, Xeljanz, Orkambi, and Enbrel. Collective opportunity is well over $1M annually just IN THOSE FIVE DRUGS. I would also be asking questions like why a certain cardiologist in El Paso only prescribed name brand drugs (317 prescriptions) to City employees???? That’s weird…..out of 317 prescriptions written to City employees in a year, not a single generic prescribed? Hmmmm….

Buy The Way : Keep It Local has been very successful. According to City Councilwoman, Elaine Hays, the buy local initiative played a key role in the increase in sales tax revenues Amarillo was experiencing prior to COVID-19. Here she is delivering the actual figures, which are great!

Again, I loved how Mrs. Hays used the analogy of hiring police officers and seal coating City streets. It puts it in a realistic perspective for citizens, right? With the newly generated sales tax revenue mentioned, the City could afford to hire 17 new police officers AND seal coat 60 miles of City streets. With $4.8M saved in the health plan, the City could afford 50 new officers, and over 100 miles of newly seal-coated streets.

Buying local certainly has an impact, and we will continue to support such initiatives in our local community. But this isn’t an “either/or” issue. We can do BOTH! We are also calling on our local businesses, organizations and residents to now consider not only purchasing health care services from local, independent providers, but to really consider WHAT PRICE we are paying for those health care services as well. Most of us just pay what the insurance companies have negotiated “on our behalf” without ever asking what the total price is! Think about that for a moment…..health care is the only thing I can think of that we all purchase BEFORE we know anything about the quality or price. No wonder it’s so expensive!

When I think about health care, what it costs us all, and the value that is being extracted from our communities, it’s easy to identify who is doing well….big pharma, big hospital systems, big insurers. But then I think about the City of Amarillo, its employees, and all the other Cities, organizations and people in this country that are adversely effected by spiraling health care prices. In addition to being an enormous wet blanket on people’s ability to get ahead, health care prices have become the number one reason families and individuals file personal bankruptcy. 66.5% of all bankruptcies are now tied to medical issues.

To wrap up, the Mission Statement of Buy The Way: Keep It Local is this: To empower our entrepreneurs, to support our local economy, to create jobs, to keep taxes low and to a better quality of life. That’s a great and worthy mission, and one we support. Let us also focus on health care, and what we can do to improve it in our community, reduce costs, and keep more resources LOCAL.