Region II Annual Conference 2010 Creating a Place for Healthcare Reform: Understanding the Financial Opportunities in Healthcare Reform and Utilizing the Financial Tools to Complete Your Building Project. Dang! What’s this Reform stuff and how do I get some of this phony baloney capital improvement money?!
What We Will Learn Today? • What is driving healthcare reform. • What lies ahead. • What the government is trying to do about it. • And…what opportunities all this creates for you to make capital improvements!
Making you Nervous “Magellan circumcised the earth.” “With a 100 foot clipper.” “His men were very nervous.”
What We Will Look At • The Driving Forces Assailing Us • The Likely Impacts • How CHCs Must Prepare
Collision Course WithTwo Certainties That will overwhelm our industry.
Demographics of an Aging Population Fragile Government Programs
Its far too late to avoid the collision. HealthChange, LLC 2004-2005
What Storm Will Hit CHCs? When 2/3 of voters are at or near retirement age?
Well, Some of You…Like Me… Are Part of the Problem! So, let’s find out who.
A Boomer Pop Quiz Don’t worry… It’s multiple choice.
A. It was a huge wooden cabinet with two big knobs and a teensy screen featuring a black-and-white picture the size of a cantaloupe that I barely saw because my dad was always standing in front of it adjusting the picture and saying bad words. B. It was a Sony. 1. Describe your first TV
A. Davy Crockett B. Vanilla Ice 2. Who was on your first lunchbox?
A. Of Course B. You’re making that name up! 3. Do you remember Howdy Doody?
A. Dwight Eisenhower B. Vanilla Ice 4. Who was the first living President you remember?
A. Yes B. Why did you have to put little plastic inserts in the holes? 5. Did you own a whole batch of 45 R.P.M. records that you wrote your name on the labels of and kept in a carrying case with a handle and put little plastic inserts in the holes to play them?
A. In a station wagon on the way to school. B. In a fallopian tube. 6. Where were you when you first heard The Beatles?
A. Uhhhh…no B. Uhhhh…no 7. Have you ever experimented with drugs? Dave Barry Turns 50
So, What’s the Big Deal About Baby Boomers Getting Older and Why Should You Care? Aging baby boomers are going to change healthcare drastically…and, if you are going to survive, you need to understand why and how… because that is what is driving healthcare reform.
What Should We Know About the Baby Boomers? • There are more of them. • They will live much longer. • But the overwhelming influence is that they have profoundly different life experiences and values. • Why? Because society was completely transformed in
What Transformed Society So Quickly…& Why Is It Important? • Great depression No money No buying • WWII Earnings went unspent unprecedented industrial build-up…and… Women in the workplace
After WWII • Huge production capability • Pent-up consumer spending And… • LOTS OF BABIES (targetable market) And… • Television
Major Socio-Economic Shift • Prior to WWII • Production for needs • Post WWII • Production of needs
What About Shoes? • 70% of all shoes sold are athletic shoes • Less than 1/10 of 1% of people who wear them are athletes
The MOONRIDERS • Many of the current generation of elderly began life riding a horse • 1930s - CHARACTER OF MODERN AMERICA • 1940s - WWII the conscience of modern America • 1950s - FAMILY PARADIGM • 1960s - CIVIL RIGHTS REFORM and… • Placed 12 men on the moon
The Baby Boomers • In 1958 I was 10 – Hoola Hoops, Fizzies • In 1964 I turned 16. • MUSTANG CONVERTIBLES. • Then I went off to college • THE PILL. • A few years ago I turned 50.. • VIAGRA.
Boomers… • More of us…live much longer… • Everything we ever wanted was there before we knew we wanted it! • Wants have become needs • Needs have become expectations • Expectations have become demands • In other words… we’ve got an attitude!
So, What Is Driving the Need for Healthcare Reform?
The Demographic Pyramid • The pyramid. • The Chinese lantern • The inverted pyramid
Americans aged 80 and over vs. preschool population Millions U.S. Census data 1998
When the elderly outnumber college-age youth by four to one, America’s youth tradition may only by a memory Millions Source: Census (1996)
Longevity and the Science of Aging • 1900 – 47 years. • 1930s – under 60 years. (Social Security) • 2010 – +/- 80 years. • 2020 – 100 years. • 2100 – 160? (100 years of retirement?). • In fact, life expectancy is now increasing faster than people age. (Healthy women?) • Implications for workers and their patients?
Number of Workers Per Retiree OECD - Organization of Economic Cooperation and Development
What About Our Government Programs? Declaring War on the Future:
Crisis? • Congress’ own Commission on Entitlement Reform reported that SS, Medicare and interest on the national debt will exceed all federal income by 2030!
Social Security, Medicare , and MedicaidOutlays as a Percentage of GDP 1990-2075 Source: C. Eugene Steurle and Adam Carasso, (Budget Crisis at the Door), The Urban Institute, 2003. Based on data from the Congressional Budget Office, “A 125-Year Picture of the Federal Government’s Share of the Economy, 1950-2075,” July 3, 2002, table 2.
Federal Receipts vs. Entitlement Spending (As percent of GDP) Source: C. Eugene Steurle and Adam Carasso, (Budget Crisis at the Door), The Urban Institute, 2003 Based on data from Budget of the U.S. Government, FY 2004 and CBO’s “Analysis of the President’s Budget, FY 2004.”
What About Our Affluence? • Median net worth of a family headed by a 50-year old baby boomer? (not counting house) • Half the families in the U.S. – net worth less than $1000 • Stock Market?
The Three Financial Ages • Borrowers: 20-40 • Investors: 40-60 • Divestors: 60+
So What Does this Mean For You? Its not just what you should do but why you should do it!
In truth, there has never been a better time to initiate a capital project. Nor will there likely be a better time in your lifetime.