All Eyes on Reform

Public support for health-care reform is high, but some CFOs take a different view.

Lawson has increased its overseas workforce over the past three years, with a quarter of its employees now based in the Philippines. While Schriesheim says U.S. health-care costs were not the reason for the shift, he adds, “[The Philippines] is a much lower-cost operation, and health care factors into the overall cost.”

Cost-cutting is not, of course, the only reason that executives believe reform would be beneficial. “All the [money] we’re spending on health care as a country means that we’re spending very little on education,” says Eric Dishman, director of health innovation and policy at Intel and co-founder of the company’s digital health group, which has developed remote-health-monitoring technology. “We believe health-care reform is needed, it needs to be significant, and it needs to be now.”

“It’s hard for me to imagine how this reform is bad for business in the long run,” says Marty Welch, the former CFO of United Rentals, who just finished a stint as chair of the audit committee at auto-parts maker Delphi, which has struggled with its benefits costs amid the industry’s declining fortunes. “It will make U.S. companies more globally competitive by ‘bending the cost curve’ as well as spreading the cost of caring for the uninsured over a broader base.”

Dishman says he hears this sense of urgency from others as well. “I can’t think of anyone I’ve met with in the last six months who says we shouldn’t be doing reform. That is a very, very big difference from the last time around.”

True, these CFOs also see business opportunities in reform. Intel is eager to offer its technology for home-based health care as a way to reduce costly doctor’s appointments or emergency-room visits. Lawson Software, which already derives 25% of its revenue from the health-care market, hopes more hospital systems and health-care networks will turn to its ERP systems for back-office support. And Walgreen, which operates health clinics at more than 700 locations (including 375 on corporate campuses), could expand that business if health reform includes incentives for more clinic-based routine care. “If more people are covered under some government umbrella, that is probably good for us, although there are likely to be [pressures to keep costs down], too,” says CFO Miquelon.

Uncharted Territory

Despite the acknowledged need for change and the possibility of new business opportunities from a reformed health-care system, apprehension remains. Some finance executives fear that health reform will cost their companies more money, because they suspect that insurers will raise their rates to offset any potential new taxes or pricing restrictions. Others are concerned that reform may require complicated changes or restrictions to their plans. Still others worry that expanding coverage will increase the federal deficit and have an indirect effect on their businesses by causing inflation.

“Some people have a general skepticism about government. They’re not confident that anyone knows how to contain costs,” says Nichols. “CFOs like control rather than a lack of control, and they fear that some versions of a national plan would take away their control.”


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