A Proven Health Care Strategy for Uncertain Times

Thursday, December 8, 2016 | Larry Sobal

In my role as a consultant for MedAxiom, I am traveling each week to various physician practices and health systems, and engaging in conversations with leadership about the status of their heart program and other service lines. The conversation always gets around to the recent presidential election, the appointments of Dr. Tom Price and Seema Verma to lead the Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid (CMS) respectively, and what is likely to happen with the Affordable Care Act (ACA), MACRA, etc.  Inevitably, the question that I get asked is “What should we be doing given all the uncertainty?” My answer is always the same: “Fix the problems you already know you have.”

Before you scoff at that answer, let me offer a little more detail.

Here’s what we don’t know and is out of our control:

• Whether or not the ACA will be repealed or reformed and when that will happen.
• Whether CMS will take a dramatic turn (or not) in regards to its current trajectory toward Alternative Payment Models (APM).
• Whether the 2017 MACRA, Decision Support/AUC, Site Neutrality and CV Bundle plans will continue as currently planned, be modified, or halted altogether.

At this time of health industry uncertainty, addressing your known opportunities will always serve as a winning strategy

Conclusion: Since many of these decisions had strong bipartisan support, assuming they will all go away is one made at your own peril.

Here’s what we do know:

• Health care spending in the United States grew 5.8 percent in 2015, hitting a record high of $3.2 trillion, according toestimates from CMS.
• In 2014 health care spending was $9,523 a person. In 2015, per-person expenditures wentup to $9,990.
• This is the largest increase in costs in the past eight years and means that health spending grew about 2 percentage points faster than the overall economy in 2015, according to thereport from nonpartisan economic experts at the Department of Health and Human Services.
• The federal government is now the largest payer (29 percent) for health care, followed by households (28 percent), businesses (20 percent), and state and local governments (17 percent).
• Spending by private health insurance plans increased by 7.2 percent in 2015, and Medicaid spending grew by 9.7 percent.
• The average annual premium for family health insurance coverage now exceeds $18,000. That’s more than double what the annual premium was for family coverage in 1999, even after adjusting for inflation.
• When you factor in what families then have to pay for their out-of-pocket share of medical costs, the overall health care costs (employer premiums paid, plus the employee share of premiums, plus family out-of-pocket spending) for the average American family surpassed $25,000 for the first time in 2016.

Conclusion: There is an acute need for health care cost reform since Medicare is still on track to run out of funding within 10 years.

So when I advise organizations to get better by fixing the problems they already know they have, I do so in the context of a firm belief that whatever health policy emerges from this new administration, it cannot revert back to traditional fee-for-service. Whether it is similar or different to current payment models, there will likely be payment policies that reward better performers, and the ability for lower performers to continue in business will become more difficult.

This leads to the one strategic certainty that organizations have, which is to focus on what they can control. Here are the most common opportunities I see:

• You’ve lost control of your revenue cycle, and can no longer say with certainty that you are being reimbursed appropriately for the work you are already doing. Understand your reality and deal with it.
• You have known yet unexplainable variation in clinical performance; it is oftentimes dramatic and (possibly) sometimes outside accepted standards of care. Acknowledge and address any unnecessary variability.
• You have leadership and behavioral issues, either with management or physicians, that is holding your organization hostage and negatively impacting your culture. Confront and solve it.
• You have human and capital resource allocation issues, resulting in inefficiency and reduced productivity. Make the tough decisions on what you really need to be doing, where you need to do it, and what you should stop doing.
• You have access and workflow issues that constrain your volumes (not to mention frustrating your physicians and employees as well as your referral base). Clean up bad processes, then establish and enforce appropriate standards.
• You don’t know if your costs are competitive in your market, but have seen some information from CMS (QRUR?) and/or commercial payers (PMPM?) that suggest you have room for improvement. Use the information you have and fix it.

I could go on, but I think you get the point. At this time of health industry uncertainty, addressing your known opportunities will always serve as a winning strategy. What’s stopping you?

 

 

Illustration: Lee Sauer

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Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

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