“On average, expect a 30 percent to 40 percent increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms,” said Bob Laszewski in his December 4, 2012 blog. “Those increases can come in the form of outright price increases or bigger deductibles and co-pays.” The most affected, young people.
This is important because Laszewski is arguably the most knowledgeable and respected expert on health policy in the United States.
Regardless of whether healthcare exchanges are delayed or not, the projected effect of the Affordable Care Act piles up a potential hurricane of runaway costs, virtually none of which physician practices will see as new revenues. It is time to stop rearranging deck chairs and get serious because, if the experts are even partially right, the only practical short term reaction will be to reduce reimbursements.
Having been mentored by some very smart and accomplished people, the core message I learned was always to make fundamentals the bedrock, watch trends and changes in the marketplace closely, and adapt ahead of others. Then, when the first two are a way of life, add sophistication.
Here are three fundamentals that will give your practice a solid, and durable, foundation:
1. Focus on the quality of your service. Privately insured patient retention, referrals to other privately insured patients, and public reputation on the Internet will make or break your practice in a consumer driven (i.e.: high-deductible) market. You are unlikely to survive on Medicare and Medicaid. Here are the basics:
a.) Instill a culture of customer service and caring in every member of your staff. Expect it and never hesitate to replace anyone who won’t do it.
b.) Empower your staff to deliver high-quality customer and professional services. Set reasonable boundaries and trust people to do the right thing. Never chastise anyone for acting within the boundaries.
c.) performance, communicate it, and reward excellence. Value competence, eliminate incompetence.
d.) Invest in tools that will set your practice apart as the standard for quality in your service area. What things do is never as important as what they do for you. If a salesperson is not focused on what their product or service does for you both quantitatively and qualitatively, they have nothing for you.
2. Prepare for a cash component to your practice, particularly if you are a primary-care provider. For many people, it will make much more sense to simply pay cash than pay more through their insurance against a deductible they will probably never reach.
a.) Establish a cash rate sheet at a discount from your regular rate sheet. Print it, post it, and promote it. Cash will be king.
b.) Be price competitive and value advantaged. Great customer service and clinical excellence provided at a fair price is a competitive juggernaut.
c.) Make it easy for your patients to do business with you. Offer payment plans through commercial healthcare financial companies, help them to apply.
3. Run your practice as a business. CMS’ fundamental plan to reduce costs is to pay less because that is the ACA’s strategy. That will not necessarily be a private insurer’s strategy for employer-based policies, which insure almost half the population, because they have to compete and spend 80 percent to 85 percent of their premiums. There are three strategies and retail equivalents:
a.) Discount retail — high volume, low margin, minimal service, rock bottom costs. Medicaid, Medicare, and private insurance. Largest customer base.
b.) Mall retail — medium volume, sustainable margin, good to excellent service, controlled costs fluctuating with volume. Medicare and private insurance. Medium customer base.
c.) Upscale retail — Low volume, high margin, superior service, investment strategy cost tactics. Concierge (cash only with personalized service), may be mixed with private insurance with an added service fee and straight private insurance to cover costs. Elite/upper middle class customer base.
The leave-behind: Don’t just treat patients as if they are the most important thing in your business, but because they are. Sounds trite? Fundamentals are like that.