Nicholas Bonvicino, MD

New studies are showing that overall healthcare spending is down; with the paradox being that individual healthcare spending is dramatically increasing.

Skyrocketing deductibles, copays, and co-insurance have dramatically shifted financial responsibility to consumers sparking a very personal realization of the real cost of healthcare. Healthcare costs are becoming more tangible to the public and so has their perspective of value and quality.

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This is a critical and profound economic shift that will affect medical practices. Be aware and be prepared!

Patients paying an increasing share of the cost will expect better service, superior outcomes, and value, on their terms - not yours. It matters little what the medical value might be. What matters is what the customer expects and appreciates. Physician practices must move from providing professional services in a manner determined best for the provider into the competitive world of consumer-centric retail services. Patient-centric care will be here, if not because physicians embrace it, then because economics will dictate it.

You see it manifesting in plan designs, cost sharing, increased demands for price transparency, patient's rights, patient engagement, shared decision making and demands for improved access, quality, results, and better communications.

Your world is changing, and all of that education, training, and experience you have amassed as physicians cannot hold back for forces of change. In simple and stark terms: If you can’t deliver what the consumer perceives as quality, you will lose.

Quality might still be measured in technical terms, and these measurements will be refined with improved data exchange, but the most important metric for your practice will clearly be "patient satisfaction." This is not about sacrificing good medicine just to play to the desires of the patient, but it is about investing in patient education, patient engagement, patient empowerment, and shared decision making. The era of the paternalistic physician practice is ending. What will not change is those organizations that produce superior quality, value, and improved outcomes at a lower cost, and a corresponding brand identity, will be increasingly valued by patients, insurers, and employers. If you want to be in position to dictate your future, you will need your patients as supporters and allies. That means transforming your practice and aligning with other similar minded practices, to produce a critical loyal patient following that will demand your services, compelling insurers to conform to your model, not theirs.

Healthcare has become a commodity. It happened first in the hospital arena.

Just 30 years ago, there were about 7,000 short-term acute care hospitals, virtually all of them independent. Twenty years later, and in a period of strong growth in healthcare, almost half of them are gone. Today, only a handful of tiny rural hospitals are independent.

The physician component of this restructuring is here (narrow networks). When the captains are picking their teams, all that counts is what you can do on the field to help the team to win.

The winning teams will be patient centric. Managing those who are chronically ill is critical. So will appealing to those patients who you rarely see. It is those patient premiums that will help to pay for the high utilizing members. If they walk away because they don’t perceive your value, so does the income from their premiums in a value-based system. In a prepaid, gain-share, or budgeted system, it is critical to have a well contented mass of patients who don’t require intensive services, but provide the resources to treat the chronically ill.

The winning teams will stress with every recruitment effort, with every message, with every presentation, and with every conversation, that they are all about building a truly patient-centric model, where patients value their relationship with their personal network physician. That means that patent satisfaction comprised of relationship, retention, and results are the most important quality goals. The networks will be handpicked, will have an enabling IT platform and risk-based health plan contracts.

The consumer demand for these services will guarantee long-term value and the financial success that will follow.

Willi Sutton said, "Follow the money." Well, here it is, and, the last place that you want to be is on the sidelines wondering why you weren’t picked.

Articles

With costs front and center for patients, in simple and stark terms:  If you can’t deliver what the consumer perceives as quality, you will lose. 

Physician’s Guide to the New Consumer Market

The American Hospital Association (AHA) is complaining that the financial risks associated with Accountable Care Organizations (ACOs) outweigh potential bonuses for hospitals.

“The number one way to increase participation in ACO programs is to modify the shared-savings determination to ensure that more ACOs are able to receive a bonus - and a larger bonus - so that they can continue to invest in the program,” the AHA stated 

 Patrick Conway, M.D., acting director of the CMS Innovation Center.

While few would disagree that a bonus richer program would spur participation from

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both hospitals and physicians, the very concept of hospital-owned and operated ACOs is flawed due to conflicted interests enabled and abetted by CMS.

A bit harsh? A simple logic exercise will allow you to draw your own conclusion:

1. Successful ACOs succeed by improving health status and reducing hospital admissions and procedures;
2. Hospitals lose revenues when ACOs succeed;
3. CMS shares half of those saved revenues at best;
4. ACOs are expensive to start and operate;
5. Hospitals would lose even if they got 100 percent of the savings; and,
6. CMS would spend a fortune administering the program.

Meanwhile, hospital consolidations continue, private low-cost community hospitals are becoming endangered species, and the marketplace is evolving to eliminate the very kind of cost transparency and competition that is necessary to help reduce the waste, redundancy, and high cost of services.  You know … the type that generally involve hospitals.

Let us know the first time you hear of a hospital CFO or CEO who, without a wink and a nod, tries to convince his board that it is good business to eliminate $20 million of revenue for a chance to earn $10 million at most in a shared-savings program, and share most of that with physicians. As a former hospital CEO, I have to admit that I would argue strongly that an ACO is a good investment - if only to block the far more costly prospect of physicians forming their own.

It would make more sense and provide a net savings to CMS to transfer ownership of all ACOs to physicians, split the reduced spending directly with them, and send half of the remaining money to hospitals under one pretense or another. At least the people doing the work would be fairly compensated and the people who are clearly conflicted would be out of the mix.

But, then again, CMS has never been big on using free market economics to manage the healthcare system. It is as gullible as any other federal agency, so common sense solutions are not necessarily politically palatable.

Why CMS should do away with hospital-led ACOs, and instead, focus on physician-led ACOs. 

Why Hospital-led Accountable Care Organizations are a Flawed Concept

Bundling payments for care episodes is gaining popularity among payers. The new payment method is probably a part of the future, like it or not, ready or not, and it can be a loser for physicians unless they are properly equipped to take charge of the process. 

If, however, physicians are entrepreneurial and willing to manage the process of care, bundled payments can represent a huge opportunity.

There are two bundled payment methods: utilization and disbursement. Both methods are priced similar to a hospital diagnostic related group (DRG) where a dollar amount is budgeted for the episode. The provider keeps the difference if the cost is under budget; he pays if it is over.

In the utilization method, claims are paid at contracted rates. The managing provider keeps the difference if fewer services are used and pays if more are used.

In the disbursement method, the full bundle amount is paid to the managing provider, who negotiates and disburses payments to other providers and keeps or pays the difference.

Some orthopedic surgeons have been working successfully with payment bundles for implant cases for years. Here’s how they do it, and how you can do it too:

1. They use price, quality, and outcome transparency. 

In the simplest terms, if a case pays $30,000 and the surgeon brings it in for $28,000, the surgeons keeps the difference. That means that the surgeon has to know what each element - from the implant to the consulting specialists to the hospital or ambulatory surgical center (ASC) - costs, and the surgeon has to know how to manage the case. The orthopedist is the general contractor and all other services are contracted. If the orthopedist commands enough volume, that creates price competition for surgical assistants, ASC use, hospital use, anesthesia services, physical therapy and rehabilitation medicine, and durable medical equipment, including hardware.  The orthopedist manages both the utilization and the unit cost of these services to bring in the best outcome at a reasonable cost, and because most of these services have historically been overpriced, the cost savings can be considerable.

 Specialty Group Purchasing Organizations (GPOs) are the most effective because they seek the best values, aggregating the hardware and supply needs of all of their members; and they purchase in bulk, often at steep discounts. It's kind of like the Costco for surgical implants.

GPOs with sophisticated decision-making software, pre-negotiated payer agreements, and expertise in managing episodic bundles profitably, can provide invaluable support and unbeatable pricing on the most expensive case elements. For general orthopedic surgeons and orthopedic and neuro-spine specialists, Access MediQuip is the oldest, largest, and most experienced, and, it will likely be getting a lot of company in the next few years indicating a net gain for physicians.

Innovative entrepreneurial physician groups who provide high volumes of repetitive specialized services that also involve other providers can also play in this game without a great deal of support. 

Consider the gastroenterologist who has access to a low-cost endoscopy center, and is tired of seeing the out-of-network anesthesiologist receive five times the reimbursement that she does for every colonoscopy performed.  By negotiating a reasonably low charge with the endoscopy center (which she might own or be a partner in) and subcontracting with a nurse anesthetist, a fairly priced colonoscopy would net a profit for all subcontracted vendors. The gastroenterologist, the supporting cast, and the payer see fair compensation and generate a considerable cost savings from the current practice of using out-of-network anesthesiologists and paying outpatient hospital pricing.

Bundled reimbursement for primary care may be closer than many physicians think, particularly for common episodic encounters and chronic diseases.  The concept is not new.  Think of it as “contact capitation.”  DRGs have been very successful for both hospitals and Medicare despite the hospitals having limited control over utilization. Imagine what an entrepreneurial, empowered physician community could do.

Physicians can have control over the entire process, if they are willing to be accountable and to take responsibility for healthcare costs.  The best will embrace the opportunity, benefit financially, and be part of the solution.

Bundling payments for care episodes is gaining popularity among payers. It is episodic risk-sharing, and it can be risky business for physicians.

Bundled Payments: A Bundle of Trouble for Unprepared Physicians

Congress and President Barack Obama have bet the health of every American on the Affordable Care Act’s (ACA's) success. Healthcare providers have their livelihoods added into the pot.

The first enrollment period of the new health insurance exchanges ended March 31. The White House is doing a victory lap, proclaiming success based upon “enrollment” without providing any details. A conservative think tank says the facts don’t even come close to checking out.

Both are telling the truth - but, not the whole truth, which, on the best of days, is intentionally misleading and, on the worst of days, is what we non-political types call lying.

In the event you have just returned from a long trip to oblivion and are trying to catch up, both Obamacare’s drafters and the nonpartisan Congressional Budget Office say that Obamacare will not be financially viable if at least 7 million Americans do not purchase insurance through the healthcare exchanges. Over a quarter of them need to be the young and healthy, as they represent its economic engine.

Veracity regarding those numbers is critically important to every American.

The White House proclaims Obamacare’s success, claiming to have met its goal by enrolling 7.1 million Americans.

A Koch Brothers supported conservative think tank, the 

National Center for Public Policy Research

, led by David Hogberg, Ph.D., was engaged by Fox Business’ Neil Cavuto to conduct a deeper analysis. It came up with very different numbers:

• Only 2.4 million of those who enrolled were previously uninsured;
• Half, or 1.2 million, of those previously uninsured have not paid into the system;
• 6,286,357 people lost their insurance under the ACA resulting in a net increase in the net uninsured, raising the total to about 45 million, according to the report.

The newly insured or reinsured that are actually paying into the system through the healthcare exchanges are what counts for Obamacare’s success. If Hogberg’s numbers are correct, this number is 5.9 million. People who lost their insurance and regained it through the exchanges count.

The wild card, which still remains uncertain, is how many young people have enrolled and paid in.

The White House correctly says that Hogberg’s number does not account for the 4.5 million newly enrolled on Medicaid or the 3.1 million young people now covered under their parents’ insurance. As positive as they are, those numbers do nothing to help boost the exchange numbers, reduce the premium increases, or reduce the sky-high deductibles that now make a mockery of the entire concept of insurance.

The real problem for all of us is that old adage: Figures never lie, but liars figure. Both of the parties in this case have a well-documented history of the latter.

So, what does all of this have to do with physicians?

The discourse is political, but the problem is practical. If Obamacare goes deep into the red, the Affordable Care Act, already well on its way, will rapidly become the unaffordable care act.

That leaves only one arrow left in Obamacare’s quiver - reimbursements to providers, which inescapably will have to go down by the hundreds of billions annually.

Physicians are the only people in a position to make the ACA work, but not if they don’t know where to start.

One faction putting Petunia Pig in a party dress and the other in a sty is an unacceptable tact when we all deserve and need the truth - all of it - with so much on the line.

That is where the trailhead to making Obamacare work for America lies, and lies are something we can least afford regardless of the political stripe of their makers.
 

The Obama administration’s health insurance enrollment numbers don’t match up to a conservative’s fact check. Who is telling the truth? 

Author | Nicholas Bonvicino, MD

Articles

Physician’s Guide to the New Consumer Market

Why Hospital-led Accountable Care Organizations are a Flawed Concept

Bundled Payments: A Bundle of Trouble for Unprepared Physicians

Physicians Need to Know the Truth behind the ACA Enrollment Numbers