Being fresh from three days attending Becker’s Hospital Review’s annual meeting and numerous panel discussions, one ubiquitous theme resounds – many hospitals built, merged and bought their way into huge debt to enhance and diversify fees when they should have been preparing to assume risk.
Assuming risk as a hospital system is no longer a strategic option, it is their future. For many, it is their near future.
CMS has been signaling their shift to risk-based Accountable Care Organizations (ACOs), which strongly outperform shared savings programs. Self-insured employers are flocking to the few ACO type programs which begin to assume their risk. Overall, the evidence is mounting to the inevitable — provider risk delivers better care at a lower cost.
Driving this movement is an updated report on federal expenditures for the upcoming ten years by the Congressional Budget Office. At the center, a blockbuster number that Medicare spending will top $1.2 trillion per year by 2028, growing faster than the economy to two-thirds of healthcare spending.
The first question physicians may ask: “Is my hospital in jeopardy?”
With well over half of physicians employed, most by hospitals or hospital systems — a number that continues to grow, that is a good question. But, not the most relevant question.
The real question is “How will it affect me?” The answer is: focus will inexorably shift from maximizing health care spending to reducing it and physicians will be the frontline.
What are your options as a physician?
The second largest physician employer, independent medical groups, those who are advanced and perform well in quality and cost, may have the best opportunity of all. They are not saddled with expensive bricks and mortar, infrastructure and regulations hospital systems are. This makes the new money in health care, the delta between premium and cost, larger and far more meaningful because it goes to physicians instead of infrastructure.
In the end, both hospital systems and medical groups on a trajectory to assuming full risk within the next three to five years will be the survivors and purchasers of those who do not.
The odd sector out? Independent physicians, who already have little value because their time has passed as fee-based operations in an increasingly risk based healthcare provider economy.
The caution here? Choose wisely before little value becomes no value and make the best choice for you and your practice. The overriding consideration is the organization you are thinking of aligning with is capable of assuming risk. Robust analytics, experience, and a track record of success are absolute musts.