The Hospital Dilemma and Its Impact on Physicians

April 20, 2018

Many hospitals have built and grown to diversify fee for service. The movement to shift risk to them leaves many in jeopardy.

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.

Then, there are those things that are important to you. The best place to start is with your goals and ambitions.  Prioritize using a 0-5 scale:

1) Rank based upon personal importance to you:
_____ Short-term income
_____ Long-term job security
_____ Near-term retirement
_____ Lifestyle advantage
_____ Leaving a meaningful legacy to an associate or family member

2) Where do you find your greatest satisfaction as a physician? 
_____ Providing care services - seeing patients with acute illness
_____ Managing the overall care needs of your patients
_____ Making health care more affordable to people
_____ Managing your staff
_____ Managing your associates
_____ Being the boss

3) If you were to sell your practice, would you want to continue to provide services in the same location?
__ Yes – full time
__ Yes – part time
__ No

4) How many more years do you expect to practice full time
__ 1-2 years
__ 3-5 years
__ 5+ years

5) Where do you believe you provide greatest value to your practice?  Prioritize using 0-5 scale
_____ As a provider of health care services to my patients
_____ As an administrator in my practice
_____ As a counselor to my patients
_____ As a care manager for my longest term and sickest patients
_____ As a leader for my associates and my staff
_____ As a practice innovator and creative thinker

6) If you were relieved the burden of managing your practice on a day to day basis, is there an area of clinical care or medical management that you have a particular interest, experience or skill set that you would like to continue to develop (Pick 0 – 3)
_____ Cost Management
_____ Utilization Management
_____ Clinical Protocol/Guideline development
_____ Quality Improvement
_____ Contract review
_____ Staff development
_____ Healthcare IT and technology enablement

7) If you were to join a large group practice, how interested would you be in a leadership/management position?
___ Very Interested
___ Moderately interested perhaps
___ Not interested at all

8) What area or areas of clinical management would you see yourself involved in within this new practice? (pick 0 to 3)
_____ Quality Management
_____ UM and cost management
_____ Staff development
_____ Clinical protocols and guideline development
_____ Healthcare IT and technology enablement
_____ Credentialing and provider profiling
_____ Other

9) How important is a role in the continued Governance of the practice to you?
_____ Very Important
_____ Somewhat Important
_____ Not important at all

10) What are your most important concerns regarding joining this new practice?