Physicians: Follow the Money to Your Future

September 11, 2014

Confused about how the healthcare system is going to change? Let's follow the money to find the answers, starting with recent news from CMS.

Confused about how the healthcare system is going to change? Let's follow the money to find the answers.

At a Sept. 3 forum called "The Future of Health Care in America: The ACA and Beyond," CMS Administrator Marilyn Tavenner said that, under the Affordable Care Act the ranks of uninsured Americans have been reduced while growing healthcare costs have been contained, and the quality of care has been improved. CMS, said Tavenner, is focused on educating consumers about their coverage and getting more people enrolled in health plans.

That's the politics.

Another panel member, Uwe Reinhardt, a healthcare economist at Princeton University, cited a 2012 study by the Institute of Medicine concluding that nearly a third of healthcare spending, or nearly $1.2 trillion per year, is wasted on unnecessary procedures, hospitalizations, diagnostics, defensive medicine, regulations, and legislative mandates.

On the same day that Tavenner made her remarks at the forum, CMS released new spending projections concluding that the economy has had more to do with slower spending growth than the reform law, and that the growth will accelerate this year by about 5.6 percent.

That's the reality.

From the commercial insurer viewpoint, another panel member, WellPoint (soon to be Anthem) CEO Joseph Swedish, countered that the U.S. healthcare delivery system is in the throes of a "revolution." He argued that technology is blurring the lines between providers and insurers, and their focus (shared with all other commercial insurers) on reducing costs is overturning the existing system.

"We are incredibly, aggressively engaged in transforming the marketplace," Swedish said.

That's the money, and it leads directly to physicians.

Why physicians? Physicians affect spending because only they can order and perform expensive diagnostics, medical procedures, and hospitalizations that represent the overwhelming portion of the cost of care. This may seem to lead to increased control, scrutiny, and denials from insurers, and there will be some, but it will not be their main focus.

The main focus, and pressure on physicians, has already started in an effort to prevent spending through increased quality measures, and it is only the beginning.

The smart money will go to if it is spent, and to a lesser extent on how much it costs when it is spent.

Insurers are money managers, not gamblers, and despite what you may think, they are very, very good at what they do. And, they have a plan. Since insurers have already stretched the limits on transferring risk to their members through increased deductibles, copays, and co-insurance, physicians are next.

Follow the money, and it leads to your bank account through your clinical effectiveness and prescription pad.

When WellPoint's Joseph Swedish talks about "transforming the marketplace," he means transferring risk by incentivizing (or punishing) better control or reversal of chronic disease, reducing complications, and better outcomes for episodes of care.

The "transformation" is affected by transitioning from today's payment for what you do to how well you do it, and, it is inevitable because it transfers risk from the insurer to the physician (and other providers to a lesser extent).

That is where the money leads. It is why CMS can play politics (because they, too, will be beneficiaries of the transformation) and it is why it is inevitable, because the reality is that $3.8 trillion for mediocre results is unaffordable and unsustainable.

The rest is up to you. If you see opportunity, you will do well. If you see the heavy hand of powerful interests, you will be wrong because the economy is the river upon which we all float, or sink and drown.