The economics of healthcare are inexorably shifting risk from payers to providers. Independent providers who fail to join risk facing groups are doomed.
So, here we are, stand-alone primary care practices, or, stand-alone any-provider for that matter. This is going to be hard to read for some because it shines a light on three truths that don't fit into the popular narrative on healthcare. It does ring true, however, because if you are being honest with yourself, all the pieces fit.
Truth #1: You are blaming the wrong people.
Hospitals, health plans, regulators, pharma, allied health groups, corporately owned groups, and consolidating physician groups are not out to get you.
What they are is years ahead of you and you are already irrelevant.
Time is running out to join the group best for you. Fail to act, and the best positioned risk-takers will simply absorb your patients when you turn out the lights.
Truth #2: For healthcare, it's all about the economics.
Forbes Magazine, December 2017 – "In the spring of 1991 President George H.W. Bush looked unstoppable. Following Operation Desert Storm his approval rating hit 89 percent, the highest ever recorded by Gallup. Yet, that wasn't enough. What did Bush in, as Clinton adviser James Carville famously quipped, was "the economy, stupid."
The facts are that there was $3.4 trillion in healthcare spending in 2017 and that number is rising. Over $10,000 per year for every man, woman and child in the U.S., documented or not. Approaching 20 percent of the U.S. gross national product. Twice the cost of the next most expensive of 27 "developed" countries yet languishing at the bottom of most quality and performance metrics.
Continuing on this path is simply unsustainable. Obviously, turning a multi-trillion-dollar industry takes time, but, not so obviously, the turn started a decade ago, and, the new healthcare economy has literally turned the corner.
Truth #3: This has been happening for years.
There is a new world view, one that started with the ACA nearly a decade ago and is accelerating all around you – the transfer of risk from payers such as employers to taxpayers to providers, from hospital systems to physician groups.
A little critical thinking brings the need for this strategy into focus. Payers can only manage price. Providers can manage spending, from utilization to site of service. And, for now, spending is the problem.
Providers can also manage health status where payers can only try to influence it. Improving health status across large populations is the only hope for the future.
It is not too late.
Of all specialties, primary care providers who transform from being service providers to clinical managers, managing the total cost of care are in the best position to manage risk. Survivors will take that path.
That is why the vanguards of the new healthcare structure, from health systems to visionary physician's groups independent of health systems, are focusing on primary care.
The key to sustainability is managing chronic disease, which is responsible over three quarters of the cost of pre-Medicare spending and over 95 percent of post-Medicare.
The key to success is practice transformation, sophisticated analytics making statistically significant mountains of data into digestible, task-based actionable information, patient engagement, patient experience and the favorable economics created by top talent, consolidated purchasing and management services and revenues earned by those who provide real value to their customers.
If the foregoing is not convincing enough, it is not only the economy, it is the economics.
Independent practices simply have less value to payers than those with the size, infrastructure, analytics and management expertise to assume and manage risk within the next three to four years. That is why groups on a risk-trajectory receive multiples of Medicare to support their progression and independent providers receive a fraction.
The signs and validations of all of this surround every one of us in this industry.
Sadly, not all of us will heed them.
Those preparing for risk today will be there for your fire sale tomorrow.