While the specific regulations from the Patient Protection and Affordable Care Act (“ACA”) are still evolving, the “barometer reading” for change is clear. Market place trends and healthcare reform have clear implications for physicians. The pace of change will depend on specific market dynamics, private payer initiatives, and the degree of physician organization and physician-hospital integration, not to mention government action.
Physicians in private practice have been faced with a series of challenges and opportunities in recent years, and some assume that “this too shall pass.” The risk, though, of ignoring market trends is to face the downside of evolution – extinction. Here are the top ten ways in which these market forces, dominated by healthcare reform, affect physicians. They may not all affect you now, but your radar should be scanning for “blips” of change in your market.
1. Traditional payment will decline. Since the ACA did not “fix” the Medicare formula driven by the sustainable growth rate (“SGR”), there will be threats of decreases in the traditional Medicare fee schedule – this year close to 30 percent. While it likely that these decreases will be periodically “patched” by Congressional action, it is unlikely that Medicare fees will increase in the near future. Since many private payers link their fee schedules to Medicare rates, this means no increases for the foreseeable future. For some specialties, it will mean decreases, since Medicare and some other payers are shifting dollars from specialty services to primary care – but not adding any new money to the “pot.” The only hope of “upside” will come through new payment models such as bundled payment, shared savings, and pay-for-performance.
2. EMR and connectivity are “table stakes.” With the passage of the American Recovery and Reinvestment Act of 2009 (“ARRA”), physicians have the opportunity to earn incentives up to $44,000 from Medicare for implementation of electronic medical records (“EMR”) that meet “meaningful use” criteria. But after 2015, penalties are imposed if practices fail to meet these criteria. Additionally, the need to be clinically integrated with other physicians and hospitals is growing due to various new payment methodologies, not to mention patient expectations. Within the next few years, it will not be a “benefit” to have an EMR AND connectivity with other providers, it will be a requirement to stay in the game.
3. Expect to be measured – no more “invisible man (or woman).” The Physician Quality Reporting Initiative (“PQRI”) program was expanded in ACA, so that there are increasing incentives to participate through 2014, then the penalties for non-participation begin (sense a theme here?). Results will be posted publicly on the to-be developed “Physician Compare” website sponsored by CMS. This is in addition to the data gathered by payers and other private rating websites such as HealthGrades. Whether or not the measures are “right,” they will be published and available to consumers. The forward-thinking physician organizations are collecting and sharing this information among physicians now to provide timely feedback and improve organization-wide performance and outcomes.
4. Are you now or have you ever been an ACO? ACOs will be selected by CMS beginning in 2012. Some private payers and self-insured employers are evaluating this model as a way to reduce healthcare cost inflation and improve population health. It is widely accepted that ACOs must be physician-led in order to achieve these objectives. Since the infrastructure required to function successfully as an ACO is substantial, many smaller physician groups will be participate in ACOs; others will be large enough to potentially qualify as an ACO. The key question for physicians to consider is: what role should/can we play in an ACO model, and what resources, leadership skills and partners will we need to successfully fulfill that role?
5. Would you like to be a pilot? The ACA calls for the funding of $10 billion to the CMS Center for Medicare/Medicaid Innovation to provide grants and lead demonstration projects to identify new delivery models and/or payment models. The hope is that through incentivizing discovery, new care delivery models such as the patient-centered medical home (“PCMH”) or payment models such as bundled payment will evolve to “reduce program expenditures while preserving or enhancing quality of care.” Alert physician organizations, large and small, can participate in these demonstration projects to be at the leading edge of innovation and seize opportunities to lead the market.
6. Access (when and how) matters. Providing the estimated 32 million or more currently uninsured individuals with access to health insurance will likely create or exacerbate access issues for medical care. Patients already have difficulty obtaining physician appointments within a desired timeframe in some communities. Given the current shortage of primary care physicians in many markets, access to primary care is likely to be the first to be affected. Only through redesigning care delivery models, implementing electronic visits (e-visits) and other electronic tools such as telemedicine, effectively utilizing a broad array of healthcare practitioners and support staff, and empowering patients to play an active role in their health will an access “meltdown” be avoided. Even today, patients are increasingly expecting ready access (defined by the patient) to their healthcare providers through e-mail, portals, and, when necessary, the face-to–face visit at home. Physicians who cling to the traditional office visit as the only venue for care will risk declining patient preference and limited – hence declining – patient revenue.
7. Patient expectations will continue to rise. A combination of factors will result in an increase in patient expectations for healthcare services:
- The newly insured will expect to have access like anyone else.
- Those with insurance may face increased cost-sharing, so will now “shop” for the best service and quality.
- The Baby Boomer generation wants to avoid looking or feeling older, and will expect their healthcare provider to provide the solution(s).
- There will be an increasing demand for the ability to communicate via text, social networking, or web portal with healthcare providers.
- Disruptive innovators and innovations can change the competitive landscape (e.g. Google, Walmart).
- Exploding wealth of data and health information will appear online for the worried well, chronically ill, or recently diagnosed patient.
These factors will result in an increasingly savvy healthcare consumer who expects that their physician is responsive to their expectations. Language in the ACA speaks of rewarding providers who embrace “patient-centric” processes; physicians must take stock of their practice and processes to evaluate how well they are prepared for these expectations.
8. Reframing the clinical workforce. The ACA includes funds to increase training positions for primary care and general surgery, add training in preventive medicine and public health, and support training for medical homes and team management of chronic disease, among other initiatives. But these will likely fall short of filling the gap of demand/capacity in many key specialties – particularly primary care. In addition, the generational shift in expectations among young physicians – for employment models that provide greater security, balanced work life, and part-time options that many small private practices cannot offer – creates a dynamic in many markets where the big groups (or hospital-owned) get bigger, and the small practices disappear as physicians retire. All this requires physicians to evaluate how their group or practice is structured for recruitment of a clinical workforce to facilitate growth and/or succession planning to meet community need. This may require looking to advanced practice nurses or physician assistants as well as a re-evaluation of compensation plans, benefits, and even medical group structure.
9. No relief in operating costs. Despite the fact as previously noted that traditional sources of revenue are likely to be constrained in the future, there is nothing in the ACA or in economic trends that give practices any relief in day-to-day practice expenses. The ACA does little to mitigate increases in malpractice costs, the taxes on biotech and pharmaceutical companies are likely to increase these supply costs, and implementing EMR requires annual maintenance fees. So the recent trends of increasing overhead costs will not likely go away – unless practices evaluate new models of care or ways to achieve economies. This means evaluating how support staff are being utilized (i.e., are they working at the top of their qualifications in a way that maximizes provider productivity and effectiveness)?
10.Hospital relationships matter. In recent years the “centricity” of the hospital as the focal point of the healthcare community has been affected by conflicting trends: on the one hand, hospitals are the employer of physicians at an increasing rate; on the other, there are many physicians who never set foot in the hospital and are unaware where the medical staff dining room is or cannot recognize key specialists other than by name. Further, many of the hopes for healthcare reform are riding on better chronic care management, which is not a skill most hospitals possess. What the new payment models (e.g., shared savings, bundled payment, PCMH) and the “triple aim” espoused by Dr. Don Berwick of CMS (i.e., “better care, improved health, and lower costs”) require, though, is a care delivery system that is based on collaboration between physicians, hospitals, and other healthcare providers. To achieve optimal performance under any of the proposed payment models, whether you are a small practice or large multispecialty practice, requires collaborative physician-hospital relationships. This will require both hospitals and physicians to put aside old frameworks that assume one entity “controls” the other; how these partnerships evolve will depend on who leads innovation and demonstrates a commitment to healthcare improvement and operates effectively to remain financially strong.
Laura Jacobs at firstname.lastname@example.org.