At Bellin Health, offering employees vaccinations, preventive-medicine screenings, and free services for some health conditions has made a significant reduction in the number of claims.
Bellin Health Systems has transformed an internal workforce challenge into a thriving direct-to-employer service business model.
"We think more health systems should get in this business," says Randy Van Straten, vice president of business health at the Green Bay, WI-based health system, which features an acute-care hospital, a critical access hospital and more than two dozen primary care clinics.
In the early 2000s, a harsh reality turned into a dream opportunity for Bellin, Van Straten says. The health system was facing a 30% increase in the premium cost for employee health insurance coverage. "What we found out was that we really didn’t know our employees," he says.
Bellin examined the health of its workforce and launched an aggressive effort to improve the medical status of its employees.
The health system, which employs 3,600 people, saved about $23 million in employee-healthcare costs through 2015, he says. The number of employees at risk for one or more serious medical conditions dropped from 14.2% to 6.6%. From 2014 to 2015, Bellin was able to decrease its per-employee healthcare costs 1%.
Bellin now provides a range of on-site services to more than 100 companies. In addition to building on the experience of boosting healthcare services for its employees, there are several essential ingredients in Bellin's recipe for direct-to-employer services success:
On-site clinics at large-employer facilities such as the home of the National Football League's Green Bay Packers, Lambeau Field. The Packers, who offer access to their clinic for all of the team's workers, have a seat on Bellin's board.
In addition to on-site health clinics, Bellin offers employers a range of on-site occupational health services such as vaccinations, a turn-key corporate health and wellness program, and fitness centers.
At-risk strategic partnerships feature health clinics based on pay-for-performance and shared savings models. Bellin has about two dozen strategic partners and annual revenue growth from strategic partnerships is exceeding the health system’s 10% goal, posting gains from 12% to 18% in recent years.
Bellin's strategy for offering on-site health services is grounded on generating results for employers and using that track record to attract new clients, Van Straten says. "You don’t want to grow your business on the backs of employers."
An effective cost-containment strategy for Bellin's workforce has been offering free services such as preventive care for a half-dozen conditions, including diabetes, tobacco addiction, and cardiovascular disease. Offering free services for these conditions has made significant reductions in the number of claims for care more than $50,000.
Bellin is devoting marketing resources to the service line. Last year, five account executives and three sales executives helped generate and maintain large-employer clients for on-site health services. Account executives were deployed based on business-mix segments of the local market, and sales executives were deployed based on regions and types of on-site services.
Primary care growth is a key metric to gauge the financial performance of direct-to-employer health services. In recent years, Bellin has boosted its primary care patient population at annual rates of more than 10%.
Joanne M. Conroy, MD, currently CEO of Lahey Hospital and Medical Center in Massachusetts, has been selected to lead the New Hampshire health system.
One of the most prestigious academic medical centers and health systems in the country has a new leader.
Joanne M. Conroy, MD, has been picked as the second CEO and president of Dartmouth-Hitchcock and Dartmouth-Hitchcock Health, the organization's Board of Trustees announced today. Conroy, who earned a chemistry bachelor's degree from Dartmouth College in 1977, received a unanimous vote of the board on June 14.
Dartmouth-Hitchcock features Dartmouth-Hitchcock Medical Center, a 396-bed facility located in Lebanon, NH. The health system also has a cancer center, children's hospital, and four affiliated acute-care hospitals. For the fiscal year ending June 2016, Dartmouth-Hitchcock posted total operating revenue at $1.8 billion.
Conroy, 61, is stepping down as CEO of Lahey Hospital and Medical Center in Burlington, MA. The 343-bed hospital is the flagship facility for Lahey Health System.
"Coming back to New Hampshire is like a homecoming for me," Conroy said in a prepared statement that Dartmouth-Hitchcock released today. "It will be wonderful to be back in a place I love, but more wonderful still to have the privilege of serving an organization I've long admired as a leader in patient-centered care and the evolution of care delivery."
Conroy is succeeding James Weinstein, DO. Under his leadership, Dartmouth-Hitchcock has played an active role in value-based healthcare initiatives, including participation in Medicare accountable care organization models such as Pioneer ACO. The health system's medical-education partner, Dartmouth College, features not only a premier medical school but also The Dartmouth Institute for Health Policy and Clinical Practice, which developed the Dartmouth Atlas.
Weinstein is stepping down as Dartmouth-Hitchcock CEO and president on June 30. Conroy's selection as CEO and president is the second major C-Suite move at Dartmouth-Hitchcock in less than a year. In July 2016, Daniel Jantzen was shifted to CFO from the role of executive vice president of operations and chief operating officer.
In addition to her Dartmouth College chemistry degree, Conroy earned her medical degree from the Medical University of South Carolina (MUSC) in Charleston, SC. She has multiple certifications and has served in several professional roles:
Board certified with the American Board of Anesthesiologists
Certificate of added qualifications in pain management
Diplomate in the American Academy of Pain Management
Worked more than five years as chief health care officer for the Association of American Medical Colleges in Washington, D.C.
Served in multiple senior executive roles at Florham Park, NJ-based Atlantic Health System, including chief medical officer
Held several academic and executive positions at MUSC, including president of the medical staff and executive medical director
Conroy is set to start her new job at Dartmouth-Hitchcock on Aug. 7. From July 1 to Aug. 6, Chief Clinical Officer Edward Merrens, MD, and Chief Administrative Officer Stephen LeBlanc will serve in co-interim CEO and president roles.
In the employer-sponsored insurance market, swings between single-digit and double-digit growth in the annual cost to treat patients appear to be over, a new 2018 medical cost trend report says.
Single-digit growth is the "new normal" for healthcare cost in the employer-sponsored insurance (ESI) market, according to a PricewaterhouseCoopers report published today.
For 2018, PwC projects the total annual cost growth to treat patients in the ESI market at 6.5%. When accounting for the impact of expected benefit-design changes next year such as higher co-pays, net annual cost growth is forecast at 5.5%.
"The era of volatile swings and double-digit growth in employer medical costs appears to be ending. With medical cost trend hovering in the single digits for several years, the industry has been waiting for the inflection point when spending will take off. But that spike appears unlikely to happen," says the report, "Medical Cost Trend: Behind the Numbers 2018."
Despite the healthcare industry's apparent achievement of establishing a single-digit cost trend over the long-term, more cost reduction is economically essential for the country, the report warns.
"Even with medical cost trend between 6% and 7%, health spending continues to outpace the economy. From 2011 to 2016, the average health premium for family coverage purchased through an employer rose 20%. In the same period, wages increased just 11%. This gap erodes consumers' ability to pay for other goods and services. … Nationally, as medical costs are projected to continue to grow faster than gross domestic product (GDP), healthcare will continue to take up a greater share of the economy."
With consumerism and other factors limiting healthcare-service utilization, one of the PwC report's primary prescriptions for large employers to contain healthcare costs is to press providers on service pricing.
"For medical cost trend to sink lower than its 'new normal,' health organizations and businesses will have to consider tackling the price of services as well as the rate of utilization. Heading into 2018, employers should look to new contract arrangements with providers to tackle healthcare prices without shifting more costs to employees."
2018 Medical Cost Trend Drivers
In 2018, PwC expects three factors to put upward pressure on healthcare spending:
Economy-wide inflation: The ongoing recovery from The Great Recession will likely boost general inflation rates, which would drive up prices of medical wages and services
High-deductible health plan ceiling: Growth of high-deductible coverage is slowing in the ESI market, weakening a well-used tool to contain service utilization
Generic drugs: Relatively few branded drugs are losing patent protection in 2018, which will limit opportunities for healthcare providers to contain costs through purchasing generic drugs
After a rollercoaster ride over the past 30 years, the rate of healthcare spending appears to be entering a period of relative stability, the PwC report says.
"Cost trend has risen and fallen in cycles, peaking after several years of double-digit increases, falling for several years, hitting a trough and then rebounding back to double digits. These cycles have tended to span about 10 years. … The latest downward trend to single-digit annual growth began even before the lower economic growth surrounding the 2009 recession and subsequent recovery. With medical cost growth hanging in the single digits for over a decade now, many employers have been expecting an inflection point when costs will once again grow at double digits. However, that spike doesn't appear to be coming."
Single-digit annual cost growth in healthcare is being maintained despite significant inflationary pressure from the broader economy, the report says. "Even as the economy now picks up steam, growth in cost trend has remained at historic lows."
In 2018, the report says hospital expenditures will account for the largest share of medical costs in the ESI market:
A former US representative and ex-president of the National Association of Insurance Commissioners expects financial turmoil in the healthcare industry as Obamacare repeal-and-replace legislation lurches through Congress.
The intersection of healthcare finance and politics features an assortment of twists and turns. Earl Pomeroy knows the terrain as well as the back of his hand.
Pomeroy served as state insurance commissioner in North Dakota from 1985 to 1992. From 1990 to 1991, he was president of the National Association of Insurance Commissioners.
From 1993 to 2011, the Democrat represented his state in the US House of Representatives and served on the Ways and Means committee. Now, he is working in Washington as senior counsel at Atlanta-based law firm Alston & Bird LLP.
Last week, HealthLeaders quizzed Pomeroy on efforts in Washington to repeal and replace the Patient Protection and Affordable Care Act, including his forecast for the financial impacts on healthcare providers and payers.
The transcript below has been lightly edited.
HLM:Before the ACA, there was no functioning individual insurance market. The individual market created through the ACA-spawned exchanges is losing carriers and teetering perilously. Gauge the fate of the individual market.
Pomeroy: The individual insurance market has long been troubled. [When] I was North Dakota insurance commissioner, we had nothing but trouble in that area.
One company, Blue Cross Blue Shield, essentially made the individual market available. So, pre-ACA, there were an awful lot of jurisdictions that did not have competitive markets.
The exchanges have had a variety of problems, and there were missteps by the Obama administration in the implementation of the Affordable Care Act that compounded some of the difficulties for insurers trying to operate on the exchanges.
However, the Trump administration has not taken the steps to signal to insurers whether the administration is committed to maintaining viable exchanges until they get a new law in place.
There is a very uncertain outlook for insurance exchanges because insurance companies don't know what the rules are going to be or what the reimbursements are likely to be. So, they are very reluctant to participate.
HLM:If there is a HIX meltdown before ACA replacement legislation is in place, what would be the primary financial impact on healthcare providers?
Pomeroy: For the healthcare delivery system—ranging from the hospitals to the doctors to the ambulance drivers—there is a substantial financial consequence for those providing healthcare when patients move from having insurance to not having insurance.
As the number of uninsured balloons, operating margins slide into the negative.
HLM: Medicaid Expansion under the ACA is under assault on several fronts, including President Trump's proposed budget, the House version of the American Health Care Act, and regulatory shifting at the Centers for Medicare & Medicaid Services. How would a Medicaid rollback financially impact healthcare providers?
Pomeroy: Hospitals have told me it's the nightmare scenario. They lose the newly covered lives, and they don't gain back some of the cuts they took in the ACA anticipating they were not going to have to deal with a large uninsured population.
The deal with the ACA was that some of your inflation adjustments going forward would be reduced, but you would have many more insured patients and your number of uninsured patients would drop significantly.
Now, they want to take the coverage away and leave the cuts in place. This would force the closure of at least hundreds of very low-margin nonprofit providers.
I used to represent North Dakota in Congress, and I know this will fall particularly hard on rural providers. It will drive a lot of rural hospitals out of business.
HLM:How would a Medicaid rollback affect commercial payers? For example, Arkansas Blue Cross Blue Shield could lose a quarter million beneficiaries who gained relatively generous Medicaid coverage through Arkansas' private-option expansion of the program.
Pomeroy: It would hurt two ways.
First, you lose some of the margin. In running an insurance company, some of the margin comes from the administrative functions they perform. They pay claims and make some margin for the administrative work that they do.
Losing lives means they are losing business.
Secondly, because the bad debt in hospitals would go up from treating uninsured patients, part of that cost would be shifted to patients who are insured.
So, suddenly health insurers are going to be paying higher medical bills. When insurance companies have to pay more, they have to get rate increases, so this would not be an isolated problem for those losing coverage.
This would be a problem for those with coverage, even at their place of employment, because the rates would go up.
If the American Health Care Act (AHCA) becomes law, states that resisted expanding Medicaid under Obamacare will take a bigger financial blow than expansion states, Missouri Hospital Association research shows.
After spurning billions to expand Medicaid under the Patient Protection and Affordable Care Act (PPACA), nonexpansion states are at a financial disadvantage in repeal-and-replace legislation before Congress, a hospital association study says.
"The compensatory measures for nonexpansion states in the AHCA falls more than $680 billion short of providing true equity and fairness in the system for states that opted out of Medicaid expansion," concludes the study, which features state and federal Medicaid expenditure data.
The Missouri Hospital Association (MHA) published the study, "The American Health Care Act Fails to Restore Parity in Medicaid Spending for Nonexpansion States," on June 6.
The MHA research found the Republican Party's plan to repeal and replace Obamacare would perpetuate the Medicaid spending gap between expansion and nonexpansion states: "By 2025, [nonexpansion] states will have foregone an additional $683.9 billion in net federal outlays for Medicaid, compared to states that have opted to expand the program under the existing law. These estimates project that federal spending on Medicaid in expansion states by 2025 will be $1,936 per capita compared to $1,158 in nonexpansion states—a relative difference of 67%."
Nineteen states have not embraced Medicaid expansion.
'Extremely Disadvantaged Starting Point'
The MHA study, prepared by MHA Vice President of Research and Analytics Mat Reidhead, highlights three Medicaid-spending rollback mechanisms proposed under the AHCA:
Starting in 2020, the AHCA would phase out the 90% federal match rate for Medicaid expansion beneficiaries, a population of mainly low-income adults who were ineligible for Medicaid coverage before passage of the PPACA in 2010
The AHCA would require continuous enrollment for grandfathered beneficiaries of Medicaid's enhanced Federal Medical Assistance Percentage (FMAP). The Congressional Budget Office (CBO) estimates that more than 95% of Medicaid expansion beneficiaries would fall out of the program by 2025 under this element of the AHCA.
In 2020, the AHCA would establish a capped funding model for federal spending on Medicaid
"Altogether, the CBO estimates that the AHCA would reduce federal outlays for Medicaid by $834 billion between 2017 and 2026," the MHA study says.
The AHCA would cement a Medicaid-spending edge that expansion states gained under the PPACA, the study says. "States that have opted to expand Medicaid under the ACA are estimated to receive significantly larger shares of federal Medicaid spending under the AHCA. This is largely due to the extreme growth in Medicaid spending observed during the first two years of the program, and projected to continue until the major provisions of the AHCA are enacted in 2020."
On a per capita basis, the Medicaid-spending gap is a "relative difference of 110%," the study says.
"Net federal expenditures for full-expansion states increased 91% between 2013 and 2015, while partial-expansion (1115 waiver) states experienced 71% growth and nonexpansion states saw just a 13% increase. Combined, in 2015, Medicaid expansion states received $1,578 per capita in federal Medicaid spending compared to $753 per capita in nonexpansion states."
As passed in the US House last month, the AHCA fails to close this spending gap, the MHA study says. "Despite provisions of the AHCA to restore parity in Medicaid spending for nonexpansion states, this analysis suggests that they will not recover from their extremely disadvantaged starting point in 2020, when the major provisions of the AHCA are enacted."
Based on historical and projected Medicaid-expenditure data, nonexpansion states are facing more than a half-trillion-dollar hit under the AHCA, the study says. "Nonexpansion states will have collectively foregone $683.9 billion in federal Medicaid spending under the AHCA by 2025. This includes an actual difference of $96 billion observed during the first two years of Medicaid expansion, and a projected additional $588 billion between 2016 and 2025."
Revenue-cycle teams in healthcare are applying new approaches to tackle an old problem—claims denials—according to a pair of finance executives who participated in a recent HealthLeaders Media Roundtable event.
Teamwork and vigilance are key components of minimizing claims denials at health systems, hospitals and physician practices.
"For me, a denial is a failure in some upstream process. Taking care of denials can be like swatting flies, when you should be shutting a window somewhere," says Krishna Ramachandran, chief administrative officer at Downers Grove, Illinois-based DuPage Medical Group (DMG).
DMG is a physician group that features more than 560 primary care and specialty physicians, with most patients drawn from Chicago's western suburbs.
Since DMG was formed in 1999, the organization has been leveraging healthcare information technology to optimize several revenue-cycle capabilities, including claims administration, Ramachandran says.
"What we have been doing is investing in technology. We took all the data from Epic and put it into the Tableau platform—a data visualization tool. The idea is looking at trends over time. How can we drill into certain specialties? Who are the top doctors? What are the denial causes? Shutting a window varies from case to case. Are we not pre-certifying? Are we not getting a referral somewhere?"
At Pittsburgh-based Allegheny Health Network (AHN), the revenue-cycle team has an aggressive approach to reducing claims denials in collaboration with a range of stakeholders across the organization.
"We look at how we can start from the moment a physician orders something. For example, we had an issue with inpatient-only procedures. We were able to intercept orders right from the moment doctors submit for a surgical procedure, and route that to a specific coder," says Marti Strand, chief revenue cycle officer of the seven-hospital health system.
"We check those orders throughout the process to make sure the moment somebody tries to change an order, we act. So we can use the clinical data streams to get in front of a problem before it even begins."
When claims problems occur, Strand's revenue-cycle team leads a "denial crush" to find solutions to avoid future financial mishaps, she says.
"We have a big classroom that has an overhead display and plenty of seats for everybody with computer systems. We bring in payers, we bring in clinicians, our CFOs come to the meeting, the heads of departments come to the meeting, our coders are in the meeting, and utilization review is in the meeting. We pull up accounts together and watch what happened with them from every angle."
The benefits of a "denial crush" session extend beyond solving claims-processing problems, Strand says.
"It is so enlightening not only to fix the denial, which we do during the sessions, but also for everybody to walk away educated about what they are doing in their departments, or from the physician's angle, or for the CFO to have a new level of understanding."
Market and regulatory factors have unleashed a wave of merger, acquisition, and partnership activity that is changing the delivery of healthcare services.
This article first appeared in the June 2017 issue of HealthLeaders magazine.
Consolidation in the healthcare-provider sector has accelerated in recent years, reshaping the relationships between health systems, hospitals, and independent physicians across the country.
In the Buckeye State, healthcare consolidation activity has been a transformational force at OhioHealth, says Michael Louge, CPA, who serves as executive vice president and chief operating officer at the 11-hospital health system based in Columbus.
"When you look at OhioHealth, and you go back two or three decades, it was a much different organization. The reason it is different today is because of philosophy and the way we approach regional partnerships—how we have worked with physicians and hospitals in the region. Our whole organization’s evolution has been through successful partnerships and consolidations with regional players."
Over the past year, statistics have been gathered on the pace of healthcare-provider consolidation.
In a recent HealthLeaders Media survey, 159 healthcare executives—mainly from health systems, hospitals, and physician practices—were asked about their merger, acquisition, and partnership (MAP) deals.
Eighty-seven percent of the respondents said their organizations were expected to both explore potential deals and complete deals that were underway in the next 12–18 months. Only 13% of the respondents said their organizations were not planning MAP deals in that same time period.
From the passage of the Patient Protection and Affordable Care Act (PPACA) in 2010 through the end of last year, merger and acquisition transactions involving acute-care hospitals increased 55% from 66 announced deals to 102, according to Skokie, Illinois–based Kaufman Hall. Last year, the operating revenue of acquired organizations was more than $22 billion, according to the consultancy.
Kit Kamholz, managing director at Kaufman Hall, says two sets of drivers are propelling consolidation activity among health systems and hospitals.
"There are transactions that are driven by financial rationale. This is driven by a level of distress at the smaller organization, either from a historical-financial standpoint, an access-to-capital standpoint, or they are experiencing some significant clinical deficiencies. … The second bucket is in the category of strategic rationale. These are organizations that tend to be relatively strong financially, that are considered to be strong community-based providers in their marketplaces; but they are looking at the landscape of the evolving healthcare environment and saying, 'Do we have the skills and capabilities to be successful in this new era of value-based care?' "
Healthcare consolidation activity is impacting the country’s physician practices and physician-employment trends.
In the same HealthLeaders Media MAP survey, physician practices were among the top targets for recent MAP deals, with survey respondents citing that 27% of the entities involved in a recent transaction were physician practices.
''Our whole organization’s evolution has been through successful partnerships and consolidations with regional players.''
The respondents reported that health systems also accounted for 27% of recent MAP transactions. Hospitals were next in line as the top target for MAP transactions, accounting for 20% of recent MAP activity.
In the survey, physician practices were the most sought-after entities for MAP activity within the next year, with 59% of the respondents reporting that their organization was interested in pursuing MAP deals with physician practices. The next-highest category of sought-after entities for MAP deals were physician organizations such as independent practice associations at 30%.
In September 2016, Physicians Advocacy Institute (PAI), a nonprofit advocacy organization dedicated to examining the challenges that physicians face and educating policymakers about those challenges, published a national report that shows the impact of consolidation activity on doctors: Physician Practice Acquisition Study: National and Regional Employment Changes.
Data for the PAI report was drawn from seven points in time from July 2012 to July 2015. During the study period, the percentage of hospital-employed physicians increased 49%, with increases posted over each six-month period examined in the report. The percentage of hospital-employed physicians nationwide jumped from 26% in July 2012 to 38% in July 2015.
The report shows a 31,000-practice increase in the number of physician practices employed by hospitals over the three-year period, which amounted to an 86% hike.
"This change in employment status has occurred across the country," says Kelly Kenney, JD, executive vice president of PAI. "The thought was that urban areas would outpace the rural side because it would not make as much sense for a rural hospital to employ physicians, but we found that the rural employment rates have gone up considerably and are converging into the urban rates."
Unfavorable financial factors are driving many physicians out of independent practices, says Robert Seligson, MBA, MA, president of PAI, and executive vice president and CEO of the North Carolina Medical Society. "In a rural area, you have less paying patients in most cases, so that creates a process of trying to find a formula and a strategy that will make your practice viable based on your payer mix."
In North Carolina, young physicians are seeking hospital employment rather than coping with the financial pressure and other challenges associated with independent practices in rural markets, he says.
"We have a community practitioner program here in North Carolina that places doctors in underserved areas of the state, and in return, we pay up to 50% of their tuition loans. They have to stay in that area for at least five years. Twenty years ago, it was an easier sell to get doctors to do that. Now, with the changing dynamics of the marketplace—whether it is the rural or the urban areas—it is harder for a practice to maintain its viability when its payer base is weak and it is trying to be competitive and meet all the requirements that are coming down the pike."
With a high level of uncertainty about the future direction of healthcare regulation and the ongoing evolution of value-based care models, consolidation poses daunting risks for physicians, Kenney says.
"There is a rush to consolidate as we all know and as our study confirmed. We are very concerned that if the economics do not play out in a fairly quick time frame—because we know that health systems often lose money on the first few years of purchasing physician practices—that health systems will shed those purchasing agreements. Then what happens to those physicians? They have sold their practice. They have no practice to return to."
OhioHealth’s strategy for MAP success
OhioHealth, which reported total operating revenue at $3.5 billion in fiscal year 2016, has enjoyed a significant measure of consolidation success acquiring community hospitals, Louge says.
"This is where we have been active and successful for a long time. The problem for those hospitals is usually an inability to recruit and retain physicians and physician specialties in their market. So, it is increasingly difficult for them to keep patients local because you need physicians and specialists to do that."
The demanding regulatory environment for hospitals in recent years has been another impetus for community hospitals to seek membership in OhioHealth, he says. "When you look at the requirements that are being placed on all healthcare providers, the community setting has a lack of depth and breadth of resources. When they see readmissions and other regulations coming—and the penalties that come with them—community hospitals need a depth and breadth of resources to comply."
Louge says a prime example of OhioHealth’s approach to acquiring a community hospital is 64-bed O’Bleness Hospital in Athens, Ohio, which became an OhioHealth managed affiliate in May 2010 and a full member of the health system in a noncash transaction in January 2014.
"We had an affiliation for supply chain and other low-hanging fruit. As the market got tougher, and reimbursement was a challenge, and O’Bleness struggled with lack of depth and breadth of resources, we entered into an agreement where we assumed management of the facility. We helped them recruit and retain physicians."
Membership had several advantages for O’Bleness. "Most of that revolved around: recruiting and retaining physicians in their community; doing outreach from Athens to the surrounding rural areas to help ensure those patients would come to Athens for care; guaranteeing that certain kinds of specialty care would be delivered in Athens—an example of that is radiation oncology; negotiating their managed care contracts, which was something that we could not do before the acquisition; and offering the depth and breadth of the resources we have in central Ohio."
The acquisition deal reached in 2013 also generated benefits for OhioHealth, Louge says.
"For one, we have a stable medical community in Athens, where we have always had a presence. We are working to make healthcare better there by keeping care local to the extent that is reasonable and logical. And there are now trusting relationships between the physicians in Columbus and Athens that bring patients to us here in Columbus, while at the same time sending patients back to Athens once advanced care has been delivered. It is a win-win for the community of Athens; it is a win-win for the physicians in Athens; and it is a win-win for OhioHealth both in Athens and Columbus."
The financial impact has been positive for both parties, he says.
"Today, O’Bleness is making a healthy, stable profit. When you see that kind of performance, what you see in that community is that healthcare is starting to thrive. They are keeping patients in Athens. They are seeing more volume. We have also seen the level of quality rise, … which also helps keep care local and helps the financial picture. And Athens County is one of the top counties in terms of referrals into OhioHealth outside of the Columbus metro area."
For the fiscal year ending June 2016, O’Bleness posted net operating income at $9.7 million. In the previous two fiscal years, operating costs outpaced income for a $2.6 million loss in 2015 and a $1.1 million loss in 2014.
Since the hospital’s acquisition deal, OhioHealth’s balanced scorecard rating for O’Bleness has trended positively, with a 3.1 rating in fiscal year 2014, a 3.7 rating in 2015, and a 4.0 rating in 2016. The balanced scorecard reflects four sets of metrics: patient care, patient satisfaction, employee satisfaction, and financial performance.
OhioHealth also has achieved consolidation success with a physician-practice acquisition in the Athens market.
"We already had an employed physicians group called Athens Medical Associates, and we have combined them with University Medical Associates. UMA was an independent practice that has provided the teaching for Ohio University’s Heritage College of Osteopathic Medicine. The beauty of putting those two groups together is having a member hospital in Athens and having a piece of the medical community employed by us. We now have a strong relationship with the Heritage College of Osteopathic Medicine at Ohio University. This not only allows us to consolidate but also to have stability in the teaching ranks and stability in the clinical practice of medicine by stabilizing the physician group."
''The whole transformation to value, and the people who are going to be successful there are the large integrated groups."
In its market, OhioHealth has observed three factors spurring physician practices into MAP deals with hospitals and health systems, Louge says.
"There are economic reasons; there are regulatory issues; and, as we look forward in the march to value, physicians in the smaller practices see the need to be part of a new healthcare model. The economic reasons are myriad. It is just much harder for practices to stand alone today economically. Whether it is Medicare, Medicaid, or even commercial insurance, the tightening of the financial reins makes it harder for them individually to stand up. You couple that with the regulatory changes coming at the state and federal level, where there are many more regulations. … Then there is the whole transformation to value, and the people who are going to be successful there are the large integrated groups."
OhioHealth also has established partnership transactions.
"We have two exclusive clinical and operational affiliations. One of them is with the Berger Health System in Circleville. And effective January 1, we finalized an affiliation with Southeastern Med, which is in Cambridge in Guernsey County. With those partnerships, we make commitments to the local community to partner with them to look for efficiencies. There also is common governance. We have strategic partnership councils with both of those organizations that have their board members and executives and people from Columbus who are responsible for fulfilling our commitments," Louge says.
As is the case with OhioHealth’s acquisition deals, partnership transactions are structured as win-win scenarios for both parties.
"With Berger in Circleville, we have two employed cardiologists who are there full-time. That is something they would have struggled to do on their own. Now, we have a robust cardiac and vascular program in Circleville, which has helped that hospital and that physician community to keep the appropriate amount of cardiac care local; and when that can’t happen, patients are referred to Columbus."
IU Health rolls with hub-and-spoke organizational structure
''We have not done a full acquisition recently, and that has been intentional.''
While other healthcare organizations are consolidating, at Indianapolis-based Indiana University Health, senior executives have spent much of the past five years in a concerted effort to recast their organization after a consolidation spree, says Ryan Kitchell, executive vice president and chief administrative officer of the 14-hospital health system.
"We have not done a full acquisition recently, and that has been intentional," he says of IU Health, which posted total operating revenue at $6.2 billion for the 2016 fiscal year.
"I became CFO in 2012, and at that time we had either acquired or built a hospital on average every year for 15 years. Given that rapid pace of growth, we had not done a really deep focus on integrating what we had in our system. So, we took a timeout on acquisitions to focus on becoming a true operating company, rather than the holding company model."
IU Health now features an integrated hub-and-spoke structure, with rural "spoke" hospitals linked to regional "hub" hospitals that send patients for the highest level of care to three hospitals in Indianapolis: IU Health University Hospital, IU Health Methodist Hospital, and Riley Hospital for Children at IU Health.
The most ambitious aspect of IU Health’s consolidation activity "timeout" was a $50 million upgrade of the health system’s information technology infrastructure, Kitchell says.
"It started with the core IT systems. When I started as CFO, we had seven different electronic health record systems. As patients moved within our system’s hub-and-spoke structure, while we were branded as one system, it really didn’t feel like it. We spent about two-and-a-half years and moved all of our hospitals to a common electronic health record, a common revenue cycle system, and a common enterprise resource planning system. Now, we have all the financial, human resources, supply chain, clinical, and billing all in one system, and it has helped to glue everything together. Before, people were not really even talking the same language. They didn’t have the same data, and we were not getting the advantages of being a system, where we could compare how we were doing on measures like infection rates and be able to decide that somebody had gotten it figured out and we should spread that elsewhere."
Measuring the return on investment from the systemwide IT upgrade has been a challenge, he says. "Starting with the electronic health record, the cost side of that is easy to measure. The return side is the harder part.
"A return could come when a patient moves from Bloomington Hospital to Indianapolis; now that we are on the same electronic health record, we can check on patients faster because we have a complete record of their health. We don’t have to order as many lab tests because we already have lab results in the record, so there is a savings there from an expense standpoint. There are a lot of those little things, and you could probably make estimates for them, but we are much more focused on lowering our overall cost structure over the long term as reimbursements are reduced. So, we viewed this IT investment as a key driver to get us to a reduced cost per patient."
While IU Health has shied away from acquisition transactions in recent years, the organization has embraced several partnership deals. For example, the health system signed a five-year lease agreement last year to manage Frankfort Hospital, a 25-bed county-owned facility.
"We already had a significant primary care presence in that county. Of the eight primary care physicians, four of those were our doctors and they had been in that community for decades," Kitchell says.
The financial impact of the partnership with Frankfort Hospital is limited for IU Health, but it is an excellent fit with the health system’s hub-and-spoke organizational structure.
"Frankfort was a supplement to the regional hub hospital in the Lafayette region. It will help us draw more volume to the Lafayette region and expand what we are doing in the Frankfort community. But from a financial standpoint, this is a very modest part of our organization. It is about $50 million in revenue compared to our total operating revenue of about $6.2 billion. We like the coordination of the care and the strengthening of that region. As we continue to get into the population health space—we have commercial insurers, Medicare, and Medicaid in our payer mix—we are managing members of multiple health plans and are finding it very helpful to have strong partnerships in communities such as Frankfort."
In 2016, Medicare and other government programs accounted for 40% of gross patient service revenue at IU Health, Medicaid and HIP (Healthy Indiana Plan) for 21%, and commercial/managed care for 36%, with self-pay and other at 3%.
DuPage Medical Group offers physicians an alternative to hospital consolidation
Downers Grove, Illinois–based DuPage Medical Group, a physician organization in the Chicagoland market, is offering doctors and physician practices an alternative to MAP deals with health systems and hospitals.
"Where we have had success driving some of our growth is that we are a physician-driven organization," says Michael Kasper, MHA, CEO of DuPage, which features more than 600 primary care and specialty doctors in more than 80 locations. For the 2016 fiscal year, DuPage reported net patient revenue at $741 million.
"I report to a board of doctors; and a lot of physicians, whether they are newly graduated or in the market, are faced with the challenges of information technology or surviving through the changes of Medicare reimbursement. We have the wherewithal of a sophisticated health system, but we try to protect the clinical environment and the entrepreneurial spirit of physicians. So we end up being very competitive in offering an alternative to physicians."
DuPage features facilities and equipment that small physician practices would struggle to finance one their own, he says.
"If you look at some of our subspecialties, we have a radiation-oncology center, we have multiple surgery centers, and we buy equipment that is specific to the needs of the individual physicians. For those physicians—if they were trying to stay within a small physician practice—it would be very difficult to produce the resources to buy the equipment necessary to do surgical procedures. When some of these practices try to do it on their own, they take on an inordinate amount of debt that overleverages their practice. By pooling economics, we are able to offer these services without the individual physician taking on the full brunt of the financial responsibility."
Examples of costly equipment purchases at DuPage include 3T MRI scanners that generate high-strength magnetic fields and two Varian TrueBeam x-ray linear accelerators, which deliver radiation therapy featuring real-time tumor imaging.
Outpatient-service capabilities are a key element of DuPage’s growth strategy.
"As we go into new markets—and even in the markets we are in today—we try to make sure we are providing as many services as possible in the outpatient continuum. The validation we get from that process is not just the cost savings. There is clinical outcome improvement as well; because when all of our service information gets contained within one medical record, it creates a lot more power as it relates to our doctors having more information at their disposal to make clinical decisions.
"A robust EMR capability supports cost-effective patient care," he says.
''If we can’t go in and help a practice grow and help the physicians from a compensation perspective to remain whole or enhance their economics, and if we can’t establish a retained earnings model, then we shy away from those types of deals."
"Through Epic, there are numerous clinical benefits, including the ability for providers to have a holistic view of their patient’s health information at all times. This reduces unnecessary medical testing and medical errors and facilitates highly coordinated care with a strong focus on ongoing communication between providers. For patients, MyChart—Epic’s secure, online patient portal—offers a place to securely view medical records, request or schedule appointments, and communicate with physicians."
When DuPage acquires a physician practice, the targeted entity has to meet a minimum set of scale and financial criteria, Kasper says. "We are seeing some practices trying to individually grow their practices. They will go into a community and try to cobble together several practices. That is not our model. We like to go into markets where there is some base of physicians—there is a group of reasonable size of 35 to 50 physicians. We have shied away from markets where we would have to start from scratch to put together a medical group."
ROI also is a key consideration in DuPage’s acquisition deals.
"If we can’t go in and help a practice grow and help the physicians from a compensation perspective to remain whole or enhance their economics, and if we can’t establish a retained earnings model, then we shy away from those types of deals. We do not create profitability at the expense of physician compensation."
One of the criticisms of healthcare-provider consolidation is that it leads to higher unit pricing for medical services. DuPage’s consolidation strategy has held the line on pricing, Kasper says. "We are the lowest-cost ACO in the Chicagoland area. We are top-quartile performance in cost, and we are roughly top 10 performance in quality based on MSSP quality metrics."
DuPage is a member of Illinois Health Partners, a Medicare Shared Savings Program accountable care organization. For the 2015 MSSP performance year, data from the Centers for Medicare & Medicaid Services show Illinois Health Partners posted a $8,847 cost of care per Medicare beneficiary, which was the lowest figure in the Chicagoland area for any MSSP ACO.
As cited in the September 9, 2016, Health Affairs Blog, for other ACOs earning MSSP shared savings payments in 2015, the average cost of care per beneficiary was $10,555 nationwide.
Health systems and hospitals generally pursue an inpatient-driven model when acquiring physician practices, which helps drive higher-patient costs, Kasper says.
"We are an outpatient-driven model. When physicians join a hospital, those physicians use the hospital for imaging, for labs, and for outpatient services. All those services go to the hospital, and any insurance carrier will tell you it is more expensive to use hospital services than it is to use freestanding outpatient services. As we build out our capabilities and add physicians and patients to our model, we bring down costs almost effective immediately."
Gazing into the healthcare-provider consolidation crystal ball
Senior leaders at DuPage say their physician-practice consolidation strategy can be replicated across the country.
"There are three strategies: the publicly traded companies that are in the physician-practice space; there are the health systems and hospitals that are in the space; and there are very few physician-driven models, especially those that are willing to take their model outside of their local market, which we are willing to do. There is a real opportunity for DuPage Medical Group to become a regional or national company, and to help create some alternatives for doctors," says Kasper.
In addition to having a 10-member board drawn from practicing physicians, Kasper says DuPage has a "sustainable ownership model" that encourages physicians to invest in their practices. DuPage gives member practices a measure of independence, he says. "The physicians have autonomy over their own schedules, practice approach, and philosophies."
DuPage’s consolidation strategy has believers in the financial world, too. In December 2015, the physician organization secured a $250 million investment from Boston-based Summit Partners, a global growth equity firm.
At Kaufman Hall, Kamholz is bullish on DuPage’s odds for consolidation activity and growth success. "They are taking private equity investment to get bigger and stronger to make the investments necessary to be successful in the new environment. They have a high degree of confidence in their strategic direction, they have strong financial performance, and they have a balance sheet that helps them withstand some of the pressures that they are facing."
Last year, DuPage demonstrated strong growth, adding 211 providers and 16 locations in DuPage, Kane, Kendall, Will, Cook, and Grundy counties.
Despite the apparent success DuPage is enjoying in northern Illinois, the future survival scenarios for many physician practices across the country are far less rosy.
Given the trends identified in the PAI acquisitions study, physician practices and the doctors who work in them are facing daunting challenges, Seligson says.
"There is a sense of a need to provide better outcomes and to work collaboratively. Physicians are obviously at the forefront of providing the care. In order for value-based care to really work, doctors have to be at the forefront and have the autonomy and the ability to make good clinical decisions in a collaborative way—whether it is in an outpatient setting, working in a hospital setting, or working with other providers to make sure a patient’s care is the appropriate care when he or she needs it."
Health systems acquiring independent physician practices is often at odds with the adoption of value-based care models, Seligson says. "We feel that sometimes the big systems are not really conducive to value-based care, which needs to be more of a collaborative effort. A lot of the hospital CEOs say there is a strong need for the private practice of medicine to support what they are doing to deliver value-based care."
When health systems and hospitals pursue consolidation strategies with much more than the financial bottom line in mind, MAP transactions generate value for all of the stakeholders involved—including patients in the form of better care coordination, Louge and Kitchell say.
In physician-practice MAP activity, OhioHealth is committed to pursuing win-win scenarios, Louge says.
"Our partnership philosophy with our physicians is that we will joint venture with them in the appropriate outpatient-therapy settings and other places for both parties’ economic benefit, but it is always with the intent to benefit the local patient and to adhere to our charity-care guidelines. When you look at our outpatient profitability, a significant piece of that is generated by joint ventures we have with our independent medical staff. We have those in surgery, we have those in sleep services, and we have those in other areas."
In recent years, mutually beneficial partnerships have been the crucial component of IU Health’s MAP strategy with community hospitals and independent physician practices, he says.
"There are more conversations around service lines and specific physician needs. In Indiana, the demand for healthcare has increased with Medicaid expansion and the PPACA exchange, and that expansion of demand in many places has led to outstripping the physician manpower that exists. So, we are in a lot of conversations to find new ways to partner."
Healthcare consolidation activity is far from over, and the healthcare industry landscape will continue to evolve for years to come, Kamholz says. "We are entering a long period where there is going to be no right answer."
Payer activities focus on delivering value for both the employer groups and the consumer.
In the healthcare industry, the payer sector remains competitive despite being far more highly concentrated than the provider sector, the financial leader of a large Blue Cross Blue Shield affiliate says.
"Not every commercial payer is operating in every business segment in every market. While they have national scale, in some cases they choose not to compete in every segment in every market, so scale does not mean as much because the book that they have in a certain market is small enough to encourage competition," says Karen Hanlon, CPA, executive vice president and CFO of Pittsburgh-based Highmark Health.
Highmark Health is the parent company of Highmark Inc., a Blue Cross Blue Shield affiliate that markets health plans in Delaware, Pennsylvania, and West Virginia. Highmark Health also owns Allegheny Health Network, a health system with seven acute-care hospitals. In 2016, Highmark Health posted consolidated revenue at $18.2 billion and employed more than 40,000 workers.
Hanlon acknowledges the payer sector is highly concentrated, with a handful of large commercial insurance carriers that she calls "the nationals" such as Aetna, Cigna, Humana, and UnitedHealthcare, along with the nationwide constellation of nonprofit BCBS affiliates.
However, she says there is a significant level of payer competition across most of the country.
"In many markets, we still have effective competition between the Blues and the nationals. Everyone is looking for scale, without a doubt. Certainly, in some of the mergers that are out there, they are looking for complementary product offerings. They think they can grow their business by picking up a concentration of business in a certain segment where they might not have been strong before."
Highmark Inc. faces significant competition from commercial insurance carriers in the BCBS affiliate’s markets, Hanlon says.
"Our core markets are Delaware, West Virginia, and Pennsylvania. We are competing with the commercial payers in each of those markets."
Although the federal Department of Justice has blocked two megamergers in the payer sector over the past year, Hanlon says health insurance carriers are likely to continue to seek new business opportunities, including consolidation deals.
"As we have thought about the various payer concentration activities out there, the focus for us has been to deliver value for the consumers in our market, and in terms of delivering that value, we recognize that cost is a key component for both the employer groups and the consumer. I am sure that is, in part, what the commercial payers are reacting to and trying to address as well. We are definitely going at it with different strategies than what those commercial
payers are pursuing, but they are trying to grow and evolve in a new world."
As opposed to seeking a major merger partner such as the Aetna-Humana transaction that was dropped in February after the DOJ nixed the deal in federal court, Highmark Health has been focused on developing new business lines and strategic partnerships, such as last summer’s launch of a postacute care company: HM Home & Community Services LLC.
HMHCS focuses on care coordination and performance in postacute care settings, especially skilled nursing facilities and home-health agency care. HMHCS offers several postacute care services such as provider-network management consulting, boosting care coordination, scorecard monitoring, and data analytics.
Other commercial payers have capitalized on diversified business lines. UnitedHealthcare operates Optum, which offers a range of healthcare-sector services, including IT, wellness programs, and pharmacy management consulting. Aetna is the parent company of Accountable Care Solutions, which provides ACO consulting services to physician practices and other healthcare providers.
There is a high degree of uncertainty over whether the DOJ will loosen its payer-sector consolidation reins under the new Republican Party–dominated leadership in Washington, D.C., she says. "There was not a strong drumbeat on that point leading up to the election out of now-President Trump."
Regulatory action poses the greatest near-term threat to Obamacare and the fastest track to minimizing the federal role in healthcare, three legal and government experts say.
Three recent policy pronouncements show that the Trump administration wants to lighten the federal government's role in the healthcare industry.
Michael Adelberg, principal at the Minneapolis-based law firm Faegre Baker Daniels and a former official at the Centers for Medicare & Medicaid Services, says CMS is signaling a softer regulatory touch.
"It appears that the new leadership wishes to have CMS perceived as a less 'top down' administrator of its programs," Adelberg says.
In a flurry of media releases featuring CMS Administrator Seema Verma, the agency made three policy announcements:
On May 15, CMS proposed changes to the Federally-Facilitated Small Business Health Options Program (FF-SHOP), the primary provision of the Patient Protection and Affordable Care Act to foster health coverage at small businesses.
FF-SHOP has not lived up to expectations, with less than 40,000 workers nationwide obtaining coverage through the program, CMS says. The proposed changes include eliminating FF-SHOP enrollment on HealthCare.gov.
On May 16, CMS announced a Section 1332 Waiver Check List to ease creation of state-administered high-risk pools, which the Trump administration and Republicans in Congress are championing as an alternative to Medicaid expansion under ACA.
"State-initiated waivers that implement high-risk pool/state-operated reinsurance programs will help lower premiums, stabilize the health insurance exchange, and meet the unique needs of each state," Verma said.
On May 17, CMS announced a "streamlined direct enrollment process" for individuals purchasing HIX coverage. The change takes HealthCare.gov out of the enrollment loop for consumers using HIX-approved third party websites such as an insurance carrier portal.
"It is time to get the federal government out of the way and give patients the best tools to make their own healthcare decisions," Verma said.
'Very Aggressive Deregulation'
CMS is embracing the Trump administration's anti-regulatory philosophy, says Earl Pomeroy, who represented North Dakota as a Democratic congressman from 1993 to 2011 and now works as senior counsel at Atlanta-based law firm Alston & Bird.
"A theme of this new administration is very aggressive deregulation. This theme is in virtually all facets of the executive branch, and you are certainly going to see it at the Department of Health and Human Services as they take on their responsibilities with the Affordable Care Act. They don't like regulations, and they don't like Obamacare," says Pomeroy, a former president of the National Association of Insurance Commissioners.
The recent policy announcements are part of a burgeoning bureaucratic assault on ACA, says Sam Halabi, JD, an associate professor of law at the University of Missouri School of Law.
"Overall, the fundamental goal is to weaken the mechanisms of the Affordable Care Act. No longer allowing small businesses to purchase health coverage on HealthCare.gov effectively makes it more difficult for small businesses to purchase coverage. Several small-business interest groups have said as much," he says.
The prominent role of CMS in crafting key elements of ACA is a major vulnerability for President Obama's hallmark domestic-policy initiative, Halabi says.
"The Obama-era decisions to delay implementation of the ACA and to afford regulatory flexibility where the language of the statute did not seem obvious opened up the law to those same measures being taken by a hostile administration."
CMS is likely to target several other elements of the ACA for regulatory culling, he says. "Pilot programs that were adopted to improve physician transparency, incentives to meet quality and cost benchmarks, and accountable care organizations were creatures of administrative decision-making, and all of them are vulnerable."
Adelberg listed more potential ACA targets for the new leadership at CMS. "The new administration will likely revisit Obama administration regulations that established significant new requirements. Last year's Medicaid managed care regulation and the Office for Civil Rights' non-discrimination regulation are two examples.”
Bureaucratic meddling poses a far greater present danger to ACA than repeal-and-replace legislation in Congress, Halabi says. "All of Congress is now distracted by the White House's non-healthcare-related activities. The American Health Care Act was already going to take a long time in the Senate. Now, it's just going to take longer."
In the high-stakes transition to Medicare's new value-based payment system, physician organizations face a looming deadline to attain full compliance with MACRA's data reporting requirements, which will drive payment bonuses and penalties for clinicians.
With implementation of Medicare's Quality Payment Program (QPP) shifting to high gear in January, most physician practices are either fine-tuning capabilities for the new value-based payment system or facingmultiple pain points.
In 2015, Congress established the QPP through the Medicare Access & CHIP Reauthorization Act (MACRA). There are two payment tracks under QPP:
Starting in 2019, most clinicians receiving reimbursement through QPP will be paid through the Merit-based Incentive Payment System (MIPS), which features data reporting in four performance categories that drive payment bonus and penalty mechanisms
Clinicians participating in MACRA-approved alternative payment models (APMs) such as the Medicare Shared Savings Program can earn 5% payment bonuses.
"Pick-your-pace" reporting for QPP started this year, with associated payment adjustments set to begin in 2019. A more mandatory approach to QPP data reporting—with bigger financial consequences for clinician compensation—begins next year.
The American Osteopathic Association (AOA) is urging its members, which features more than 100,000 doctors, to view QPP as an opportunity to improve physician practices.
"We are focused on raising MACRA awareness among our physicians, and helping physicians to educate themselves about practice improvement. A lot of practice improvement strategies are not just about excelling in MIPS—they are ways to improve efficiency, have better care for patients, and have happier employees," says Laura Wooster, senior vice president of public policy at AOA.
There are several keys to MIPS success. "A good EHR is a good start. Any kind of system that helps a practice with population-health management is a great step for maximizing performance," she says.
"For example, it helps to have the capability to track all of your diabetic patients, and to make sure you have brought them all in over the past year to check their hemoglobin-A1C or conduct a foot exam. It helps to look at your patients as different groups and make sure they are getting the best care to manage their health."
The MIPS performance measures incorporate existing Medicare payment-program metrics such as the EHR Meaningful Use program the Physician Quality Reporting System (PQRS), which are sunsetting this year.
Physician organizations that have experience collecting and reporting this data for the Centers of Medicare & Medicaid Services (CMS) have an essential building block for MACRA success, says Krishna Ramachandran, chief administrative officer of Downers Grove-based DuPage Medical Group (DMG).
"DuPage Medical Group has been reporting data to CMS for PQRS, EHR Meaningful Use as well as for the Medicare Shared Savings Program ACO for a few years. We certainly appreciate the alignment created by CMS to fold these under one program under MACRA."
"In addition to external data reporting, these measures are part of our internal monthly dashboards, so that we are able to keep an eye on our performance," Ramachandran says.
The ability to measure Medicare payment-system metrics on a monthly basis is reflected in physician compensation. "Measures that have needed more attention and focus from our physician partners have typically found their way into our annual physician incentive bonus criteria, so that the priorities are aligned," he says.
Fall risk and pneumonia vaccination are examples of MIPS-related measures that have been included in physician compensation packages at DuPage.
MACRA Helps Stoke Physician-Consolidation
Administrative burdens on physician practices were already heavy before MACRA, and rising to the regulatory requirements of MIPS and APMs will likely stoke the wildfire of physician-practice consolidation activity, Wooster and Ramachandran say.
"I can certainly see instances of MIPS and MACRA being the final straw," Wooster says.
DMG is one of the largest group practices in Illinois and is pursuing a growth strategy, with more than 560 primary care and specialty physicians and more than a million patient visits annually. DMG's ability to manage value-based payment models such as MIPS and APMs is a valuable selling point to draw new physicians to the organization, Ramachandran says.
"The complexities of successfully implementing technology, modifying workflows, and producing accurate reports for MACRA have greatly magnified the challenges that have been felt by independent physicians practicing in our community."
"A key differentiator in joining a group like DMG is the opportunity for community physicians to remain independent but to take advantage of the shared value-based care infrastructure that we have created," he says.
Transparency and Physician Reputation Risk
Data collected through MACRA will appear on Physician Compare, Medicare's online clinician-comparison tool for consumers.
In the near term, rollout of the new payment system represents a step rather than a leap forward for Physician Compare, Wooster says. "I doubt it is going to be a sea change because Physician Compare already has PQRS data, so performance is already in Physician Compare."
"In terms of physicians managing their reputation risk, we have not hit the point where Physician Compare is like the Yelp for physicians, and MACRA alone is not going to get us there."
On a broader scale, MACRA's focus on key components value-based care such as cost, efficiency, and quality could boost transparency in the healthcare industry, she says. "For value transparency, I can see MACRA making a difference."
Just as is the case with rising to the administrative challenges of MACRA, capitalizing on experience is an essential element of DuPage's reputation-risk and transparency strategy for the new payment system, Ramachandran says.
"DMG began transparently reporting various quality, efficiency, and access measures across our physician community in 2010. The primary driver was to begin a cultural transformation of measuring, managing, and continuously improving ourselves before agencies like CMS or other payers published data on websites such as Physician Compare."
Cost reporting under MACRA is likely to have a significant impact at the local-market level and nationally, he says.
"Cost transparency is relatively new for us: We have been receiving interesting insights from claims data for both MSSP and commercial ACOs that have helped us identify high-quality, cost-effective settings of care for our patients. We expect cost transparency to grow under MACRA as well as with the growth of commercial ACO contracts. Cost transparency will be an important tool for us to be good stewards of our nation's healthcare dollar."
