Key drivers for spending growth include an improving economy, an aging population, spiraling drug costs, and coverage expansion under the Patient Protection and Affordable Care Act.
Healthcare spending growth will increase by an average of 5.8% annually over the next decade and will consume nearly 20% of the nation's gross domestic product by 2024, according to projections issued Tuesday by actuaries at the Centers for Medicare & Medicaid Services.
Key drivers for spending growth include an improving economy, an aging population, spiraling drug costs, and coverage expansion under the Patient Protection and Affordable Care Act, according to the federal government's projections, which were published Tuesday in Health Affairs.
As a result, healthcare spending as a share of the nation's GDP will increase from 17.4% in 2013 to 19.6% in 2024.
The nearly 6% annual increase in healthcare spending growth would likely wildly outstrip overall inflation in the larger economy, which was at 0.4% for the past year.
"When you have healthcare inflation growing much faster than CPI, you have healthcare spending crowding out other spending in the family budget, and it also happens in government budgets," says Tevi Troy, president of the American Health Policy Institute. "Medicare/Medicaid spending is starting to crowd out all other spending to the point where all government spending is going to be for healthcare and service to the debt."
Sean P. Keehan
CMS actuaries are calling the healthcare cost growth projections "relatively modest" when compared with the 9% average annual growth in healthcare spending in the 30 years before the 2007 recession. The actuaries note that the slowing growth comes even 8.4 million people have gained insurance coverage.
During a conference call with media on Tuesday afternoon, CMS actuary Sean P. Keehan said healthcare costs growth "will rebound from their relative historic lows, but they are not going to reach levels where they were pre-recession time."
"There are a few reasons why we think that," Keehan says. "There is going to be more price transparency and price sensitivity and the presence of narrow networks. We are projecting that they will keep the acceleration of price growth fairly modest."
CMS actuary Gigi A. Cuckler said the projections can't provide before-and-after scenarios to measure the effects of the PPACA.
"It's no longer pragmatic," Cuckler says. "We can't come up with a counter factual of what spending would have been. The law has been in effect for five years."
However, her colleague John A. Poisal said that "it is fair to say there are certain components of the law that have resulted in faster spending."
"The coverage expansion, people gaining coverage, [and] in some cases people moving to more generous coverage, is likely to exert upward pressure whereas some of the cuts to Medicare payment updates would exert some downward pressure," he says. "There is a mix and the ACA impacts how they play out."
The continued rise in high-deductible health plans that make consumers shoulder more of the cost is expected to play a significant role in keeping healthcare cost growth in check, CMS said.
Analysis 'Raises Questions'
Trish Riley, executive director of the National Academy for State Health Policy, says healthcare consumers are playing a big role in reducing healthcare spending growth.
"They talk about high deductibles as changing patient behavior, but that begs the questions of what happens to their healthcare and what does the underlying healthcare cost," she says. "Instead of addressing the tough issues of healthcare costs, we pass it on to consumers. There is nothing wrong with the analysis, but it does raise questions."
Healthcare spending growth in 2013 was close to the historically low rate of 4%. As the economy improved, CMS says spending growth increased to 5.5% in 2014, the first time growth surpassed 5% annually since 2007.
The increase in overall spending, which amounted to $3.1 trillion in 2014, was driven by the newly insured, and by prescription drugs, most notably the expensive new treatments for hepatitis C. As a result, prescription drug spending growth increased from 2.5% in 2013, to 12.6% in 2014, its highest annual rate of growth since 2002. From 2013 to 2014 prescription drug prices rose from 2.3% to 4.1%, CMS said.
John Holahan
Cost growth is expected to decelerate to 5.3% in 2015 as some of the initial effects of the PPACA moderate and drug spending slows. By the end of the decade, annual healthcare cost growth is expected to increase by 6% annually due to the medical costs associated with aging baby boomers, with nearly 40% of every healthcare dollar going to either Medicare or Medicaid.
For now, many value-based payment models and other reforms haven't been around long enough to determine their potential to drive savings, Cuckler says.
"To the extent that these programs have been implemented and actually illustrated savings, they have been incorporated into the Medicare and NHE projections," Cuckler says. "However, it is still too early to determine whether or not these demonstrations will have a lasting effect on health spending.
John Holahan, an institute fellow at the Urban Institute, says the CMS's 10-year projections are reasonable, at least for the first five years.
"They do a pretty good job of explaining what's happened recently and their projections out to about 2018 make sense for the reasons they give," he says. "But for the 2018–2024 period, it's almost like they throw up their hands and say the past several years have been too good to be true so it's going to go back to the way it used to be."
"The headline will be that we'll be pretty close to 20% of GDP by 2024. They could certainly well be right, but since so much of the action occurs in these out years when forecasting gets riskiest, you have to take it with a grain of salt."
Medicaid Expansion
The report also noted that Medicaid covered 66.5 million people in 2014, a 12.9% increase in lives covered. Spending growth for the program grew by spending 12%. However, because the newly enrolled Medicaid beneficiaries tend to be healthier than the traditional Medicaid enrollee, per enrollee spending growth fell off from 3.8% in 2013 to -0.8% in 2014, CMS said.
In the private sector, commercial health plans saw their premiums increase by 6.1% in 2014, up from 2.8% in 2013. Private health plans collected more than $1 trillion in 2014. The annual spending growth for private plans is expected to hit 5.6% in 2024, compared with 7.9% for Medicare and 5.9% for Medicaid.
Troy says he "was surprised by how unsurprising it was to see the numbers continue to go up."
"The ACA, by expanding coverage is spending more money. The population is continuing to age. We still have too many people who are overweight or obese. We have the overall costs going up, and insurance premiums are getting higher," says Troy, who was deputy secretary of the Department of Health and Human Services from 2007–2009.
"The moderation in health inflation over the past couple of years may be a trend that has played itself out. It predates the ACA. We are going to continue to see spending growth until we see some policy changes."
Troy says it's "presumptuous" to declare that any one action can slow healthcare cost growth, "because we haven't been able to do it."
"But overall we have to have a more value-driven health system. It can't be dependent wholly on third-party payments and people need to take more responsibility for their healthcare. It's easy to say, but getting there is hard to do."
The role of the primary care physician continues to be vital in the drive toward value-based healthcare, MGMA data shows.
A survey from Medical Group Management Association provides further evidence that primary care physician compensation is rising at a faster rate than that of specialists. However, the survey also shows that specialists earn nearly twice as much.
The findings, gleaned from comparative data from nearly 70,000 providers, found that primary care physicians reported a median compensation of $241,273 in 2014, a 3.56% increase since 2013. Median compensation for specialists rose to $411,852, a 2.39% increase since last year.
Todd Evenson, COO
"The role of the primary care physician continues to be a linchpin with the new healthcare models," says Todd Evenson, COO at Englewood, CO-based MGMA. "Obviously hospitals are playing a role hiring at a brisk pace, strengthening their referral networks and trying to ensure that they can deliver on a quality-based model."
"To do that," he says, "they are going to have to lean on and leverage those primary care physicians as well as non-physician providers to change the way that healthcare is delivered away from the fee-for-service environment to one where they can coordinate care and provide value."
The MGMA trends are consistent with other industry watchers. Merritt Hawkins, the Irving, TX-based physician recruiters, this month issued its annual survey of physician demand and compensation. Primary care specialties were among six of the top 10 most requested recruiting searches for Merritt Hawkins in 2014. Primary care compensation growth also outpaced specialists but a huge compensation gap remains between primary care physicians and specialists.
"In terms of compensation, there is a differential there clearly today," Evenson says. "There have been efforts across the industry to have more harmonization. There will be a continued separation in terms of where we see those values, but obviously we are seeing a growth curve that is a little faster in the primary care space. Will that differentiation be somewhat less in the future? That is quite likely."
"In 2012 our survey showed on average that 6.67% of compensation for primary care physicians was based on quality measures. In 2014 that had already migrated to 10.83% for primary care. On the specialty side, it was 4.6% in 2013 and 7.3% in 2014," he says. "This clearly indicates that the quality component is becoming a larger factor."
In 2012, Evenson says, 50% of survey respondents said that their compensation was 100% productivity-based. In 2014 that number was 25%. "That shift is pretty sizeable in terms of the composition of these compensation plans aligning with value measures, and reflects what is going on in these reimbursement models."
Increasing compensation for primary care physicians likely will have positive effect on luring more medical students into the field, Evenson says, but he says that surveys show that compensation is not a top consideration when medical residents choose their specialty.
"Compensation is not a driver for physician satisfaction," he says. "Compensation is a component, but it is more related to the type of patient care that physicians would like to deliver.''
The slowing growth of healthcare costs has extended Medicare's projected lifespan 13 years beyond projections made in 2009, the last report issued before the passage of the Patient Protection and Affordable Care Act.
The Medicare Hospital Insurance Trust Fund will have "sufficient funds to cover its obligations until 2030," the Medicare Board of Trustees said Wednesday in its annual financial review of the $613 billion program.
This year's projections are much the same as in last year's report, when trustees extended the solvency of the program another 13 years beyond projections in 2009, the last report issued before the passage of the Patient Protection and Affordable Care Act.
The report showed that Medicare covered 53.8 million people in 2014. Total Medicare expenditures were $613 billion, and income was $599 billion. The average benefit per enrollee was $12,432, about 2% higher than last year. Medicare outlays in 2014 were slightly lower for Part A and Part D, and higher for Part B than previously estimated.
The trustees said the projected portion of benefits that can be financed with dedicated money is 86% in 2030, falls to 79% in 2039, and then gradually increases to 84% in 2089. The 75-year actuarial deficit in the hospital Insurance Trust Fund is projected at 0.68% of taxable payroll, down from 0.87% projected in last year's report. The trustees credited the improved outlook to a change in methodology that shows a lower estimate for long-range healthcare cost growth.
Obama administration officials wasted no time crediting the Affordable Care Act with extending the life of Medicare and slowing cost growth.
"Once again, these reports demonstrate how the Affordable Care Act has bolstered Medicare and shored up the program's finances," Treasury Secretary Jacob J. Lew said in remarks accompanying the report.
Cori Uccello
"When the President signed healthcare reform into law, the Trustees projected that it would extend the life of the Medicare Trust Fund by 12 years, from 2017 to 2029. Since then, the Affordable Care Act has helped reduce the rate of healthcare price increases to their lowest rate in 50 years. As a result, the trustees have over the past several years revised down their projections of Medicare costs, and the projected life of the Medicare Trust Fund now extends to 2030, even further than estimated when the Affordable Care Act was signed."
Per-enrollee Medicare spending growth has averaged 1.3% over the past five years. Over the next decade per-enrollee Medicare spending growth, projected at 4.2%, is expected to be lower than the growth in overall health expenditures, which is projected at 5.1%.
Future Needs
Cori Uccello, Senior Health Fellow at the American Academy of Actuaries, says this year's report "continues what in the last few years has been somewhat of an improvement, especially in the long term."
"However, the program still faces significant challenges in the long term," Uccello says. "It's not just that the HI Trust fund is going to be depleted in 2030. It's that in general medical spending over time is still going to make up an increasing share of GDP and that is going to put pressure on the federal budget, and on household budgets. At least on the Part B and Part D side they are going to have to pay higher premiums down the road as spending goes up."
"So, the optimism in this report regarding lower long-term spending shouldn't make us complacent about the need to make changes to the program to ensure its sustainability in the long term."
Those changes, she says, include the push for structural reforms that move the program away from volume-based to value-based compensation.
Andy Slavitt
Those sentiments were echoed by Andy Slavitt, the acting Administrator the Centers for Medicare & Medicaid Services, who warned against complacency.
"We must continue to transform our healthcare system into one that delivers better care and spends our dollars in a smarter way for beneficiaries so Medicare can continue to meet the needs of our beneficiaries for the next 50 years and beyond," Slavitt said in prepared remarks.
Slavitt's remarks were echoed by Mary R. Grealy, president of the Healthcare Leadership Council, in a statement released by her office Wednesday. She called the report "A sharp reminder that time is limited for policymakers to take prudent, responsible action to secure Medicare's financial future for generations to come… We need to begin the debate now on how to structurally modernize Medicare so that there is ample time to enact and implement essential improvements before insolvency looms."
Part B premiums will be finalized later this year, but CMS projects that 70% of beneficiaries won't see a premium increase in 2016 because it is projected that there will be no cost-of-living increases in Social Security benefits.
The remaining 30% of beneficiaries would pay a higher premium based on this projection. These include only individuals who enroll in Part B for the first time in 2016; enrollees who do not receive a Social Security benefit; beneficiaries that are directly billed for their Part B premium; and current enrollees who pay an income related higher premium. Decisions about premium changes will be made in October and depend on a variety of factors, CMS said in a media release.
The Medicare Trustees are Lew, Health and Human Services Secretary Sylvia M. Burwell, Labor Secretary Thomas Perez, Acting Social Security Commissioner Carolyn Colvin, Obama Administration public appointees Charles Blahous III, and Robert Reischauer. Slavitt is the board secretary.
Other perennial top hospitals on this year's U.S. News and World Report "Honor Roll" include Mayo Clinic, Johns Hopkins Hospital, UCLA Medical Center, and Cleveland Clinic.
Massachusetts General reclaimed the coveted No. 1 spot among the nation's Best Hospitals, in the 26th annual survey and ranking from U.S. News & World Report.
Ben Harder
The Boston-based hospital, ranked No. 2 in last year's widely read survey, leads a list of 15 blue chip providers that each year swap chairs at the head table. Other perennial top hospitals on this year's U.S. News "Honor Roll" include Mayo Clinic, Johns Hopkins Hospital, UCLA Medical Center, and Cleveland Clinic.
Best Hospitals features national rankings in 16 specialties, and the Honor Roll includes hospitals that rank at or near the top in at least six specialties, says Ben Harder, Managing Editor at U.S. News, and the magazine's chief of health analysis. In addition, 137 hospitals performed well enough to rank in one or more complex care specialties.
"The specialty rankings are designed to answer specific questions, each one around a specific specialty," Harder says. "But even within that we are not saying the No. 1 cancer hospital is best at treating all cancers. It is best at treating the most complex patients. That is what our methodology for the specialty rankings has always been designed to do. The rankings of each of the Top 50 hospitals in each of the specialties are designed for the rare patient who needs something more than the typical level of hospital care."
Annual hospital rankings by U.S. News, The Leapfrog Group, Consumer Reports, and Healthgrades have come under criticism for their often wildly divergent results. Harder says that is to be expected because each of the survey groups is using different metrics.
"Our focus is on specific areas where patients need decision support, [and] guidance driven by data," he says. "Our rankings are those that look at complex care in 16 different specialties. The ones we published a few weeks ago look at hospitals that excel in these more common surgeries and procedures. We also published last month rankings in pediatric care. Hospitals that do well in one of those domains don't do well in others."
Accuracy of Quality Measures Questioned
Peter Pronovost, MD, director of the Armstrong Institute for Patient Safety and Quality at Johns Hopkins Medicine in Baltimore, is skeptical of the various hospital rankings surveys because he says their data sources and reporting standards are subjective and fuzzy.
"It's surprising, but there are no standards for the accuracy of healthcare quality measures," says Pronovost, who studied the discrepancies in the rankings in a report published this spring by Health Affairs.
"In other words, for a lot of these different ranking systems, there is no threshold that says 'does it have to be 90% accurate or 50% accurate,' and there is no auditing of performance data."
Peter Pronovost, MD
Pronovost says the wild divergence in the hospital ranking surveys suggests that healthcare needs to adopt rigorous reporting and accounting standards similar to that of financial institutions and other businesses.
"Ironically, we audit for financial data, but not for potentially preventable deaths," he says. "The problem with healthcare [quality rankings] is there are no rules or standards. You could make a performance measure and there is no transparency about how accurate or inaccurate it is."
"The people who make these rankings push back and say that is because we use different measures. Perhaps, but I don't think the public gets that nuance. You could go into virtually any town in America and you're on somebody's top list. With most of them you have to pay to say you are on their top list."
'Too Much Variation' in U.S. Healthcare
Harder doesn't necessarily disagree with Pronovost's assessment, but he says there are other factors in play.
"You could have written a Health Affairs study on the discordance in the U.S. News rankings," he says "That is important because a patient shouldn't necessarily choose a hospital for orthopedics that is good at cancer, and that is a great deal of what you are seeing."
"The other organizations pose different questions, so of course they get different answers," he says. "That is to a large extent a reflection of the fact that healthcare in America is full of too much variation. It'd be nice if hospitals that were good were consistently good across every specialty. It would make choosing a hospital much easier. But what we see is hospitals that are good at one thing might not be so good at something else. Patients need as much advice and decision support as they can muster."
Saying he fears "no retaliation from anyone," the CEO of a small California hospital has filed suit in U.S. District Court claiming that $1.1 million in Medicare claims flagged by recovery audit contractors have been in limbo "for years."
California's only non-profit independent rehabilitation hospital has filed suit to force the federal government to resolve disputed Medicare billing appeals within its mandated 90-day window.
Felice Loverso, president and CEO of the 68-bed Casa Colina Hospital and Centers for Healthcare in Pomona, says the federal government has "for years, years" been holding about $1.1 million in claims that were flagged by recovery audit contractors. Casa Colina has appealed the claims denials, but, he says, HHS hasn't come close to providing a hearing in front of an administrative law judge within the 90-day window mandated by Medicare law.
Felice Loverso
So, Casa Colina has filed suit in U.S. District Court in Central California, and Loverso seems to relish the fight. He says the rehab hospital runs at 100% occupancy, even with stringent screening requirements for the patients they admit.
"We just want to be paid for what we have already delivered," Loverso says. "We welcome audit[s]. We want audit[s], but a fair audit, a calculated audit where the rules of engagement are adhered to by us and by them."
The Casa Colina suit says that Medicare appeals are delayed, even as RACs were allowed to review and deny hundreds of thousands of claims, creating a backlog so severe that HHS has stopped assigning new ALJ appeals for 28 months.
Even though Casa Colina claims that it wins more than 80% of its RAC appeals, the delayed process means that the $1.2 million in care reimbursements remain in limbo. The rehab hospital has also set aside $2.1 million in reserves to account for more RAC audits, which began again recently after an 18-month moratorium expired.
'Chasing a System that Seems to be Broken'
"We have saved for 15 years to now to better serve the patients who are here, with an ICU and things like that," Loverso says. "The RAC audits, because they hold on to your money, challenges all of our bonds, all of our savings. Thank God Casa Colina right now is capable of covering the audit with reserves, but at some point those reserves will run out and we still have our bonds and loans and we still have patient who need to be seen."
Casa Colina generates about $11 million in net revenue each year, Loverso says, so the $1.2 million in deferred claims and the $2.1 million in reserves represent "a big chunk of money."
"When you run a small hospital and you have to reserve $2.1 million, there is a lot of children with autism who could be treated with that money, there is a lot of free care I could be doing, prostheses I could be putting on people. There are a lot of things I could do with that $2.1 million rather than chasing a system that seems to be broken."
David v. Goliath
During an interview with HealthLeaders Media, Loverso repeatedly likened Casa Colina's fight to that of David v. Goliath. As such, he has no desire to find other hospitals that might be willing to bump the suit into class-action status.
"Our Congressional leaders from California and around the U.S. need to know the true impact and it gets diluted when you go to the trade organizations," he says. "I met with a CEO at a fundraiser of a hospital close by here and we talked about this very thing. I said you ought to be doing what I am doing, taking an individual suit. He said 'I can't afford it and I don't want retaliation from Medicare.'"
"I fear no retaliation from anyone," Loverso says. "I believe individual lawsuits are just as strong, if not stronger for our Congressional representatives. They need to hear this. They need to see it. They need to know that Medicare beneficiaries are being denied this level of care based on medical necessities and technical denials and an audit process that is absolutely ridiculous."
Loverso says Medicare has one standard for providers and another standard for itself.
"For me, if I don't comply with a Medicare guideline I lose immediately," he says. "It seems to me that Medicare should lose every one of these RAC findings if they don't comply with the very criteria that they have been mandated to follow. It seems like an inequity, and I believe we represent thousands of hospitals that can't afford nor have the nerve to look at Medicare in the eye. We do and we are proud to represent thousands of not only rehab but acute hospitals alike."
If the suit is successful, Loverso says he'd at least like to see HHS at least pay interest on the $1.1 million it's withheld.
"A lot of CEOs are saying they should cover expenses but I don't think that is a fight that can be won," he says. "If you welcome audit then you have to pay for audit, you have to be audit ready. We do not mind being audited, but when the auditors are not compliant that there should be a penalty on the private companies that are doing the audits, that are being rewarded for every denial. That is a conflict that needs to be addressed by Congress and Medicare."
"Somebody needs to take a good look at this," Loverso says. "I guarantee you that if my hospital paid an outside company to bill for unbilled services and gave them a percentage of what they collected, OIG would be in my hospital tomorrow. But when Congress allows this to happen there are no penalties."
"We are a speck of dust on people's screen. Well, this speck is going to stay here until someone hears us."
Physician salaries aren't really immune to supply and demand—it only seems that way. Primary care compensation is slowly catching up. But specialist salaries will always be ahead.
A report out this week on physician recruiting and compensation suggests the laws of supply and demand don't apply to the healthcare sector.
For the ninth straight year, family physicians were the most-recruited specialty. In fact, six of the top 10 most-recruited specialists were in primary care, including family physicians, internists, hospitalists, nurse practitioners, OB/GYN, and pediatrics.
In most sectors of the economy, the people with skills that are most in demand would expect to receive higher compensation. Despite the demand for primary care, the average salary offered to primary care doctors recruited through Merritt Hawkins was $198,000. By comparison, the average salary for urology—No. 14 on the Top 20 most recruited list—was $412,000.
As much as we loathe sports analogies, it has been too frequently noted that primary care physicians have become the quarterbacks of the healthcare delivery team. So why are they still getting paid like the back-up punter?
"Well, that's a touchy subject, and it is multifactorial," says Don Beckstead, MD, program director for Altoona (PA) Family Physicians Residency.
"One of the factors is that the specialists' lobby has been pretty strong over the years," Beckstead says. "I don't want to get myself in trouble with my specialist colleagues, but they are very protective of their right to make a lot of money. The presumption is, 'I do a fellowship and spend extra years in residency; therefore I should make more.' "
"I would argue that family docs these days are seeing more and more difficult patients and handling more and more difficult patients and therefore should be reimbursed accordingly. We obviously as a group think we should make every cent as much as the specialists."
Compensation on the rise
Dr. Beckstead may be on to something.
However slowly, the healthcare sector is responding to market demand for primary care, with that demand more and more reflected in compensation. For example, in 2010 Merritt Hawkins reported that family physicians were the No. 1 most-recruited physicians, with annual compensation averaging $175,000. That average grew to $198,000 in 2015, a 13% increase.
A 13% increase over five years might not seem like a lot until you compare it with other specialties. In that same time frame, general surgeons' average compensation went from $336,000 to $339,000, an increase of 0.9%; urology average compensation went from $453,000 to $412,000, a decrease of 9%; and orthopedic surgeons' average compensation fell from $521,000 to $497,000, a decrease of 4.6%. (Dermatology bucked the trend. Average compensation rose from $331,000 to $398,000, an increase of 20%.)
Beckstead has noticed a substantial increase in compensation for family physicians in the last few years.
"My graduates were seeing $135,000 a couple of years ago, and now it's about $180,000 to start. It is increasing but it is slow to catch on," he says. "Some of the specialists salaries I have seen have at least not accelerated as quickly as ours have. I don't ever expect them to be equal, but at least the gap is closing, and that is a good sign."
Some caveats apply here, as with any data. These are rough numbers taken from one source, and they could be subject to considerable exceptions for any number of reasons. But these compensation trends match what is happening in healthcare right now: a transition away from inpatient volume, acute care, and fee-for-service, and toward population health and managing chronic illness.
Specialists are no longer the key to generating healthcare revenues. Now the drivers are team-based healthcare and the chronic care model.
Population health and managing chronic illness are fueling continued strong demand for primary care providers, a new report from physician recruiters Merritt Hawkins shows.
For the ninth straight year, family physicians were the most-recruited specialty by the Irving, TX-based company over the past year. Of the 10 most-recruited positions, six were in primary care, including family physicians, internists, hospitalists, nurse practitioners, OB/GYN, and pediatrics.
"The demand is everything that primary care reflects right now and that is team-based health," says Kurt Mosley, vice president of strategic alliances at Merritt Hawkins. "For a while the specialists were the key to everything because they generated inpatient revenues. Now it is team-based health, the chronic care model."
Also in the top 10 were psychiatrists, orthopedic surgeons, emergency physicians, and general surgeons.
Merritt Hawkins' 2015 Review of Physician and Advanced Practitioner Recruiting Incentives tracks the 3,120 physician and advanced practitioner recruiting assignments the firm conducted across the nation from April 2014 through March 2015.
Psychiatrists were the third-most-sought specialty, the highest it's been in the 27 years that Merritt Hawkins has tracked. Mosley says that the demand for psychiatrists is fueled in part by population health, because of the strong link between mental health and chronic health issues. The federal government estimates that one in five adults experiences some form of mental illness each year.
"A lot of the psychological problems manifest themselves physiologically, which affects chronic care," Mosley says.
The federal government has designated 3,968 whole or partial counties as Health Professional Shortage Areas for mental health defined as areas where there is less than one psychiatrist per 30,000 people. Mosley says it would take 2,707 mental health professionals to remove these designations.
Disparities vary tremendously by state. Massachusetts has 18 psychiatrists per 100,000 population, Idaho has five. In Texas, 185 of 254 counties have no psychiatrist. There is no indication that the shortage will be alleviated any time soon. Nearly half of psychiatrists are expected to retire over the next five years, and Mosley says there aren't enough new psychiatrists to replace them.
"We estimate about 15,000 of the 30,000 psychiatrists are going to retire over five years, but we've only got about 1,160 that are coming out every year," Mosley says.
Plays like a QB, Earns like a Scrub
Primary care physicians may be the quarterbacks on the healthcare team, Mosley says, but they continue to be paid like scrubs on the practice squad.
Despite being in high demand, family practice physicians who were recruited over the past year were paid on average about $198,000, well below the compensation for invasive cardiologists ($525,000), orthopedic surgeons ($497,000), and gastroenterologists ($455,000)
"It's frustrating," Mosley says. "There are a lot of docs who have a great passion for primary care but it's not the most rewarding, dollar-wise."
The employed physician model represented 95% of all recruiting searches in the past year, as the prevalence of private, independent practices continues to decline.
"People are running for cover," Mosley says. "The SGR got fixed, but still, docs are concerned about the future. 'What will I make? I need to know.' The employment models give them a sense of security. It helps them run their practice and their malpractice is taken care of. There is uncertainty about what is going to happen over the next five or six years. They don't want to have to worry about if they are going to make enough money to make ends meet."
The Merritt Hawkins report suggests that the push toward value over volume has slowed and that compensation continues to be driven by volume-based metrics such as relative value units, patient visits, and net collections. Of the Merritt Hawkins clients who offered physicians a production bonus last year, 23% based the bonus in whole or in part on value-based metrics such as patient satisfaction, compared to 39% two years ago.
The nomination of Andy Slavitt to administrator of the Centers for Medicare & Medicaid Services is raising concerns about potential conflicts of interest between the acting administrator and a former employer.
Another contentious Senate confirmation hearing may be in the works over the new leadership at the Centers for Medicare & Medicaid Services.
Senate Republicans have signaled that they may challenge the Obama Administration's nomination Thursday of Andy Slavitt to be administrator at CMS. Slavitt has been with CMS for a year, and has served as acting administrator since February, when Marilyn Tavenner resigned from the job she'd held for 21 months.
Andy Slavitt
Senate Majority Leader Mitch McConnell last week issued a statement that suggesting that Slavitt's nomination is not a done deal, although the Kentucky senator's ire seemed directed at the Patient Protection and Affordable Care Act more than at Slavitt.
"The head of the agency that oversees Medicare and Medicaid should be focused on what the American people expect him to do: administer these important programs, not allow his attention to be diverted instead to the implementation of some gigantic, unworkable health care law that hurts hardworking Americans," McConnell said.
"While Andy Slavitt's nomination will receive thorough consideration in the Senate, it has long been clear that no one can successfully manage a law as unworkable as Obamacare. The sole focus of CMS should be to look out for our nation's seniors and the many vulnerable Americans who use these programs, without the distraction of Obamacare."
Earlier this year, Senate Finance Committee Chairman Orrin Hatch, (R-UT), and Judiciary Chairman Chuck Grassley, (R-IA), raised concerns about potential conflicts of interest between Slavitt and his former employer, Optum.
In a March 31 letter to Health and Human Services Secretary Sylvia M. Burwell, the senators noted that Optum is a subsidiary of UnitedHealth Group, and that it was subcontracted with another UnitedHealth subsidiary, QSSI, to administer the bungled rollout of HealthCare.gov.
Slavitt led a team of troubleshooters to repair the website after the failed launch.
"The multiple relationships between Mr. Slavitt and United subsidiaries raise real concerns about how, and to what extent, CMS has prevented conflicts of interest given the fact CMS makes decisions that impact United and its subsidiaries every day," the two chairmen wrote. "While Mr. Slavitt may have recused himself from such decisions in the past, it may be difficult or impossible for him to do so in his current position at CMS."
A History of Contention
If Slavitt's nomination is challenged by Senate Republicans, it won't be the first time that the top CMS post has been a source of contention for the Obama Administration, or for the Bush administration before him.
President Obama in May, 2010, nominated Donald Berwick, MD, to lead CMS. When the Senate failed to act to confirm him, Obama made a recess appointment. Berwick resigned in November 2011 after Senate Republicans vowed to block his nomination.
Tavenner was the first CMS administrator to gain congressional approval since 2004, when Mark McClellan, nominated by President George W. Bush, was confirmed.
Healthcare Sector Applauds
Leading associations within the healthcare sector have voiced their support for Slavitt.
Rich Umbdenstock, president and CEO of the American Hospital Association, in a statement released Friday, said Slavitt "has a deep understanding of the U.S. health care system and a commitment to improving patient care. We believe Andy's proven leadership in the public and private sectors speaks to the ongoing contributions he will make at CMS."
Bruce Siegel, MD, president and CEO of America's Essential Hospitals, in remarks released by his office Friday, called for a quick confirmation hearing. "[Slavitt] brings the experience and leadership needed to effectively manage the complex programs on which our nation's vulnerable people and their hospitals depend," Siegel said.
Ron Pollack, executive director of Families USA, in a media statement, called Slavitt a "superlative" choice.
"Mr. Slavitt has played a remarkably successful role in overseeing the second open enrollment period under the Affordable Care Act and played a heroic role in the successful re-launch of HealthCare.gov," Pollack says. "His actions as Principal Deputy Administrator for CMS have consistently been sensitive and responsive to the needs of healthcare consumers."
The Workgroup for Electronic Data Interchange, a nonprofit that works to enhance the exchange of healthcare information, is "generally speaking… supportive" of Slavitt's nomination, says Devin Jopp, CEO of WEDI and an advisor to the Secretary of Health and Human Services. "We believe his demonstrated leadership and background will be a good fit in his new role as CMS administrator."
A palliative care specialist is hopeful that CMS will attach appropriate reimbursement to time physicians spend talking with patients about their wishes for end-of-life care. But don't expect it to save money, he says.
The Centers for Medicare and Medicaid Services this week unveiled a proposed rule change (p.246) that for the first time reimburses physicians and other providers for time spent with patients discussing end-of-life care.
R. Sean Morrison, MD, is a geriatrician and palliative medicine specialist at Icahn School of Medicine at Mount Sinai in New York, and director of the National Palliative Care Research Center. He spoke with HealthLeaders Media about the long-awaited rule, what it represents, and its potential ramifications. The following is an edited transcript.
R. Sean Morrison, MD
HLM: The rule makes for dense reading. What does it say?
RSM: The new ruling says that for the first time doctors will be reimbursed for the time spent talking with patients about their wishes for care and treatment near the end of their lives.
Surprisingly, before the time this was put in, the time I spent talking to a patient about their values and goals, how would they like to be treated near the end of their lives, and how would they like to be treated in the setting of a serious illness, was not reimbursed by Medicare, even though it was a routine part of my practice.
It typically takes as little as 30 minutes, but sometimes up to an hour because these are intense discussions and I was never paid for it. What the new ruling says is now there is appropriate coding that when physicians take the time to talk to their patients about what their wishes are they will be appropriately reimbursed. It really is as simple as that.
HLM: Are these the conversations you have with your patients every day?
RSM: Every day.
HLM: Is there a dollar figure on the value of the reimbursements?
RSM: I don't know at this time. They haven't attached a payment to it.
HLM: Even if it doesn't cover your costs, is the reimbursement important symbolically?
RSM: It's important that they've acknowledged that this is an important part of the doctor/patient relationship. I am hopeful they will attach appropriate reimbursement to the recognition that this is a part of the routine care of patients and their families. A few commercial insurers have started to reimburse for this, and if this follows other patterns, [more] commercial insurers will reimburse for physician time for these conversations.
HLM: Why has this rule change taken so long?
RSM: That is a very good question. There are three reasons. The first is that under Medicare, for years and years, what we have valued and reimbursed is procedure-driven care and conversations have not been thought of as a procedure, when in fact they are.
The second thing is that people just don't realize or haven't realized how difficult it is to get the individual treatment in the setting of serious illness. It has only been the aging of the Baby Boomers, their parents moving into their 70s and 80s, that people have recognized we need to do a better job at providing care for people with serious illness and understanding their values and goals.
The third is that we have seen a change in how we as Americans view autonomy. Forty, 50, 60 years ago what the doctor said is what you did. The patient's voice wasn't present.
What we are seeing now, appropriately, is a recognition that people are different, that people have different values and different treatments need to be provided to meet those values and we need to do a better job respecting that autonomy. That has taken a long time to move forward.
HLM: Does this have significant financial implications for the healthcare system?
RSM: It actually doesn't, I'm afraid. There was a very good study by Ezekiel Emanuel that actually looked at the cost savings around this and the answer was probably not much. What it does mean is that patients hopefully will begin to receive the care they want. There is abundant data showing that patients don't want and don't receive treatment they do want because their families and their physicians don't know their values and goals and what treatments will meet those.
Hopefully, by opening up a window to these conversations, we won't be working in the dark. Will this save money? Probably not, and that shouldn't be the goal of it.
HLM: Why does this not save money?
RSM: Globally, overall, patient-centered care will save money. When we can reduce waste in the system and provide patients with the treatments that they desire, that will globally save the system some money. Will advanced care directives have a significant impact? In the absence of other system changes I am not sure it will.
HLM: Do you see this rule change as a work in progress that could be revised and improved in the coming years?
RSM: Absolutely this is a work in progress. This is the first step, but boy is it an important step!
HLM: Do you see any potential problems?
RSM: I hope this doesn't get reduced to a check list and not having the conversations. The first step is to recognize the conversation is important. The next step is to realize the conversation is of appropriate high quality so we understand our patients.
HLM:There is now a 60-day comment period and their rule change, presumably, goes into effect in January. How should you and others who care about this issue respond in the coming months?
RSM: We need to submit comments in support of this. We've already seen physician groups making comments that this is the right thing to do. What we didn't do well the first time around and what we need to do now is when people begin to talk about death panels and rationing, we need to be very clear and out front that this is not about that. This is about understanding our patients and respecting their choices and values.
HLM: It's political campaign season. Are you concerned that this rule change will revive talk about "death panels"?
RSM: We have to be very consistent that these conversations are not about limiting or rationing care. These conversations are about understanding our patients, their values and their goals and by doing that we can match treatments to those goals.
As physicians, we need to be crystal clear that these conversations are about understanding our patients better and working with them to provide the treatment they want and need, and that it is not about rationing care and it is clearly not about withholding treatments.
HLM: Do you think this could rise above the demagoguery?
RSM: I think it will. Serious illness affects people across the political spectrum. Tea Party Republicans want their values and choices respected and Progressive Democrats want their values and choices respected. I am hopeful that this will not be a political issue this time. The Affordable Care Act has been passed and upheld twice by the Supreme Court. I am optimistic that this rhetoric won't hit us again.
Physicians in small, independent practices are still in the majority, but the trend continues toward employment at larger practices and health systems. "I wouldn't say the game is over for solo physicians, but it's the bottom of the ninth and you are behind. There is nothing going your way," says a recruiting executive.
More than 60% of physicians work in practices with 10 physicians or fewer, and that practice size didn't change much between 2012 and 2014, the American Medical Association says in a new study.
"These data show that the majority (60.7%) of physicians were in small practices of 10 or fewer physicians, and that practice size changed very little between 2012 and 2014 in the face of profound structural reforms to healthcare delivery," AMA President-elect Andrew W. Gurman, MD, said in prepared remarks.
The findings seem at odds with reports that physicians are flocking towards employed models, either with larger physician groups, hospitals or health systems. Nonetheless, the AMA study shows that the trend toward employment and migration to larger practice is occurring.
Nearly 57% of the physicians worked in practices that were wholly owned by physicians in 2014, which is down from 60.1% in 2012. The percentage of physicians working for hospitals or in practices that had some hospital ownership increased from 29% in 2012 to 32.8% in 2014.
Physicians as practice owners decreased from 53.2% to 50.8%.
Solo practitioners decreased from 18.4% to 17.1%.
Physicians directly employed by a hospital increased from 5.6% to 7.2%
Physicians in practices that had some hospital ownership increased from 23.4% to 25.6%.
Travis Singleton, a senior vice president at Dallas-based physician recruiters Merritt Hawkins, says the AMA findings are largely consistent with Merritt Hawkins' data of physician demand.
"The one number that is probably significantly different from ours is they have 60.7% physicians in practices of 10 or fewer and our number is at around 50%," Singleton says. "The core message of what they are saying is that independent and small practices are alive and well and a large portion of our delivery system."
Singleton says some of the distinctions carved out in the AMA study are more about "semantics."
"They've got 57% working in practices that are wholly owned by physicians as opposed to 33% for hospitals," he says. "Now, it's more about the resources you have at your disposal that shape you practice versus whether you are employed or not, whether it's a hospital or a group that is doing it. Technically, if you work for Kaiser Permanente or Cleveland Clinic you work for a physician wholly owned group. I would argue you operate much closer to a traditional definition of a hospital-employed physician."
Even though a majority of physicians are working in smaller, independent practices, he says the trends are unmistakable. More and more, physicians are gravitating towards employment at larger practices and health systems.
"If you look at our recruitment numbers, 95% this past year were in an employed relationship regardless of the setting they went to. That is staggering," he says. "I would agree with the picture of a landscape that shows relatively smaller independent or group practices as a viable portion of our healthcare delivery system. I don't agree with the fact that that has changed very little since 2012. I don't think that is the case, albeit it has probably changed at a slower pace that people think reading the headlines."
Singleton says that 50% of Merritt Hawkins recruiting searches this year were for hospital-employed direct setting. On the other end of the spectrum, recruiting for solo practitioners represents about 4% of searches.
"I wouldn't say the game is over for solo physicians, but it's the bottom of the ninth and you are behind. There is nothing going your way," Singleton says. "The vast majority of those still in solo settings, about 17% of the marketplace, are your older physicians that never really changed and aren't going to change."
