Accountable care organizations are the latest craze in healthcare. Why? As usual, it's because the government, the dominant payer, is pushing them. And commercial insurers, some large hospitals, and hospital systems, see them as a promising opportunity to improve healthcare and cut costs at the same time.
But what is an ACO, really? Only the government's two strict and very selective plans offer a road map. But there are many ways to design accountable care. The government's version may ultimately prevail, but there are plenty of hospitals and health systems that wouldn't have designed it that way if they were in charge.
The beauty is, you can be in charge by designing structures with your commercial insurers or by fitting into a plan that the payers have created with your input. The point is, no one's really sure what the winning design will look like, but it costs a lot to develop your prototype.
Another choice: You could simply do nothing at all.
Let me repeat that: You could do nothing at all—for now.
As usual in business—and let's remember that healthcare ultimately is a business—organizations will take the path that they think will ultimately work over the long term. But "long-term" has different meanings to different people.
For a hospital seeking immediate strategic partners, for example, the ACO has to be on the back burner. A well-positioned hospital might legitimately take a wait-and-see attitude, looking for someone else to undertake the risk and expense, only to eye a partnership after that someone else has taken the early slings and arrows.
Now that I've convinced you that sitting back and waiting is an option, here are four reasons you might want to wait:
1.Working two different reimbursement systems at the same time
While bigger systems may be able to spread the risk, make the investments necessary, and handle losing money for a while to develop the system architecture that they think will ultimately prevail, smaller hospitals and systems can't afford to do that. Never mind that they'd be restructuring their business to cannibalize their own biggest profit stream.
"The fact is that unless we see some drastic change in the way [hospitals] do business, we're not setting the ACO concept up to succeed," says Wendy Whittington, MD, chief medical officer at Anthelio Health Solutions, a healthcare information technology company. "For the basic acute care hospital, and there's still a lot of them, their major revenue stream is still acute inpatient care. And when you still need to making a living on that while you figure out the ACO model, it's hard to work both."
Why? Well, for example, when you're the CEO of an independent community hospital, still working the DRG system and trying to keep your beds full, how can you justify spending scarce capital on keeping patients out of the hospital? You'd be spending capital to work against yourself, and given the modest margins most hospitals live with, that would be impossible. You might start looking seriously for a partner, however.
2. Handling, and paying for, the information
The other conundrum is in the handling of the data needed for ACOs to work efficiently.
Whittington and her team do a lot of work with IT departments surrounding their participation in health information exchange, or HIE, efforts, which are critical to sharing patient information among a variety of providers who may be using different IT architecture.
"And we see a lot of failure, mostly due to the lack of the financial sustainability from the HIE model," she says. "If I'm responsible for the ACO, and I know that there needs to be a smooth flow of information to all the pieces of care, how am I going to afford to keep that going, and why should I bother now, when it may allow me a box check on meaningful use, but there's not a lot left for me to create the structure."
3. You're not an innovator
Any long-term CEO is ultimately pragmatic. And if pragmatism dictates that for whatever reason, your organization can't be an innovator, it might be best to leave others to shake out the ultimate design that will succeed as an ACO.
Though we all talk about ACOs as an acronym that actually means something concrete, only in the CMS realm have the rules finally been put in place. The rest of the market, which will include the vast majority of hospitals, is free to play around with different constructs with their commercial payers, if they desire.
Or they can choose not to play. Of course, in negotiations with payers, the normal business rules still apply. You can choose to stay out of any ACO-like contracts, but that doesn't mean your reimbursement stream is safe.
In fact, Whittington wonders whether the best solutions will come from the government ACO constructs or hospitals or physician groups.
"By limiting [CMS] ACOs to hospital and physician provider groups, I wonder if we're doing ourselves a disservice," she says. "We're not necessarily very good innovators, but we're at such a crisis point that we really need innovation. We see quite a bit of hospital leadership treating this like it's another thing they have to do."
4. These are NOT mandates
There are certain changes that you have to make in your healthcare system to remain in business. You have to pursue ICD-10 readiness. You don't have to pursue an ACO construct. Ultimately, for you, it may be as simple as that.
"My general philosophy is that healthcare systems that work toward doing the right thing for patients and patient care will be the winners in the end," Whittington says. "If we put all our effort into complying with the exact rules of the ACO model, in the end, we're often working against ourselves internally..If we focus on what it's going to take to enter patient-centered care, that's probably a better path to take."
One of the good things about ACOs is that it forces a conversation about healthcare costs that needs to be had with a serious intent in this country, says Whittington. There will be opportunities, even if you don't dive into the ACO model right now, to bite off little chunks that make sense for your patients and business model now, and that will also make sense under an ACO model.
"We see these things as mandates. But they're really not," Whittington says. "Unless you really have the model worked out and you're sure you can make a margin, why jump in?"
I have twin three-year-old daughters who are addicted to a couple of TV Christmas specials. They absolutely would watch Frosty the Snowman or Rudolph The Red-Nosed Reindeer as many times as we would let them. So as the holidays approach, I've become something of an expert on the plot of each.
So as I was thinking about my column this week on the Federal Trade Commission's recent challenges to hospital and health system consolidation, I was reminded of one of the central plots in Rudolph. Bear with me. One of Rudolph's villains, as you'll no doubt recall, is the Bumble, an abominable snowman that menaces our hero.
In the climactic scene, Bumble is knocked unconscious, and the elf, Hermey, a misfit who wants to be a dentist instead of a toymaker, removes the Bumble's teeth. The Bumble then wakes up only to find that without his teeth, he is harmless and powerless.
It seems the FTC has worked that process in reverse. Someone has put its teeth back in.
The FTC recently achieved major victories in its quest to maintain a level, non-monopolistic playing field in the hospital sector. It could successfully be argued that the agency has overreached.
Of course, as we've seen, some of what's required for hospitals and health systems to participate in accountable care organizations conflicts with FTC guidelines, making decisions about mergers quite murky and filled with potential landmines for any senior hospital executive.
Those same executives complain that they're being encouraged on one hand to develop closer relationships with their local competitors in order to better coordinate care and limit waste in healthcare through ACOs, but the other hand of government is preventing them from taking these very actions.
It's a legitimate complaint, despite guidance from the Justice Department and the FTC that seems to promise relaxed enforcement regarding partnerships and acquisitions that are necessary for ACO development.
But one has only to look at the FTC's victory this week over ProMedica in Ohio to get a sense that the agency's enforcement efforts are getting tougher rather than easier, despite the rhetoric.
The agency not only ruled that St. Luke's Hospital's partnership enacted last year with ProMedica violated antitrust rules, but also won an important victory in the court of an administrative law judge. Though ProMedica, which has already executed the partnership, will appeal, this is undoubtedly a huge legal expense that must be borne by both the government and ProMedica.
One could argue this fight is necessary to establish guidelines, and a possible safe harbor for future tie-ups, but taken alone, it's not exactly an efficient use of time or money in bringing down healthcare costs. And the FTC's hospital challenges continue to mount.
The FTC is notorious in healthcare for causing trouble among hospital organizations that want to merge. Occasionally over the years, and depending on the political affiliation of the administration in charge, the agency would get serious about its role as an arbiter of fair trade.
As such, the FTC would choose to challenge hospital and health system acquisitions that it felt would cause a monopoly over healthcare services in a given geographical area. Never mind the expense that would be associated with dissolving a partnership. Of course, no one wants a hospital to dominate a single market and exercise monopoly power, but the agency certainly isn't as vigilant on the payer side of the equation.
Frankly, an FTC challenge, for hospitals at many times in the past, was simply an annoyance. It might delay the transaction, but seldom did the agency ever ultimately prevail in preventing any but the most obviously anticompetitive mergers from happening. It's much more than an annoyance now. The FTC's actions may seem arbitrary, but this Bumble now has teeth, and it may be best to try to avoid him until things get a little more clear, or until an elf with a proclivity for dentistry comes along.
This article appears in the November 2011 issue of HealthLeaders magazine.
Preparing for a shortage of medical talent to treat the expected influx of patients in coming years is difficult work. It’s made even more difficult by the traditional doctor-first attitude that imbues the healthcare workflow. That often means the physician is the bottleneck—all treatment decisions need to filter through him or her. Many systems are trying a myriad of ways to take some of the workaday functions off the physician’s plate, with the difficult task of providing a method of physician oversight of such functions.
Those tackling this set of problems often find physicians are apprehensive about loss of autonomy, income, and career stability. Meanwhile, other members of the care team continue to feel marginalized, as ingrained attitudes about hierarchies are hard
to change.
But there are successes; they tend to come from institutions that are not afraid to try new ideas to take on the challenge of creating better patient access, tracking, and delivery of care.
Many of the changes necessary to prepare for a different future focus first on the changing medical staff model, and the responsibilities of everyone—not just the doctors—who are expected to deliver on the organization’s strategic direction.
Reframingthe conversations
Thomas Noren, MD, led a 2009 medical staff reorganization at Marquette (MI) General Health System’s main component, 225-staffed-bed, Level II trauma center Marquette General Hospital. This initiative created 20 team-based groups that bring together medical staff members of similar experience and expertise so that issues, visions, and problems can be deliberated by colleagues who share common interests.
Noren, who serves as chief medical officer, says Marquette General’s traditional department structure—which consisted of medical, surgical, and others—needed to change.
“There was not much accomplished in those meetings in the past,” he says. “We concluded that had to do with the disparity of interests. The department of surgery has lots of different worlds, for example, so having a constructive conversation about looking at data and performance improvement had inherent limitations.”
Marquette calls the medical staff evolution that ensued from this reengineering “service lines,” but the aim is far from maximizing the revenue potential surrounding profitable disease-based systems—the thought that is traditionally connoted by the term.
“I realize you’re usually talking about product lines when you mention service lines as a concept,” says Noren. “We thought service to the customer rang well so we stuck with it. But this is specifically a medical staff reorganization designed to foster hospital-physician alignment.”
Marquette General’s 21 different service lines convene meetings eight times a year, and traditional departments meet only quarterly. Service line meetings are led by elected medical staff leaders who, Noren says, possess the skills to generate enthusiasm for accomplishment. Each service line contains medical staff members, program directors, quality managers, the CMO, COO, and representatives from decision support, care management, nursing, and marketing. Additionally, ad hoc committees have people from all service lines working together on specific overlapping programs, such as the breast health committee, which includes cancer, pathology, imaging, and women’s health service line representatives.
The meetings have standing agendas, which include regular review of Press Ganey patient satisfaction scores, Premier Quality Advisor data, actions from the value analysis team, and suggestions for developing regional physician work team interactions. They follow “Rimmerman’s rules,” according to Noren, which means “everyone has an equal voice. The philosophy is all ideas are good until the best one arises.”
One example of success came from the brain and spine service lines group. In reviewing performance and cost data, the group found huge variation in the cost of spinal implants. Under various reimbursement schemes, as much as 75% of the payment for the procedure was consumed in the cost of the implant while others were as low as 25%. As a result, the hospital started negotiating with vendors and has reduced that number overall to about 41%. The hospital realized a huge savings with that alone, Noren says.
As for the cost of the service lines program, “we pay for a few more meals, but other than that, the realignment didn’t cost anything,” he says.
Noren claims this organizational structure doesn’t create 21 new silos, but instead breaks down the barriers between employed and independent physicians as well as between physicians and the rest of the care team in an effort to focus on quality, transparency, and value. About 65% of the physicians practicing at Marquette General are employed. But Noren says little to none of the conversations in the meetings have anything to do with whether the physicians are employed.
“We do not equate employment with engagement in the concept of these service lines. There’s no distinction in voice or prerogative,” Noren says.
The farmer vs. the architect
Matthew Hanley, MD, is vice president of medical affairs at Centra Health, which realigned its medical staff in a similar way over the past couple of years. The Lynchburg, VA–based nonprofit health system includes 358-bed Lynchburg General and 206-bed Virginia Baptist Hospitals; 93-bed Southside Community Hospital in Farmville is an affiliate.
Hanley implemented a shared governance structure for the emergency department. “We had open collaboration, were very data driven and transparency based, and we had a high level of accountability for results,” he says.
The ED group tackled wait times in the ED, for example, and variation among ED physicians on testing, service scores, and length of stay.
Now he’s trying his collaborative philosophy on a grand scale.
Hanley likes to look at the work he’s doing to cut costs and improve quality in terms of an analogy: the farmer vs. the architect.
“An architect represents a top-down philosophy,” he says, while the farmer nurtures and isn’t really sure what’s going to come from that nurturing.
“My job is to move the rocks out, pick the weeds, and make the ground fertile so when these experts come in, I have given them enough tools and enthusiasm to allow them to grow their own ideas.”
The experts of whom he speaks aren’t consultants or high-powered physicians; they’re people on the front lines of care.
“People who work on the front line are the experts. If you want fundamental knowledge of the process, you need to talk to them,” he says. “I’m not an expert in cardiology or pediatrics, but I can help get them to figure out where they have opportunities for change because they’re already hooked in.”
Historically, Centra has featured high quality, high patient satisfaction, and low costs, says Hanley, so it’s a challenge to see where improvement can be made. The reason Centra has accomplished its lower costs is aggressively managing the supply chain, revenue cycle, length-of-stay case management, and productivity and, to continue Hanley’s analogy, it feels like it has harvested much of the low-hanging fruit in cutting healthcare costs.
But with a patient mix that skews 55% Medicare, Hanley says Centra “is living closer to the edge than some of the other systems, and that’s forced us to look at a lot of stuff that others are only looking at now. The benchmark going forward is surviving under Medicare.”
Centra has some variables in its favor. It has a well-developed EMR that has used computerized physician order entry for five years, has standardized order sets, and culturally, “we are a single-specialty town, so we don’t have another big hospital to compete with,” he says.
Still, future success will center on innovations in clinical care delivery, Hanley says, and that’s something where process engineers have an important contribution to make.
“If I wanted a breakdown on a financial report I could get that in a couple of hours,” he says. “But if I want some detailed report on a clinical process, that could take days.”
That’s not unusual, but Hanley wants to make it so that possible changes in clinical care delivery can be modeled. His reliance on process engineers started after his emergency medicine physician group was absorbed into Centra in 2006.
“When we became employees, we wanted a process engineer for our department who didn’t have history in healthcare so they could be objective. We made a commitment to the science of quality improvement. That was a huge decision for us.”
Many of the gains made by the ED group were data driven and facilitated by the process engineer.
“So when I moved into this role, that idea has always been there,” he says. “Sometimes it’s better to be lucky than good.”
Lucky or not, he knew a good thing when he saw it. Now, process engineering is a vital part of the performance improvement regime and has become its own department. The pharmacy and therapeutics committee tackled the medication delivery process, and in doing so saved about $1 million in drug purchasing costs. The performance improvement department also concentrated resources on DRG profitability studies and implemented the clinical council, which, Hanley admits, is “part infrastructure and part culture.”
The clinical council—which includes professionals from physicians to nurses to administrators—is a broad forum to discuss and implement quality and process improvement ideas along service lines.
“It extends beyond the borders of the organization’s quality. It’s really about community quality and, going forward, will take a greater level of collaboration to create the solutions we need,” says Hanley.
“The clinical council is a budding plant right now,” he says. “We’re trying to build a platform of constant process improvement, where it becomes an intrinsic part of the work we do. We have a system in place with tools and resources and space to continually improve. We have a very good start, but we may need a couple more growing seasons.”
This article appears in the November 2011 issue of HealthLeaders magazine.
Thanks to research from our Intelligence Unit, we know that care coordination is one of the top strategic challenges for healthcare leaders. It's difficult, time-consuming, and while it's unquestionably good for the patient, the details of bringing together disparate sites of care and the practitioners who operate them are intimidating both from a cultural and financial standpoint.
You won't find many senior healthcare leaders who will argue that better care coordination is essential to solving some of the cost and overutilization issues in healthcare. But for the individual hospital or system, making the investments to ensure better coordination involves expensive infrastructure improvements. These come in the form of information technology investments, higher labor costs in the form of care coordinators, and often, investments in partnerships or ownership in primary care, rehab, hospice, skilled nursing or a host of other possible sites of care.
It's a huge commitment, and those choices have to be made in an environment where return on investment for the organization is unclear—even though it's positive for society as a whole. Making these types of high-dollar, high-transformation decisions could spawn multiple career-limiting events. That's not the kind of risk-return ratio that most hospital executives are willing to undertake. But what if you could eliminate some of the variables?
Clearly, the US Army is not under the same type of business equation, but the challenge of care coordination is the same.
Maj. Chris Warner, MD, has been in the Army since graduating high school, so he's not the person to offer advice on ROI, but he can certainly tout the benefits of his work in coordinating mental health with primary care, not only for the patient, but for the Army itself. After four years at West Point and then medical school, he completed a five-year residency at Walter Reed Army Medical Center in Bethesda, MD. He's had two deployments in Iraq, and recently became deputy commander of U.S. Army Medical Department Activity-Alaska, where he oversees medical care for more than 39,000 beneficiaries across three Army installations.
But it's his team's work on the battlefield between 2005 and 2009 that really informed his philosophy on care coordination.
"It was an excellent opportunity to prepare for the clinical integration of mental health into primary care," he says, noting that both are key specialties for operational and deployed medicine. "This wasexciting work because I was able to work with developing policy and initiatives that could help soldiers overcome the stigma of seeking help."
At Ft. Stewart, he formed a team of psychologists and social workers in preparation for a deployment to Iraq that covered an area the size of West Virginia and included more than 70 small patrol bases.
"Many of our mental health personnel are deployed on a regular basis," he says. "Therefore, IT is very important to help find balance in developing the team. As an administrator, I look to set a pathway to put in evidence-based processes and refine the processes to gather evidence to do the right things."
Here's where what the Army is doing to coordinate care will start to sound a little familiar.
"There's a couple of key lessons," he says. "The Army is about the largest healthcare practice in the country. We have a coordinated EMR, so care delivered elsewhere can be viewed anywhere else."
In integration of primary care and mental health, Warner has developed programs in which nurse case managers serve as the bridge to primary care physicians.
"This represents one of the largest benefits we've seen and can be incorporated in any healthcare system," he says.
In short, with a captive audience of service members who will access military healthcare for a number of years, the Army has embraced a population health model, Warner says. The Army's Healthcare Effectiveness Data and Information Set (HEDIS) helps care coordinators make decisions on early intervention based on population health metrics and screening soldiers for exposures, disabilities or problems coming from their deployments, including depression and PTSD.
"This allows us the ability to identify conditions early, which in the long run, decreases the amount of healthcare costs they will require," he says. "We feel we've done a good job on prevention as opposed to treatment."
That's fine for the Army, you might be saying to yourself, but civilian hospitals don't have the assurance of hanging onto a captive population where such early interventions are practically guaranteed to reduce treatment costs through prevention. Or do they?
Most hospitals are the largest employers in their immediate area. All of the people who work there tend to do so for long periods of time. Focusing on that group might possibly provide valuable experience and a stable population for hospitals to begin their population health and care coordination journey, no?
Based on what I saw out of Massachusetts last week, the future of healthcare looks increasingly like a race to the bottom on pricing. It comes from a short story in the Boston Herald, and if you blinked, you probably missed it. It was a local story, describing how state officials would be empowered to reject certain rates charged by hospitals for medical services. That is, if the recommendations of a blue ribbon panel of "healthcare stakeholders, lawmakers, and experts," as described in the story, are accepted.
I'll leave it to you to decide whether or not you agree with the paper's description of the panel, but I have my doubts as to how many healthcare stakeholders and experts backed this plan if, for example, they work in a hospital, or ever expect to be treated in one. In fact, the only person on the 10-person panel to vote against the measure was Lynn Nicholas, president of the Massachusetts Hospital Association.
The plan, at least, works both ways in theory: If providers of healthcare services charge a price that exceeds the market norm, and the insurer refuses to pay as a result, providers would be required to defend their prices before a panel of state healthcare finance officials.
That panel would be empowered to force an insurer to accept a hospital's price or to force the hospital to accept a lower price, according to the newspaper. Given the pressure on governments and just about everyone else from high healthcare costs, which of the two outcomes do you think is likely to occur in most cases? It sounds like an idea that should work, but then again—and I concede that this is probably an unfair comparison—so does communism.
Granted, the story goes on to mention that the panel sees this action as a "near-term" solution to address "unjustified" provider price variation, whatever that means. I don't know about you, but I read "near-term" as code for "desperate" and "unjustified" as "expensive" in a state that is spending—for a variety of unpredictable and very predictable reasons—vastly more on its universal healthcare plan than it ever imagined.
Excuse me for extrapolating Massachusetts' grand experiment with what we're undergoing more slowly on a national scale, but the structural similarities between the two lead one to believe that many of the same problems eventually will crop up nationally.
Bluntly, this plan sounds suspiciously like rate-setting. We tried, as a nation, a very crude form of healthcare rate-setting in the Nixon administration, when healthcare wages and prices were frozen. That failed miserably.
But despite protestations to the contrary, how can anyone see this Massachusetts proposal as anything but rate-setting? It seems unlikely that hospitals would be on the winning side in most of the decisions put before the panel, so it's in their interests never to have to appear before the committee. That puts an unseen ceiling on healthcare costs that is far from competition-driven.
The serious question I ask about all this as it goes on in Massachusetts is whether we want healthcare to be provided by the low bidder as determined not by economics, but by the vote of a committee.
In reading the story earlier this week, I was reminded of a quote from astronaut Alan Shepherd: "It's a very sobering feeling to be up in space and realize that one's safety factor was determined by the lowest bidder on a government contract."
Again, it's an imperfect analogy, but it occurred to me that if Massachusetts is a Petri dish under which many of the provisions of healthcare reform are being tested, one day, we all might legitimately co-opt Shepherd's quip by replacing "up in space" with "in a hospital bed."
Independent physician practices are slowly fading away, and with the advent of healthcare reform, the pace may be about to get much quicker. It's only one of a few troubling signs about the physician labor pool, which seems increasingly dissatisfied with their career choice and the direction of the healthcare industry.
Physicians are being pushed to employment in hospitals or by hospitals, and they're not necessarily happy about it. To be sure, some, especially recent medical school graduates, like the safety, the (somewhat) regular hours, and the freedom to practice medicine rather than worrying about small business concerns that an employment contract offers.
On the whole, though, physicians' dissatisfaction is palpable. According to the physician component of the 2011 HealthLeaders Media Industry Survey, 58% of doctors say that healthcare reform has weakened their organization's financial position—even though many of its provisions haven't kicked in yet!
Even worse, 60% say healthcare reform has weakened morale, and only 67% of them would encourage their child to enter healthcare. Not exactly encouraging for an industry that needs more physicians.
Here's further evidence that physicians are rethinking their choice of career: Merritt Hawkins, a national physician search firm, recently released a survey showing that, despite the fact that 75% of physicians coming out of training are getting at least 50 job solicitations, close to 28% of the same group said that if they had the chance to do it all over again, they would choose a different profession.
How depressing is that?
I could imagine, in theory, being quite happy in a field that provided me 50 job offers upon completion of my studies and training. I hope I'm not letting a big secret out of the bag by saying the demand for journalists is just a little less strong than that. In any case, physicians see that reimbursements are declining.
They have huge debt, generally, and they're not sure when they'll ever be financially whole again, given the expected clampdown on their future earning potential.
In an excellent story in the forthcoming November issue of HealthLeaders magazine about the realities driving physician employment at hospitals, my colleague Karen Minich-Pourshadi says that the percentage of truly independent physicians, according to the American Medical Association, has been declining by 2% a year and is projected to decline by as much as 5% annually by 2013.
I can empathize that it's a dark landscape for some.
At least one relatively deep-pocketed organization is doing the best it can to hold back the tide not only of doctor departures from the field of medicine, but also departures for employment in big institutions.
"Because bigger is not always better," says Lou Goodman, president of the Physicians Foundation, a nonprofit grant-making entity that was formed with a $115 million endowment. The endowment came from a group of physician societies who won about $1.5 billion in retrospective and prospective relief resulting from a class action suit in 2003 against several major insurance companies.
Physicians alleged, successfully, that the companies were using a hidden system (colloquially called a black box) to deny reimbursements to which physicians were entitled under their contracts with the insurers.
The foundation has awarded about $28 million in grants since its founding, and usually funds research and ventures that are in the business of keeping physicians who want to be independent.
"All the incentives are arrayed against it," he says. "We're collecting information, through our medical practice task force, with a survey of young physician needs. They're not seeing a lot of alternatives to employment."
In an effort to help physicians see another way, the foundation has developed technological solutions aimed at the independent physician office, and they are committed to helping educate physicians on the realities of running a business, even one that's challenged by healthcare reform.
Together with Northwestern's Kellogg School of Management, the Physicians Foundation hosts a three-day educational institute with Kellogg professors at which presidents of state medical societies learn negotiating skills and other business concepts so they have a toolkit to deal with hospitals, insurance companies, and employers.
Further, they've developed a Roadmap for Physicians to Health Care Reform, a simplified guide for independent physicians that "explains to physicians in straight English what the Affordable Care Act means to the doctor and his patients and what opportunities they might have to participate," says Goodman.
He hopes these efforts encourage physicians of an independent bent that they can maintain that, though he concedes it's a tough sell sometimes. Goodman says that many of the physicians who initially choose employment with a hospital or large group also choose to leave that position after three to five years. Whether or not they go to another employed position is immaterial, he says. They need other options.
"They feel under pressure, stress, unappreciated, overworked, and treated more like housekeeping than the fine professionals that they are," says Goodman. "But there's no medicine without physicians."
The Patient Protection and Affordable Care Act is a huge document. As we all digest the many implications of accountable care organizations, value-based purchasing, and increased access to medical care for the previously uninsured, it’s easy to forget there are other important parts of the law.
One often-overlooked provision is Section 6002, which requires the public reporting of payments or other value transfers made to physicians and teaching hospitals by manufacturers and group purchasing organizations of drugs, devices, biologicals, and medical supplies that are covered by Medicare, Medicaid, or the Children’s Health Insurance Program.
Despite its more than 900-page length, the Act can be viewed as sort of a guideline for how lawmakers envision that healthcare should be delivered and measured. The real work of interpreting the law and translating it into policy and regulation is often done out of the media spotlight as the Centers for Medicare & Medicaid Services determines how each piece of the law will govern healthcare in practice.
The key to successful implementation is interpreting the intent of legislators in making the law. Of course, CMS offers plenty of opportunity for citizens, public interest groups, and industry mouthpieces to offer input into their interpretations of certain aspects of the law before creating final reporting and compliance guidelines. I’ll let you guess who’s best represented at these meetings.
Section 6002 is a provision in the Act that is intended to give consumers valuable information about their physicians' or hospitals' involvement in payments or other transfers of value from drugmakers and medical device manufacturers.
This provision comes from the perception that the non-public nature of such value transfers might create doubts among patients about whose interests are being placed ahead of whose in decisions about the treatment of their illness.
Whether or not such deals most often passed the “smell test,” there is a widespread perception that such payments represent a key reason why healthcare costs so much, and beg the question of whether a $10,000 replacement hip that comes from a manufacturer with which a physician has a development deal is any better than a $5,000 one from a company that doesn’t pay him. And further, whether any of that might have influenced the physician’s recommendation of treatment. That’s not an easy conclusion to reach, but it’s impossible without the disclosure of financial relationships between the two.
In any case, CMS is now formulating the reporting requirements of section 6002, and will be judged on whether or not it has done a good job of making the information easily understandable and presented in context and without delay, while at the same time making reporting requirements simple enough so that they do not stifle innovation. It’s a daunting task, and breaks down like this:
Goal 1: Understandable
Each payment or transfer of value should be listed separately, but consumers should be able to manipulate the data such that a clear picture of the financial relationship between the physician and the company or companies with which he has a financial relationship can be obtained. Because of this need, CMS needs to ensure proper safeguards such that duplication of data does not give false impressions to consumers. These kinds of duplications have an odd way of multiplying in searches of sophisticated databases of information, and this one would have to be of the most complex sort.
Goal 2: Presented in context and without delay
In addition to making the list searchable in various ways, CMS needs to ensure that the data is presented in context, says a missive to CMS from the Premier healthcare alliance, a financial and clinical data analysis group owned by hospitals. That means, according to Premier, that “CMS should reference the specific drug or device associated with any reported payment or transfer of value and should also include the name of the drug or device in a form that is recognizable to the public.” That sounds right to me.
Premier also argues against providing a period for review and correction of the data from manufacturers and group purchasing organizations because of the inevitable delays that this would entail in presenting the data to the public. As the group rightly points out, delay in access to reported information lessens its value and undermines the goal of the statute.
Goal 3: Don’t discourage innovation
When discussing this issue, it’s easy for physicians of even the highest ethics to understand that the data might provide a misleading picture of their work with drug or device manufacturers. This work is surely necessary on some level in order to innovate, and compensation for the work is only fair.
Physicians and manufacturers are rightly worried that any financial relationship, simply by being publicly listed, encourages the presumption that these relationships are by definition unethical. However, the fact that somebody is watching is often enough to prevent most ethical lapses in instances like this. Transparency never hurt anybody but the ones who are trying to hide behind everyone else’s good name.
Let’s leave aside, for a moment, the potential consumer/patient use of this data. Hospitals and health systems that are trying to get a handle on supply costs would surely make good use of the data. Would it not be helpful, for instance, for a hospital CEO who’s pushing supply chain optimization to know whether her top heart surgeon has a development deal with Medtronic or if her top orthopedic surgeon has a consulting relationship with Stryker?
Such information, taken alone, doesn’t suggest anything improper or unethical is going on, but the very fact that it will be reported might strike a little fear into anyone who might be tempted to provide preferential treatment to manufacturers who sign their checks.
Much attention, deservedly, has been paid to the final accountable care organization rules released by CMS last week. My colleagues (mostly) and I (very little, so far) have expended plenty of time and effort breaking down the final rules and the consensus is that they're much more attractive to providers that in their previous iteration.
You can read a few unvarnished opinions from some of healthcare's most influential voices. However, many of these leaders also say that the revised rules still don't clear the hurdle to the degree that it's suddenly desirable to take on the investment risk necessary to go down the path of a Medicare ACO.
They fear change. They fear taking on risk. And perhaps most importantly, they fear that ACOs will represent another failed payment experiment from the federal government.
Perhaps healthcare leaders are also worried about their survival under any reimbursement scheme that has been so often revised and retooled. In some cases, early adopters have fared poorly from an ROI perspective.
But those are side issues. The fact is that many hospitals, especially of the standalone kind, will never be able to make a successful go of creating accountable care organizations under their current structure.
They can't survive while the inevitable problems with underfunding and patient and physician mobility are addressed—if they ever really are. Even the big systems, possessing contractual expertise, and the pieces of the care continuum under their ownership or contractual control, are concerned that ACOs, at least the government's version, have easily identifiable land mines that could render the experiment insolvent from their point of view.
Never mind that significant investments are necessary to even begin to participate in ACOs. Will that money and effort pay off? It's certainly not clear that it will. So thank you, they say, for listening, but we'll still pass.
Smaller hospitals and health systems may have little hope of gathering the necessary firepower to take on risk, especially when patients—and physicians, according to the revised rules—can move in and out of the system to provide and obtain care. That's a problem, again, for the big systems. The problem for the smaller ones and the standalones is that they can't even afford to obtain the size and scale necessary to make a real effort at ACOs.
It's these organizations that are really at a crossroads at which either path seems treacherous. Clearly, reimbursement is moving in the direction of accountability, whether through government payers or commercial ones. Should healthcare leaders decide to stay the course, and not participate in ACOs or other risk-bearing contracts—and above all, stay independent--they might face a slow march toward oblivion. Their concern is that the trip may be much quicker if they decide to try ACOs.
So, what we have left is consolidation. Many standalone hospitals are attractive targets for larger systems that have the firepower to survive an expensive, uncertain experiment. Others aren't. This is no fantastic revelation, however, it's easy to imagine leaders at these organizations whistling through the theoretical graveyard, and hoping it might all just go away.
This is a fight for survival, even if survival means being taken over by bigger, better funded organizations that can afford to make mistakes. ACOs are a great common-sense idea. But most leaders can't afford to blow up their current business model in order to try something that might sign their organization's death warrant.
I've been hosting more than my fair share of "roundtable" style discussions among healthcare leaders lately. I like doing it. The discussions in these groups are meant for dissemination. The participants know this, yet are often remarkably candid about the challenges they face as healthcare gets turned upside down in the general upheaval we call healthcare reform.
Though these leaders are generally frustrated with the details, it's interesting that none would argue that upheaval isn't necessary. For many, it's the way change is happening that represents the problem. And it's an access problem.
In quiet moments during breaks at the roundtable events, and sometimes during the discussions, executives will cautiously bring up a controversial opinion. Usually they'll make a remark in passing, poking me to follow up on the trend or theory. Sometimes I do; sometimes I don't.
Lately, I've been hearing whispered opinions that basically go like this: Enactment of the Patient Protection and Affordable Care Act started a metaphorical snowball rolling downhill toward a two-tiered health system.
Essentially, the argument goes, increased access to healthcare that comes along with PPACA, coupled with the government's miserable payer record (in terms of cost of care, not promptness), practically guarantees a healthcare system in which the publicly subsidized insurance theoretically covers all, but to such a pitiful degree that a massive industry in the secondary healthcare market is enabled. Perhaps not even the politicians who crafted it could have seen coming.
Perhaps you're familiar with a two-tiered healthcare system. It's what they have in England, to name just one example. Under this model, the government provides a basic level of medically necessary healthcare, for which timeliness, and, some say, quality, are not guaranteed.
But back to whether two tiers are in our country's future. I don't know if I completely agree with the assessments I've been hearing from leadership. I have to admit, however, that given what we know about healthcare reform, and about disturbing trends among independent physicians, it looks like we're headed that way, unless there is a change in direction.
The penalty for not obtaining health insurance is currently insignificant and Medicare, at around 90% of costs, and Medicaid, at much less than that, are poor payers. The information I'm relying here is all anecdotal, but in Texas, many independent physicians have already closed their rolls to new Medicare patients, to say nothing of Medicaid. This is happening in other states as well.
Because just about everyone over 65 is on Medicare, and hospitals need that business, they're not likely to be in the vanguard of the new two-tiered health system, but smaller organizations will. How will you know it's happening? You'll know when more and more complex organizations, from physician practices to outpatient centers, begin to refuse to deal with government payers entirely.
On the balance, worse doctors, and poorer quality institutions, will want that business. That's not necessarily a bad thing for society. After all, the previously uninsured will have access to care that they theoretically didn't before (outside of the emergency room).
Admittedly, moving to a two-tiered health system such as we see in the U.K., Canada, and parts of Europe would take time. There will be plenty of opportunities for course correction along the way to avoid it. But given what we know now, a two-tiered healthcare system may be coming.
Some could argue that we have a two-tiered healthcare system right now, and I couldn't argue about that conclusion. We have to decide as a society whether a two-tiered system would be better than what we have now, or if it would be worse.
The American Medical Association wants the Centers for Medicare & Medicaid Services to start paying doctors extra for care coordination. The group argues in a letter to CMS administrator Donald Berwick that four types of care coordination services should be reimbursed separately from the office visit to ensure physicians are compensated for providing these services.
Before I criticize their position, I want to note that their argument, on its face, is sound. Care coordination, in many cases, does prevent more expensive hospital care down the road. That's because, in theory, patients aren't made sicker because of poor communication among their various doctors, usually one or more specialists in addition to a primary care physician.
ACCESS. INSIGHT. ANALYSIS.
Join the HealthLeaders Media Council Get members-only access to industry-wide intelligence, forecasts, and analysis positions your organization to benchmark against your peers, identify and respond to key trends shaping healthcare, and make sound business decisions. JOIN TODAY
The idea is to get all the providers actually communicating with each other instead of each operating within their own silos, thereby possibly endangering the patient with incompatible drugs, treatments, or conflicting advice.
And taking care of these kinds of patients is more difficult and time consuming than treating healthier ones, while both are reimbursed at the same rate. But that's where my agreement with their position ends.
Excuse me, but as physicians sworn to do no harm, isn't this kind of work what they should be doing already? The presupposition in their argument is that physicians' responsibility for overall quality patient care begins and ends at coding.
To take their argument further, perhaps they should be reimbursed separately for writing a prescription when the patient is not in the room? The fact that many physicians don't currently coordinate care is just one indication of why our national healthcare bill is frighteningly large and rapidly growing larger. Of course, patients have some responsibility for coordinating their own care, but clearly, most don't have the ability to do this job on their own.
My point is that just because a payer happens to be a relatively poor one, the government, which now expects more value for its money, doesn't mean you necessarily get to break down your responsibility to provide quality patient care into tinier and tinier bits so that each step in the process is reimbursable.
If you can't make a decent living servicing these patients under the reimbursement system that is currently in place, why not lobby for an overall increase in reimbursement, or better yet, just stop taking new Medicare patients? (My understanding, anecdotally, is that this is happening at a higher and higher rate. Dropping Medicare patients instead of arguing for reimbursement for things that most patients feel you should be doing anyway should eventually solve the problem as seniors, who vote, complain to their legislators). But let's not pretend that the reason healthcare has a big hand in bankrupting us all is because we haven't thrown enough money at it or broken it down into smaller and smaller reimbursable steps.
Look, I'm not suggesting that extra work doesn't go into caring for Medicare beneficiaries who have multiple illnesses. They are a difficult group, and it's OK that the AMA and its members are asking and lobbying for extra payment, but geez, can you imagine the way a system like this could be gamed?
I could be wrong, but I doubt a plea like this will fall on willing eyes and ears at CMS, which is actively discouraging fragmentation of healthcare, not abetting it.
Can't we all agree that fee-for-service healthcare reimbursement is a failure in the sense that patients aren't best served by piecemeal delivery and lack of care coordination? And shouldn't we all agree that once and for all, patient care shouldn't stop at the office door? The whole thing makes my head spin and long for capitation, as many problems as that created.
I don't fault the AMA for trying, but the effort represents clinging to a model of reimbursement that is antiquated, wasteful, and provides strange incentives that seem to absolve doctors of the responsibility for taking care of anything regarding these patients other than what will be reimbursed.
The system is broken. But more fragmentation of the care process will only make it worse. And this isn't leadership.
Healthcare leaders, please take our 2012 Industry Survey. Contribute to the top source of healthcare industry insight, see the results from your peers (published online in February), and be entered into a drawing for an iPad.
