Wednesday, February 23, 2011
Eight Health Reform-Driven Physician Trends
Interpreting trends is useless. It can only give you answers.
The law is not a single program. It is a collection of mandates, public insurance expansions, and regulations that affect different groups of Americans in different ways, at different times.
Jonathon Oberlander, “Beyond Repeal – The Future of Health Reform,” New England Journal of Medicine, December 9, 2010
Two forces are driving health reform – 1) the unpopular health reform law passed in March 2010; 2) the deepest recession since the 1930s.
Democrats call the health reform law a “historic achievement.” Republicans call it a “monstrosity.” Whatever one calls it – the Patient Protection and Affordable Act, the Affordable Care Act, or simply Obamacare- it is unlikely to contain costs, and it is confusing.
One observer described the new law as “2500 pages of indecipherable and unreadable legal graffiti, confetti, gibberish, and legislative sausage.” This is verbal overkill. One can be cynical about it, but its intentions are honorable and reform is necessary. The changes it proposes, aimed principally at the health insurance industry, contain constructive provisions.
But, in the haste to pass it, legislators, perhaps emboldened by their unchecked majority status and sensing an opportunity to cement their legacy, may have overlooked untoward consequences. They created profound uncertainties in a health industry that comprises 1/6 of the American economy and that has created more jobs in the last three years than any other economic sector.
These uncertainties, adverse consequences, the recession, the jobless recovery, and skyrocketing national debt, state budget overruns, and the nascent health reform revolt, have unnerved Americans and the medical profession and unleashed unprecedented economic pressures.
A White Paper, Health Reform and the Decline of Private Practice, research sponsored by the Physicians Foundation and conducted by Merritt Hawkins, concluded, “Health reform is comprised of two elements: “informal reform,” i.e. societal and economic trends exerting pressure on the current healthcare system independent of the Patient Protect and Affordable Care Act), and “formal reform,” (i.e., the provisions contained in the act itself.”
Major Physician Trends
Physicians have asked what I consider the major physician trends to be. Here they are. The opinions expressed here are my own. I expect reasonable people, particularly backers of the reform bill in its present form, will disagree with my interpretation of physician trends.
I have gathered information from various sources. Among these are The Physicians Foundation, representing doctors hundreds of thousands of physicians in state medical societies; Merritt Hawkins and Associates, the nation’s largest recruiting and firm; The Camden Group, which offers consulting services to more than 1000 hospitals, health systems, and medical groups; Healthleadersmedia.com, which focuses on hospital and physician executives; Fiercehealthcare.com, and the Wallstreetjournalhealth.blog, both directed at the business of health care, and media sources.
That said, most of what follows flows from my gut. What I say concerns doctors and the impact of reform in the clinical trenches.
One: Accountable Care Organizations (ACOS). The acronym, ACO, is on everybody’s lips these days. ACOs are so hot I felt moved to write a short E-book, Pros and Cons of Accountable Care Organizations (physiciansupportresresources.com) and to interview an authority on the subject, Bill Demarco of Pendulum Health are Development Corporation, Inc., a consulting firm (“The Future of Accountable Care Organizations(ACOs).” (see January 26, 2011 Medinnovation blog for the interview text ). Hospitals embrace this trend. Doctors resist ACOs. Reform policymakers believe ACOs may save Medicare through “savings, ” to be divvied up between doctors and hospitals. In my opinion, physicians will make or break ACOs, depending on the region of the country, with less likelihood of success in more conservative America.
Two, Consolidation at every level of the health system. Reform is forcing this consolidation because it takes a large organization to handle IT systems , meet bureaucratic and quality requirements, and access capital. As the Physicians Foundation’s remarkable White Paper, Health Reform and the Decline of Physician Private Practice, so aptly put it, “Most physicians will be compelled to consolidate with other practitioners, become hospital employees, or align with large hospitals or systems for capital, administrative, and technical resources.” Increased negotiating power in ever larger health systems will raise the specter of monopolies with the ability to set prices and will evoke anti-trust concerns among consumers and the government, resulting in Justice Department actions.
Lloyd Krieger, MS. a plastic surgeon who invests in health care companies, in a February 23 Wall Street Journal Op-Ed, “Obamacare Already Damaging Health Care,” says consolidation is destructive, “The most significant change is a wave of frantic consolidation in the health industry. Because the law mandates that insurers accept all patients regardless of pre-existing conditions, insurers will not make money with their current premium and provider-payment structures. As a result, they have already started to raise premiums and cut payments to doctors and hospitals. Smaller and weaker insurers are being forced to sell themselves to larger entities. Doctors and hospitals, meanwhile, have decided that they cannot survive unless they achieve massive size—and fast. Six years ago, doctors owned more than two-thirds of U.S. medical practices, according to the Medical Group Management Association. By next year, nearly two-thirds will be salaried employees of larger institutions.”
Three, Bundled payments between hospitals and physicians. Although bundled billing may be part of ACOs and consolidation, bundled billing can be implemented without fundamental organizational restructuring of either hospitals or medical practices. In a former life, as chairman of a PHO, I had personal experience with bundling over 100 hospital procedures . Hospitals and practitioners arrived at their portion of each bundled bill separately. We add te the two components together, and backed the final bill with re-insurance should the estimate be exceeded. Putting tbundled bills requires a lawyer and close attention to detail to avoid accusations of collusion, monopolies, and violation of anti-trust laws. Fear of anti-trust may be the greatest single deterrent to ACOs, hospital mergers, and bundling billing.
Four, the decline of private practice, especially of small groups. Physicians ownership of their own practices now accounts to less than 50% of all practices, down from 75% five years ago. Various factors contribute to the decline – desire of younger physicians to be employed,; rising numbers of women physicians, accelerated retirements of older physicians, acquisition of primary care and specialty groups by hospitals; difficulties in acquiring loans to start and sustain a practice; capital needed to fund information systems and recruit new physicians and retain current physicians; and the sheer paperwork required to maintain a viable practice. Again, if I may . I shall quote the Physician Foundation White Paper, “The independent, private physician practice model, will be largely, though not uniformly replaced…Physicians will need to redefine and rethink delivery models.”
Five, Hospital and physician initiatives decentralizing care and to reaching out to dominate local and regional markets. This takes various forms and may be done in concert with hospitals or independently without them. Decentralization includes strategically located outreach clinics, free standing emergency rooms, surgery centers, imaging centers, urgiclinics, and “big boxes,” i.e. supercenters of care, medical shopping malls, and hospital-acquired medical practices.; and telemedicine reaching into homes to, among other things, reduce hospital readmissions and emergency room visits. The Camden Group has characterized these various activities as: “Market share, market share, market share. Hospitals and medical groups have underused assets and must get them busy. Providers also realize that more volume will generate incremental revenue and decrease per unit cost. Hospitals will hunt for new programs to fill empty or underperforming assets.” The common denominators among this initiatives are market dominance, institutional growth, and quick returns on investments from market-based developments with proven track records.
Six, Concierge Medicine. This is a sleeper. No one knows how big it will be, where it is going, or how practical it will be. But having talked to many observers and have written two Med innovation blogs about it: 1) “Concierge Medicine- A Consequence of the Health Reform Law, February 20, 2011; and 2) Concierge Medicine: Reality or Mirage, January 25, 2011,” I believe it may be bigger than most imagine. Why? Physicians desperately want “out” of third party systems that lower reimbursements, restrict and ration care, drive up overhead, take time away from patients, and decrease practice satisfaction. Doctors in record numbers are dropping out of third party systems, including Medicaid, Medicare, HMOs, and other managed care entities. Concierge physicians are innovating - charging monthly rather than yearly retainer fees, introducing new amenities, offering one-day services, responding promptly to emails and phone calls, installing electronic medical records, and repackaging and repricing their various offerings. Concierge medicine represents a return of market-based principles and a retreat from government-directed care.
Seven, The electronic revolution. An electronic tsunami is sweeping over and engulfing medical practices. The e-revolution features a number of things – CPOE (Computerized Physician Order Entries) to issue orders and to prescribe; PACS (Picture Archiving Communication Systems) to transmit images; voice recognition software and increased computing power that allows computers to “talk,” to answer questions, permit conversations between patients, doctors, and computers; allows doctors to dictate into EHRs; marketing and communication via the social media (Twitter. Facebook, and Google); and a host of computer apps (applications) made possible by IPads and other mobile devices. Physicians will practice on Internet time, and practice will never be quite the same again. Unlike many, I do not foresee emergence of a universal interoperable EHR system aligning all major players. Meeting the 25 “meaningful use” rules is too burdensome for most practices. These practices are still the elephant in the room. Small practices will either not adopt EHRs or wait and see what evolves, or accept the financial penalties for not adopting EHRs. This resistance may be overcome by government mandate, “free” EHR systems, supported by advertisers, or low cost physician-friendly EHRs with voice recognition systems that allow physicians to dictate into EHRs to summarize and articulate what is going on with an individual care and to tell the patient’s story.
Eight, Patient involvement in care. The Health 2.0 movement is based on the premise that consumers, armed with information and riding the electronic wave, will transform care, and will make it more efficient, effective, and transparent in the long term. In the meantime, consumers and employers are turning to CDHPs (Consumer Driven Health Plans) and Health Savings Accounts to create savings for employers and to lower premiums for employees. Critics and cynics say high deductible plans with low premiums and Health Savings Accounts are nothing but cost shifting and are unaffordable for sick patients with chronic disease. This may be, but more than 15 million Americans now have these accounts, sometimes called tax-advantaged medical accounts. And since their own dollars are involved, participants in high deductible plans and HSA members are more cost-conscious and are asking for discounts and otherwise negotiating lower fees. John Goodman, PhD, founder and president of the National Center for Policy Analysis in Dallas has predicted, “.Over the next decade I believe we are going to see a major transformation of American medicine. It won’t be the kind of transformation that is normally discussed at health care conferences and at inside-the-Beltway briefings. Nor will it be the kind of change anticipated by the people who gave us the Affordable Care Act (ObamaCare). Instead, what I envision is a large migration of patients and doctors, and facilities and services out of the third-party payer system. (“The Future of Consumer-Driven Care", Health Affairs Blog, February 18, 2011). The migration “out of” Medicare and Medicaid payment systems, if it occurs, will aggravate the physician shortage, lessen access to doctors, and create a political crisis of unprecedented magnitude among Medicare and Medicaid constituents.
Richard L. Reece, MD, blogs at Medinnovation and has a website under construction. www.doctorreece.com. He is the author of three recent books, Obama, Doctors, and Health Reform (Iuniverse, 2009), Innovation Driven Health Care (Jones and Bartlett, 2007), and an E-book, Pros and Cons of Accountable Care Organizations (Practice Support Resources, 2011). He works with but does not speak for The Physicians Foundation, a 501C3 organization representing physicians in state medical societies. Opinions expressed in his blogs are his alone. He can be reached at firstname.lastname@example.org and 1-860-395-1501.