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February 24, 2014 Things That Matter

February 24, 2014

Things That Matter

Several times recently I have given one version or another of the same essential talk: Doc, here is what you have to do if you want to stay independent.

I was asked to give the talk at a specialty society meeting, but was given a really short time slot, which meant that I had to get very directly to the point, something that my wife might say is not always a strong suit for me.

So I called my friend in southern California who has been doing managed care for longer than the current generation of policy wonks have been alive. What do I say, I asked her, to a group of docs who are still pretty new to this whole ‘physicians bearing risk’ idea? I thought I might get something about the importance of physician leadership or stakeholder alignment, or in keeping with the new buzz some points about big data and analytics.

But this is what happens when you’ve been in the trenches for years…you cut through the baloney and get to the real issue.

‘There are only four things that matter,’ she said without hesitating. ‘Bed days, ER visits, total cost of surgery, and medications. That is it. Everything else is noise. If independent physicians want to play in the new world, they have to figure out how to impact those four things. Anything else is just B.S.’

She might live in southern California, but she is a diehard Steelers fan, so dirty fingernails type answers is what you get.

There you go. That is what matters.

If you want to play, it is first and foremost about bending the $3 trillion cost curve. It is not about getting a 2% increase on your RBRVS rate from your commercial payer. It is about using your leverage as physicians to bend the bigger cost curve. If you can do that, you’ll make good money. If you can’t, you are a target for someone else who is trying to do just that.

It is hard, but don’t make it overly complex. Attack one or more of those four things or go home.

February 24, 2014 Unintended Consequence, Part n

February 24, 2014

Unintended Consequence, Part n

Here’s guessing we can use that title for many posts, so we’ll not bother with counting the parts in the title. It will make ‘copying and pasting’ easier.

One major premise behind the Affordable Care Act is that the uninsured go the ER a lot for care that could be delivered in the much more affordable primary care physician’s office. That seems logical. The ER carries a lot of overhead if what we are treating is an ear infection.

Turns out a recent study in Oregon casts at least some doubt on that presumption.

In the 2008 study, thousands of low-income people in Portland were entered into a lottery. Some got Medicaid coverage and some did not. Over the 18 month period of the study, those with coverage went to the ER 40% more than those without. The findings were strong enough that it held true across demographic groups, time of day, and condition being treated. And yes, many of the visits could have been treated in a primary care office.

Of course, there are multiple levels to the issue of insurance coverage, but this is a major plank in the economics of universal coverage and at least this study did not turn out as would have been expected.

Oops.

February 24, 2014 Sasquatch Spotted

February 24, 2014

Sasquatch Spotted

Yes, there seems to be some level of agreement between Republicans and Democrats on one very important issue.

We all know the SGR formula for physician Medicare payments is broken. We are all tired of the twisted Kabuki theater that takes place at the end of every year, the net result of which is the cuts are postponed, dollars are wasted fidgeting with claims processing only to get about what we thought we were going to get anyway, and the elephant just gets kicked further down the road.

We also all know that now, after years of elephant kicking, the problem is so huge that it is easier to kick it again than to actually solve the problem.

But, both parties have their teams of high ranking people, healthcare policy wonks, and nerds with spreadsheets working on a real fix to the SGR problem. The fact that the ‘S’ stands for ‘sustainable’ is wickedly ironic.

We might be sneaking up on real action, but is Washington. However, we are getting little glimpses behind the curtain on the thinking of the two groups and, while there are differences, there is enough commonality on some big things that we could be relatively safe in assuming something like these ideas might be part of the actual solution.

First, you can assume that Medicare will be essentially flat for another ten to twelve years. And yes, I am discounting any increase that starts with 0.x%. Yep, after about that many years of basically flat already, we are likely to see that repeated. So, you have 20-25 years of cost increases (we call that inflation) with virtually no increase in revenue. That means…well, you know what it means because what it means because it has shown up in your wallet.

And you know that increasingly your commercial contracts are tied to Medicare, so this basically means the best case scenario is that your ‘per unit’ reimbursement is flat for the next ten years.

I hope you are not reading this over breakfast as I don’t want to ruin your cornflakes.

We’ve been saying to our clients for a long time that they better gear their operations and personal lifestyle to work at Medicare levels of reimbursement. Kudos to those of you who find a way to beat that benchmark, but that is still generally sound advice.

The second idea that both sides seem to like, though with variations in the execution, is some form of pay for quality. This is likely to be something like a 5%+/- swing, based on your results.

So, if you are below average (and since physicians are like children in Garrison Kellior’s Lake Wobegon, that means almost no one is below average), you could lose up to 5% of that already flat reimbursement. And if you are above average, you could get up to 5% more.

We’ll be watching to see how this plays out. Logic says we have to tackle this beast at some point and with healthcare the only thing that seems to matter in Washington these days, why not now? I remain a little skeptical and continue to keep my eyes open for pachyderm’s tumbling down the trail. But, if there really is agreement that reality is reality and flat is all we can afford, then it wouldn’t be a total surprise to see some action here in this general direction.

February 24, 2014 The Fine Print

February 24, 2014

The Fine Print

I think you might be able to get a no-cost breakfast and maybe even an occasional free dinner, but as the saying goes, lunch is going to cost you, one way or another.

Patients, or voters, depending on your lens, were promised lots of things that looked like a free buffet, but it turns out there is a little price (or two or three) to pay.

Astute minds, or those who are faithful in their use of Quicken, know there is a lot more to a family’s healthcare cost than just their portion of the monthly premium. But after a lot of marketing noise focused almost exclusively on that single monthly premium number, ever more people are waking up to the true cost of rising deductibles, limited pharmacy benefits, and excluded services. And these are just the financial costs.

It turns out that some stuff does roll downhill, and the bottom of the slope slides right into the family budget.

When the portion of the premium paid by the individual goes up faster than wages, as has happened since 2003, and that premium is for a plan with a higher deductible, as is happening regularly now, there will be an impact on how patients think about their consumption of healthcare.

And remember, their consumption is someone’s revenue. Maybe yours.

There are many, many changes that are moving healthcare toward a more traditional consumer industry, but none is more powerful than this one. The more conscious people are about what they pay for something, the more active they are in seeking their own self-interest (and not necessarily yours) in their decisions.

February 17, 2014 Tinkering Begets Tinkering

February 17, 2014

Tinkering Begets Tinkering

Some reading about the challenges that surface when exchange plans eliminate specialty hospitals (e.g. the local Children’s hospital) and thus disrupt care for chronically ill patients reminded me of a recent project at our house.

My wife bought an old, beat up armoire for $1 (really) that she was going to restore for our youngest daughter’s room. It obviously needed a coat of paint and there was one drawer rail that I had to reattach. It turns out that the board to which the drawer rail was to attach was missing. No worries. I would simply add another board as this was in the back and not visible. In the process of attaching that, the front board came loose as well, the old staples simply gave way. That meant that I would have to somehow rig a hidden block to hold up the front board without interfering with the opening and closing of the drawer. Lo and behold, the other side had the same issue, so that little fix would have to be duplicated. The paint job and a couple of nails turned into the entire piece of furniture disassembled in our entry way for several days. You know the story.

Back to our little narrow network problem.

So specialty hospitals, especially children’s hospitals but also certain other facilities focused on specific diseases, are often more expensive on a per unit basis. A $23,000 appendectomy at the specialty place can be done for $14,000 at the low cost community hospital. It seems logical in light of the objective of reformers to set up a system that moves patients over to get the $9,000 savings. Of course, the specialty hospital gets excluded from the network.

Which is great, except for those chronically ill patients, who happen to need coordinated care the most and are also big drivers of cost, who now have their long term care disrupted because their hospital and physicians are not in their new network.

That is not good, so the feds begin to tinker. Let’s offer a longer term transition period. Let’s say that if the network does not provide essential services, then the exchange product must pay for those out of network services. Yes, that will blow up the economics of the insurance, but we’ll figure that out later. And yes, then we’ll start arguing over whether or not the service is actually provided, but we’ll figure that out later, too. And yes, yes, that means the patient is now getting some of their care through the contracted network and some outside of it, and yes, yes, that is hardly the goal of accountable care, but we’ll go to the hardware store and get some tape and glue and baling wire and fix that, too.

Soon, the thing will be disassembled in our collective front hallway.

February 17, 2014 Get Your Mind Right

February 17, 2014

Get Your Mind Right

News flash…They cancelled the Marcus Welby TV show. No, really, it is off the air.

As healthcare gets blown up and reconstructed, that version of independent medicine is gone and it isn’t coming back. If you are reading here in hopes of finding some magic potion that can lead back to the good old days, you will be disappointed. Besides, if I had a magic potion, don’t you think I’d use it on my personal bank account and give up non-reimbursed blogging about healthcare?

If you want to stay independent, if you want to control your own destiny, it is going to take a lot of work. You are going to have to give up some things that you have cherished in the past. Your thoughts about independence are going to have to be reformed. The way you operate will end up looking very different than the past.

So as one of my clients says, and he says it with the most beautiful Southern drawl, 'You're going to have to get your mind right.'

This is a big deal and you have to approach it accordingly. We're not going to be futzing around the edges here. This will not be just applying a new coat of paint and calling it done. Heavy lifting will be required.

Remember, there is always the employment alternative.