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January 15, 2016

Rats Leaving the Sinking Ship

Billy Wigglestick was my nickname for Shakespeare when my kids were little. In was funny to an eight year old (once), but as an esteemed commentator you get no intellectual credit for quoting Shakespeare if you call him Billy Wigglestick. But one or two of our readers might have smiled and just might drop it on their own fifth grader.

In ‘The Tempest,’ Shakespeare gives us the inspiration for this most visual saying:

“A rotten carcass of a boat, not rigg’d, nor tackle, sail, nor mast; the very rats instinctively had quit it.”

Of course, it made sense to use the ‘rats leaving a sinking ship’ metaphor for the news that another of the mega health plans has bolted the big health plan trade group. If we can’t use Shakespeare to poke this group, what good is he?

Aetna has decided that they no longer need to be part of America’s Health Insurance Plans, the lobbying group for the insurance industry. This comes just a few months after UnitedHealth Group had already bolted.

Maybe the big boys decided they want to do their own lobbying instead of joining forces with their little piddly health plan brethren. Aetna, Humana and United already collaborate outside AHIP to lobby together regarding Medicare Advantage.

Maybe they don’t like the fact that Marilyn Tavenner, the new head of AHIP, is a little too cozy with the Administration, the very people who will fight Aetna’s big merger. She used to be the head of CMS for Obama, after all.

Regardless, it is telling that the big plans are going to save their $1 million a year in AHIP dues and go it alone in the halls of Congress.

Protecting a monopoly might trump advancing the views of the industry overall.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 13, 2016

Year End Push

I am not sure who faces more financial stress at year end – a retailer or a non-profit? For both, December is ‘bet the farm’ time. Your December mailboxes, both physical and virtual, are a testimony to the pleas for that year end gift or the big, big sale.

December was push time for ACA enrollment as well, though people can still enroll through January. Like the stores and the charities, the numbers are rolling in. Let’s check in on how things are going so far.

The good news for ACA advocates is that enrollment is up sharply. At the end of December, we had about 11.3 million people signed up across and the 13 state-run exchanges. That compares to 9.5 million at the same time last year. 3 million are first timers this year.

But we need to put that into a bit of context. Signing up and actually paying premiums are two different things.

In 2015, the enrollment period ended with 11.7 million people signed up (you are doing the math, and yes, that means another couple million folks signed up in January…we might expect the same this year). But, that number dropped to 10.2 million in March and 9.9 million in June.

Sort of like a health club in January. Lots of people sign up for a membership on the 2nd, but not as many are actually in there sweating on 20th. One is easy, and the other requires a little commitment.

So, the current numbers are good and ahead of the Administration’s goal. They will go up more – signing up is free – but they’ll come down when checks are due.

Speaking of money, eight in ten of these folks are going to get a subsidy to pay about 70% of the premium. In 2015, the average subsidy was $263 per month. In 2016, it looks to be around $294. This math is a little harder because it requires subtraction and division and carrying, so we’ll help… that is a 12% increase.

Here is another frame on the early numbers, one that might be a bit cynical. We are putting more and more people into an insurance product where the taxpayers foot most of the bill and we can only get 11 million people to take the deal? Further, the cost of this plan is growing at 12% a year, far faster than the economy as a whole or even market-driven employer provided insurance.

Reminds us of the old adage, ‘We are losing money on every unit, but we’ll make it up in volume.’

NOTE: Remember, we’re pushing our third post of the week from Thursday to Friday so we can send you into the weekend well informed.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
January 11, 2016

Sweeping Up the Confetti

Happy New Year and we are glad you survived Times Square.

People are fairly bifurcated as to whether spending New Year’s Eve in Times Square is a bucket list idea or some form of torture. And, hey, I can already scratch ‘Use the word “bifurcated” in a sentence’ from my 2016 goals.

Thanks for tolerating our taking a little holiday break here. Know that we were not totally loafing – mostly loafing, but not totally. I read a lot of ‘2016 Outlook’ pieces to get a sense of what is on the horizon for healthcare in the coming year.

In truth, much of it was a bit of a letdown because, unlike recent years, there is just not a lot of big, government imposed junk that is going to land on us this year. Hallelujah.

Most of what we’ll see this year involves the big themes of reform and change continuing to play out, continuing to get legs, and continuing to morph from idea to reality. Consumerism will keep gaining speed. The push for transparency will not slow. Talk of ‘payment for value’ will still be a bigger deal than actual ‘payment for value,’ but it will move forward it fits and starts. We’ll come along behind the technology that we shoe-horned in over the last five years and see how we can actually make it work.

But, there are a couple of specific things to keep your eye on.

Let’s start with China. OK, China really doesn’t have much to do with your practice, but every ‘future outlook’ list includes China. I think it is a requirement to mention.

The election goes without saying, but I don’t have to tell you to keep your eye on it because it will be impossible to miss. Yippee.

For once, the Supreme Court might not be the center of attention. Then again, they might.

Of more interest to me this year is the Federal Trade Commission. These are the folks who are supposed to deal with anti-trust issues (yes, there is some sarcastic commentary in the ‘supposed to’) and I want to see if they are actually going to do their job for the American consumer. There are those two mega payer mergers on the table, which would appear to be a layup if you are an anti-trust regulator. But there are also a host of regional integrated delivery systems that need some attention, that is, if the word ‘monopoly’ means anything other than a board game. Maybe in 2016 we’ll see if the FTC thinks competition is at all an important factor in the healthcare economy.

It might actually be a year of progress instead of just headlines. Maybe, the people down in the dirt doing real work will make some progress. We’ll do our best here to help chronicle the journey.

Now why are you still here? Don’t you have a 2016 TO DO list? Get after it.

NOTE: We are making a slight change in our publishing schedule and will be moving our typical Thursday post to Friday.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
December 17, 2015

Signing Off

Walter Cronkite ended each of his newscasts on the CBS Evening News with his famous signoff, ‘That’s the way it is.’

Mr. Cronkite was the paragon of journalistic integrity, back when that phrase was not an oxymoron, and had about 28 million viewers every night. He also had a cool, slicked back hairdo.

We are severely lacking on all three counts, so doubt that our final signoff for 2015 will merit being memorialized at any level. But it is time to put the wraps on our blog for 2015 and call it a year.

And what a year it was. We had court cases, some with the nine folks in black robes and some that sent fraudsters to prison. 68,000 new codes arrived, though I am still not sure which one to put down as the cause of the headache that their arrival caused. We got used and abused, but in a meaningful way. We saw mergers, more physicians gave up the fight and took the employment deal, we exchanged data, we attested. We were busy.

We learned some things, though we probably added more questions than we answered. We made some progress and seemed to regress in other places.

It was another year in the new normal of healthcare.

I count it an honor that you toss reading this blog into your regular rhythm. I hope that we have been faithful to our purpose: provide some news and commentary, provoke a thought or two, make you smile occasionally.

Come back next year. I am pretty sure there will be some things to talk about and we’ll again do our best to deliver on the promise to not be boring.

In the meantime, all of us here at ALN wish you, your family and your organizations the very best this Christmas season. Happy holidays and go get ‘em in 2016.

NOTE: As a reminder, we’re now officially on a break. We’ll be back at the beginning of January.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
December 16, 2015

Where I Was Right, Where I Was Wrong

There are four ways to succeed in the prediction business.

Predict the obvious. Say things like, ‘the sun will come up tomorrow,’ or ‘the Patriots will cheat’ (yes, I am a Broncos fan).

Next is the fortune cookie model. Predict something so general that you are bound to be right. ‘Something good may or may not happen to you in the next 12 years.’

Third, follow the tabloids and predict about 12,541 things and then come back next year and recall only the two you got right.

But the fourth way is best: don’t make predictions.

As a general rule, follow #4. Most of the time, we respond to some news or try to provoke a thought. It is an easier way to not be wrong.

But looking back at 2015, we inadvertently made a couple of predictions.   We got a couple right and missed one badly. Here’s our scorecard.

In February, when the first ACA co-op folded, we told you more trouble was coming for these 23 organizations. A dozen have officially folded. 10 of the remaining 11 lost an average of $21M over the first half of 2015. We got this one right, but really, this was about as obvious as predicting Donald Trump would say something outlandish.

In March, we thought political momentum was finally building to take on the irrational ‘site of service differential’ that pays more for physician services if the practice is owned by a hospital. The budget deal in November took a step in this direction, though we’ll be careful with any forecasts that assume rational decision making in Washington.

March was a mixed bag, however. We doubted that Congress could agree on a permanent fix to the SGR formula and we were flat wrong. Though to the previous point, betting on Congressional dysfunction is generally easy money.

This summer we told you the 2016 exchange plan premiums would jump a lot and in fact the lowest priced Silver plans, which cover 70% of the people on the exchanges, went up 11%. Like the Patriots, I cheated a little on this one because many of the big payers had already put in their 2016 rate increase requests when I wrote this post. Like the Patriots, I’ll still claim the victory.

So, we don’t make many predictions and when we do, we’ll stick with a) predicting the obvious, b) beating on Washington to be Washington, or c) sneaking a peek at the answer before making the prediction.

NOTE: After this week, we’re going to take a couple of weeks off for the holidays and will be back at the beginning of January.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
December 14, 2015

My Kingfisher

Alan McFadyen is a focused, maybe even obsessed, man. The Scottish photographer had a specific shot in mind and spent 4,200 hours over six years to get it. He took about 720,000 pictures, thankful for digital photography. But, he finally got exactly what he had envisioned and it is breathtaking. Go ahead and take a quick look. I’ll wait. But come back, we are not finished.

Pretty cool, huh?

I have had a similar obsession that has finally been satisfied, though mine is in no way as stunning as that kingfisher.

Last week, we looked into 2014 healthcare spending, and since our focus is on physicians, I always want to know how things are going on that front. And I am always frustrated that spending for physicians is lumped into the category called ‘Physician and Clinical Services.’ All sorts of other outpatient services are lumped in there as well.

Drives me nuts. Home care gets its own line. DME gets broken out. Retail sales of medical products are separate. Heck, government research spending is identified.

Don’t the government actuaries know that I am trying to write a blog here? I have needs and a simple little question…How much of the $603.7 billion in that category went to docs? Is that too much to ask?

Finally, I think I have my answer and I didn’t have to schlep a tripod out to the pond to get it.

The North American Industry Classification System (NAICS) is numerical schematic that identifies all types of businesses. NAICS 621111 stands for ‘Offices of Physicians, excluding Mental Health Professionals’ and is a pretty good proxy for the question of my obsession.

Fortunately, these codes are used by various government agencies and by mushing some data sets together, it looks like the NAICS62111 class had $4.62 billion of revenue in 2014.

There it is…the elusive 621111, captured.

Though I am sensing less excitement than I expected from you, here is little tidbit that you might find interesting. From 2008 to 2012, the revenue for 621111 businesses was about 71.4% of the ‘Physician and Clinical Services’ number. Very steady.

Suddenly, 2013 and 2014 jumped to 76.4%. That is huge. Why? There was not a sudden jump in the number of physicians or physician claims.

Of course, that answer is not immediately evident, but I have a theory. When a physician becomes employed by a hospital, the site of service payment differential means they get paid more for the very same service. Could it be that this spike reflects the recent trend toward employment?

A new hunt begins.

NOTE: After this week, we’re going to take a couple of weeks off for the holidays and will be back at the beginning of January.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.