of healthcare reform has left healthcare leaders confused regarding the future
of third party reimbursement; governmental and commercial. The guessing game is
in full swing:
- Bundled payments?
smart money should be on “all of the above”. My take is reimbursement to
providers will be an “experimental science” for the foreseeable future. It is
unlikely that the payer markets will flip a switch and convert largely from a
fee-for-service world to a neat, clean and understandable new world of health
services pricing and payments.
less integrated community health systems are scrambling. There seems to be a
return to the behaviors of the late 1980’ and early 90’s; the “PHO” era.
Independent physicians and community hospitals are quickly forming enterprises
to “accept financial risk”. The Pioneer ACO experiment is underway. By all
accounts, some are making progress. Others have already dropped out.
more integrated health systems with years of experience under their belts seem
comparatively unconcerned; “accountable care organization? We’ve been that for
decades. We can contract for, accept and manage payments in any form. It is
more important that we get paid, and less how we’re paid”.
design of provider systems will need to accommodate reimbursements in multiple
forms. It follows then that the more integrated health systems should be best
positioned to convert various forms of “risk payments” to profitable financial performance
as a result of the characteristics of the integrated health system design;
especially the ability to control or sufficiently influence the totality of the
required operating expense and capital structures including clinical models,
provider productivity and related compensation.
more integrated health systems typically place “accept financial risk from
payers” high on the list of market tactics. Why? Because they know many of
their competitors can’t.
contracted financial risk is only step 1. Organizations must internalize the
competencies to manage that risk to sufficient profitability.
brings us to the last and perhaps most counter-intuitive point. The market
cycle we’re in now may be the most profitable for the more integrated health
systems ready and able to accept and manage financial risk. Why? It is highly
likely that the health insurance premium inflation curve (governmental and
commercial) will remain on a less steep, but positive slope going forward.
financial risk transfer inflation curves for providers are likely to remain
positive as well, but at a lesser slope grade. The provider systems that are
able to reduce total costs of care, while maintaining quality will benefit from
a widening differential between realized reimbursement rates and total costs of
care through the cycle (however long it lasts).
health systems prepared to pursue financial risk contracting as a principal
strategy and are also prepared to reduce total costs of care at a rate that
exceeds downward pressures on volumes and costs will benefit disproportionately
to those who are unable to function this way; at least for a while.