Healthcare Strategy in the Year of Uncertainty; Even amid significant legislative ambiguity, reform remains a market-driven issue.
By Aamer Mumtaz, Alan London, MD, and David Fairchild, MD
Healthcare Financial Management Association, May 2017
Among the dozen C-suite leaders from leading health systems and AMCs in nine states who we interviewed over the past two months, most believe that the healthcare market has many of the same characteristics and challenges as it did in 2011: Cost growth is an issue, quality and value are ongoing concerns, and breaking even on government programs is a challenge. With some critical caveats, the appropriate short-term provider response thus will not be fundamentally different from the past seven years:
• The search for value will continue, with clinical integration, care coordination, and high-quality care still the paths to get there.
• Scale will become even more important as systems look for ways to reduce the per unit cost of care.
• Commercial insurance will remain the main engine of growth for providers, with Medicare Advantage the most attractive government program financially.
• Medicaid and the ACA marketplaces are wild cards. What happens in those spaces will be felt disproportionately by systems serving high numbers of underprivileged patients, including systems operating in rural areas.
• The move toward quality will continue despite the potential waning of government support for innovation.
• Speed to market for new initiatives in the pipeline will be important.
• Cost reduction and asset redeployment will be essential in an increasingly cash-strapped environment.
“No regret” moves
Providers are focused on moves that transcend the ongoing legislative and regulatory uncertainty and instead address more fundamental economic forces. Such moves include:
• Achieving scale through partnerships and alliances
• Commercial market growth (e.g., through targeted ambulatory expansion)
• Continued focus on Medicare Advantage
• Aggressive cost control
• Partnerships with health plans to share more risk
• Building the clinical network
• Slowdown or halt on long-term investments
Economics overshadows politics
Our preliminary discussions with leaders from major health systems around the country have cofirmed that healthcare reform remains driven primarily by market forces as opposed to legislative initiatives. As one West Coast executive told us, “The challenges facing health care are more economic than political.”
Just as in 2011, imperatives to reduce costs and to achieve profitable growth through the delivery of value remain key. In fact, cutting costs, improving clinical integration, and addressing quality and customer service needs — all while focusing on profitable markets for growth — arguably will be even more important strategies in 2017 and going forward than they were in 2011.
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Comment:
By Don McCanne, M.D.
So who really determines the nature and scope of the health care delivery system? Is it the doctors and nurses? They are busy trying to make the system we have work for their patients, and they are having difficulties with that. Is it the politicians? They continue to feed the largest share of money into the system (taxes – often opaque – to pay for health care) while turning much of it over to the medical-industrial complex.
The medical-industrial complex is composed of interwoven, overlapping organizations and their executives that make spending decisions through various financing vehicles such as commercial insurance, managed care organizations, accountable care organizations, health plan administrators for public and private programs, and the like. According to this survey of C-suite leaders, they want more of it – more integration (anti-competitive consolidation), more care coordination (care management prioritizing executive business decisions), shifting care to where the money is (outpatient services now epitomized by the most expensive of all – free-standing emergency departments), more programs to promote “quality” (think MACRA and MIPS), more government financing of private insurance (prominent examples being Medicare Advantage and Medicaid managed care), while achieving scale in all of this (more and more of it), and they want it right now (before the social movement for health care as a right – single payer – can gain traction).
Many of the measures are touted as methods of controlling costs when the real cost containment efforts are directed to reducing volume and price as a method of ratcheting down the growth of spending on the actual health care delivery system. Although excessive prices and over-utilization are problems, so are under-utilization and inadequate pricing. Establishing barriers to care and not compensating the delivery system adequately do a disservice to patients and their health care professionals, especially when there are far more patient-friendly methods of containing spending, which also reduce the abuses.
Our current bearing will leave these people in charge, with more of the same. So what should we do? What should be our strategy and tactics? Is sticking placards in the faces of politicians and shouting “single payer” enough? Can we truly organize and coordinate with the greater social justice movement? Can we convince the medical-industrial complex that they need to be active participants and even leaders in a sincere movement for health care justice for all? They are going to be there whether or not we want them involved, though we should be able to cull those who really care for patients from those who are simply after acquisition of substantial personal wealth.
Regardless, take another look at what these C-suite executives have in store for us. It is terrible for health care professionals who really do care and even worse for patients. We can do far better with the $3.2 trillion we are already spending on health care (it’s our money!) than to turn it over to the medical-industrial complex and let them do with it what they will. As these authors state, “reform remains a market-driven issue” when we know that markets are anathema to health care justice.
No more feeble organizing. Let’s have the real thing.