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Current and Breaking News for Professionals, Consumers and Media |
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| Current and Breaking News for Professionals, Consumers and Media |
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Decrease in Reimbursement: First, reimbursement will decrease. Reducing the costs of health care services has been and will continue to be the underlying objective of both legislative and executive branches of federal and state governments. Regardless of how our elected and appointed leaders position the deck chairs on the health care Titanic, reimbursement will (perhaps must) decrease. Increase in Regulation: Second, regulation will increase. The health care industry is and will remain highly visible, particularly as a percentage of gross domestic product or GDP. Highly visible industries attract regulation and regulators. Some regulation certainly makes sense in an industry where patients are vulnerable to a few unscrupulous individuals. But, the increasing regulatory compliance burden on even the smallest of medical practices is already overwhelming. Health Care Industry Trends Still, despite the unstable platform of health care reform, it is important for all of us to consider the underlying trends affecting our industry in 2010 and beyond. We offer the following for consideration: The increasing cost of health care is a top concern for U.S. citizens, businesses, and government. Some states are examining managed care reimbursement reminiscent of capitation. There is continued pressure to reduce reimbursement to providers serving Medicare and Medicaid patients. The number of uninsured and under-insured individuals continues to increase. The development of quality clinical care standards based on empirical outcomes continues to be an elusive goal for most medical specialties. Pay-for-Performance in hospitals and in medical practices continues to gain momentum, particularly in the areas of demonstrated best medical practice (as opposed to outcomes). Hospitals continue to see a decline in many types of inpatient services, as improving technology permits the shift of more procedures to outpatient and ambulatory settings. As the population ages, inpatient beds are increasingly filled with the very sick and/or end-of-life patients, often with the government as the payer. The hospitalist model has become the standard in urban, suburban, and even rural settings. Numerous studies have demonstrated the value of this new specialty in terms of reduced length-of-stay, reduced medical errors, more timely patient care, and improved outcomes. Given the advent of hospitalists, many primary care physicians (PCPs) never darken the hospital door. Even general internists are likely to be seeking an ambulatory-only setting. Those PCPs who still prefer to practice hospital medicine are finding it increasingly difficult to identify enough partners to cover after hours call. Hospitals in many markets continue employing invasive specialty physicians to start up or shore up service lines and to ensure E.D. coverage Hospitals continue to purchase primary care practices and to employ primary care physicians with a focus on capturing market share and controlling the flow of patient referrals. The traditional medical staff is disintegrating in some markets where PCPs would rather not retain their active membership, and where specialty physicians have become hospital competitors in diagnostic imaging, ambulatory surgery, and other arenas. Most new physicians exit residency or fellowship programs looking for an employment model and an improved quality of family life. They are not interested in entrepreneurship. Importantly, younger physicians who join private practices are less and less interested in “buying in” or “buying out” their more established partners – again, preferring the lower risk and reduced commitment employee option over partnership. PCPs are looking for additional ways to enhance their income by increasing the number of procedures they perform in their office settings. Family physicians in a few markets are providing endoscopy screening procedures using conscious sedation in the medical office setting, with the support of gastroenterologists. The convenience increases the numbers of appropriate screening examinations (promoting early detection), helps the family physicians earn higher incomes, and keeps the specialists focused on therapeutic efforts. Not-for-profit hospitals are under increasing scrutiny at the federal and state levels to justify their non-taxable status. The U.S. Justice Department, the OIG, the IRS, the FTC, and others are increasingly interested in physician/patient relationships, physician/hospital relationships and in physician/vendor relationships. Hospitals and physicians will be increasingly scrutinized for their billing practices. CMS is expanding its Recovery Audit Contractor (RAC) program to all 50 states. The pressure to implement an electronic medical record continues from the President of the United States, on down. As federal and state regulations continue to evolve, the competitive stance of hospitals and physician groups change. For example, since Stark II, Phase III final rules were promulgated in late 2007, some hospitals have been more aggressive, even mandating that their employed primary care physicians refer “domestic,” meaning only to the hospital and its affiliated specialty physicians. “Minute Clinics” and other primary care options are popping up in many large retail chains to compete with the traditional primary care model through improved access and lower cost over a narrow range of primary care services. There is still a reported shortage of registered nurses in some markets. There is a projected shortage of primary care physicians. Some markets are already grappling with a shortfall. Others are still recruiting successfully. The Implications The implications of these and other industry trends are quite clear. They include the following: Market Share: Critical to the success of any provider of medical services is access to market share. Primary care physicians build and maintain the market share for the health care delivery system, including specialty physicians and hospitals.1 Having adequate numbers of primary care physicians and maintaining relationships with those PCPs to attract referrals is essential for the success of all other providers. More astute hospital executives and specialty physicians are reassessing how they can attract, retain, and interact with primary care physicians who no longer darken the hospital door due to successful hospitalist programs. Quality: A patient’s service experience is the key driver of her perceptions about service quality in a medical practice or in the hospital setting. Since few patients understand the quality of their clinical care, they use service quality as a surrogate measure. A referring physician’s service experience is the key driver of future referrals. Access, communication, and referred patient experience are key drivers of future primary care referrals. Clinical quality is “assumed” by most referring physicians unless that assumption is violated -- which spells the end for future referrals. Again, astute specialty physicians are working with their hospital services lines to enhance their service commitment to referring physicians and their patients. Provider Productivity: Productivity and the effective expenditure of resources (efficiency) will continue to be the rule of the day. As reimbursement is driven downward, the most productive and efficient providers will outlast those who fail to respond through improved productivity and efficiency. A key to success is the productivity of the very expensive physician resource, whether in the ambulatory setting, on the inpatient floor, or in the operating room. Capital: The hospital is the only capital-generating engine in the health care delivery system. Medical practices, particularly smaller practices, usually break even and use debt financing for their capital needs. Wise hospital CEOs will view themselves as “Market Managers” needing to amass capital and reinvest that capital both within and outside the walls of the hospital to ensure the success of their integrated models for the benefit of the communities they serve. More Regulation: We can count on increasing intervention from a variety of agencies, sometimes with seemingly conflicting requirements. The cost of compliance will increase, but not as much as the consequences of non-compliance. Processes in hospital and medical practice settings will need to be carefully reviewed to ensure that they remain effective, efficient, and compliant. At the same time, the regulatory “tail” cannot be allowed to wag the whole dog. Every strategy, tactic, policy, procedure, process, and decision must pass all four critical performance filters: Does the strategy, tactic…decision maintain or enhance clinical quality? Does the strategy, tactic…decision maintain or enhance service quality? Does the strategy, tactic…decision maintain or enhance provider productivity? Does the strategy, tactic…decision maintain or enhance operational and financial viability? If a strategy, tactic, policy, procedure, process, and decision cannot pass all four filters, it should be tabled until it can do so, or it should be scrapped. Local Industry Consolidation: Health care providers will need to consolidate their efforts to ensure the success of the health care delivery system in individual communities. The integration of hospitals and medical practices will continue, as physicians struggle to remain viable due to decreasing reimbursement, increasing overhead, and the inability to recruit new partners. Hospitals will continue to offer employment to both new and established physicians, particularly in primary care and in those invasive specialties that support hospital service lines. Increased Local Competition: Most markets will experience increased competition for the “right” patients, meaning those who are insured and can pay their bills. Fewer, larger, more integrated health care delivery systems (see consolidation, above) will result in more intense competition in local markets. Technology Driven: New technology will continue to drive changes in the delivery of medical services. Clinical advances have already permitted many formerly inpatient services to be offered on an outpatient or even ambulatory basis. Some cancers that used to be fatal are being managed like chronic illnesses. In addition, the pressure to implement electronic medical records will continue to force change during the coming months in both physician practices and hospital settings. The practices and hospitals that prosper in this increasingly challenging environment will need to be much more rigorous in their business practices. Rigorous strategy development, effective implementation, specific performance measurement, and rigorous performance accountability will be required of physicians, executives, and staff in every successful delivery setting. Marc Halley - President and CEO (MBA) Organization: Halley Consulting Group – a national physician practice management firm Summary of expertise: Providing management and consulting services to medical practices for over 20 years, Marc has worked with a variety of specialties, including hospital-owned practice networks in more than 30 cities across the United States. His topics of expertise include physician practice management, hospital/physician integration, physician integration economics and managing change in hospital and medical practice organizations. Marc is a frequently requested speaker addressing governing boards, senior executives, physician groups and management teams – organizations such as the American College of Healthcare Executives, Medical Group Management Association, Healthcare Financial Management Association, various state hospital associations and more. In addition, Marc has authored several books, including The Primary Care Market Share Connection: How Hospitals Achieve Competitive Advantage, The Medical Practice Start-Up Guide, as well as contributing to a three volume set, The Business of Healthcare. Subscribe to our FREE Ezine and be eligible for Health News, discounted products/services and coupons related to your Health. We publish 24/7. HealthNewsDigest.com We videotape Press Conferences, produce Satellite MediaTour's, B-rolls, PSA's, - all with distribution: HealthyTelevisionProductionstvmike13@healthnewsdigest.com Top of Page 
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