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Practicing physicians and healthcare reform – population health vs. compensation wealth

In an interview published in the Los Angeles Times this summer regarding the Affordable Care Act and value-based reimbursement, HHS Secretary Sylvia Mathews Burwell stated that “medical providers want this.” After reading the interview, I wondered for a moment if I am working in the same healthcare system as the secretary. I can unequivocally state that, unlike healthcare thought leaders and policy wonks, a scant few practicing physicians are committed to population health management, value-based care and the “triple aim.”

It is essential to significantly improve the value of healthcare, but given the is connect between the policymakers/thought leaders and the nation’s practicing physicians, I am not confident that current efforts will succeed. Most practicing physicians consider the current movement to value-based care/population health to be an ineffective, expensive, bureaucratic interference with the practice of medicine (PDF).

The consolidation of physicians into large hospital-affiliated groups and oligopolistic private practices has afforded many practicing physicians the ability to organize an effective “resistance movement” against local or federal initiatives that threaten their compensation.

Policy advocates frequently cite a handful of health systems that have successfully integrated with their physicians (e.g., Mayo Clinic, Cleveland Clinic, Geisinger Health System, etc.), but most fail to note that these prestigious systems have unique characteristics, culture and markets, the combination of which cannot be replicated by most others.

It is common to hear health system CEOs say that “we” are committed to the triple aim, population health management and value-based care, but it is doubtful that this “we” includes the majority of their affiliated practicing physicians (both employed and independent). Is the typical orthopedic surgical group that refuses to agree to be on call unless their compensation for being on call exceeds $1,500 per day concerned about the triple aim or population health? What about the many emergency department physician groups that are out of network with a commercial payer and are demanding that patients pay inflated out-of-network rates?

A fundamental principle of payment reform is that financial incentives are the prime motivating factor that determine physician behavior. Yet the hypothesis that most physicians will change how they practice if their incentives change is unproven and, in fact, there is some evidence to the contrary. When physician incomes are threatened due to a change in reimbursement methodology, physicians know there are ways to protect their income that will not require changing their clinical practice and they are availing themselves of these opportunities.

First, physicians can go out of network with the plan. Or the physicians can limit certain patients from their crowded practices as they have done with Medicaid. Also, as they have done over the past decades, physicians who perceive a threat to their income will demand that their health system increase their on-call pay, stipends, salary and/or medical directorships to offset any reduction in compensation, regardless of the impact on the overall cost of care.

Health systems that are contemplating taking actuarial risk in the near term are likely to be getting ahead of their competencies (and that of their practicing physicians) and thus will be in store for significant financial losses. This advice is supported by the National Association of ACOs, which stated “the overwhelming evidence shows that the current Medicare two-sided ACO risk models are not viable for most ACOs and set the bar much too high in terms of financial risk.”

Stick with the upside-only Medicare Shared-Savings Program model for now. For most, the cost of not qualifying as an alternative payment model is far less than the downside risk exposure of the Track 2 and Track 3 ACOs. Give the physicians the time necessary to develop a hierarchy and collective culture for clinical integration. It took one of my clients, MHMD—the exceptionally successful Memorial Hermann ACO, over eight years to fully develop this physician culture, but it was worth the wait. Health systems that aggressively pursue a strategy with underdeveloped competencies and physicians support will fail. Let being the “Uber for healthcare” take a backseat to the fundamental, essential hard work of standing up a truly integrated, high-performing, delivery network that is driven by the hearts and minds of practicing physicians. Only those giving care can improve it. Note: Uber lost $987 million in the first half of 2015.

February 27, 2017
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