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Seven objectives for health care providers, stakeholders

“A year from now, you will wish you had started today.”
—Karen Lamb

Several of my columns this year have focused on a continued emphasis on revolutionary federal and state health care reform initiatives. In these columns you have read about the objectives related to continued reforms of the state Medicaid and federal Medicare programs. This column takes a forward-thinking, strategic approach for each and every organization that provides health care and/or social welfare services.

Remember that the health care reform initiatives are both revolutionary and, in many cases, unproven. Reform of this nature, in which the state and federal governments are plowing new ground, creates both opportunities and challenges for all health care providers. Through my participation over the past 18 months in these reform initiatives, I have developed the following list of the Seven C’s. These seven attributes will most likely be even more difficult to navigate than the “seven seas” were several centuries ago. Each and every provider and stakeholder in health care and human services must adopt an attitude consistent with the following required objectives:

  •  Cooperation among providers
  •  Collaboration with others
  •  Competition for service referrals
  •  Compensation allocation among providers
  •  Care coordination with a more intensive scrutiny on identifying the most appropriate and cost-effective site of care
  •  Convergence of provider activities resulting in shared services, mergers and affiliations
  •  Contracting transition from fee for service to value-based performance metrics and outcomes.

It is difficult to identify any other industry in our global economy that operates with the attributes listed above. I challenge you to identify another industry that could operate successfully in an environment that requires complete and total commitment to individual cost-effective outcomes. I have not found one industry that could remotely describe itself as being able to collaborate and compete at the same time that compensation and revenue allocations were being directly affected by the structural reform initiatives.

These current reform initiatives follow roughly 40 years of both failed and successful efforts to control the rate of increase in health care costs. You should remember that the U.S. spends close to 18 percent of its gross domestic product on health care services. This spending has consistently been at more than twice the rate of any other industrialized nation. Interestingly, our increased spending and concerns have not resulted in better health outcomes for our citizens in comparison to those nations that spend half of what we do in the U.S. The reasons for this unexplained disparity in spending are complex. While there is no one simple answer or approach, our efforts over the past four decades are certainly appropriate since we must be able to “bend the cost increase curve,” constraining costs at the same time 10,000 baby boomers turn 65 each day for the next 17 years.

Before I provide the typical questions that should be addressed by providers, keep in mind the impact of the five As:

  •  Aging
  •  Alzheimer’s
  •  AIDS
  •  Alcohol and Substance Abuse
  •  Accidents

The impact of these factors coupled with research to improve technology is one of the many complex reasons why we find ourselves on the doorstep of fundamentally changing American society’s general expectation that our citizens will “be kept alive” regardless of cost.

So we have tried many models of health care reform. You might say that the entire health care industry and its providers are “experienced veterans” of constant reform and change initiatives. The following list of questions can be both strategic and operational in your organization’s services. Each of them should be considered in a board and management brainstorming discussion, preferably in the next six months.

Strategic/operational questions to be addressed:

  •  What is the best strategic position for our organization to take to participate in the delivery system reform incentive payment (DSRIP) Medicaid/ prospective payment system (PPS) initiative and the value-based payment reforms being implemented by the New York State Department of Health?
  •  What is the likelihood of success for our organization if we remain autonomous and “go it alone”?
  •  If autonomy is not an option, how many and which regional provider networks (RPN) should we participate in?
  •  What can our organization effectively do to achieve the goal of hospital facility diversion that is the fundamental objective of DSRIP/PPS for eligible Medicaid individuals? 
  •  What is the definition of  “avoidable hospital facility utilization,” and have we established clear policies and procedures for all staff to follow?
  •  Do we have the necessary technological sophistication to be able to make “real time” triage decisions?
  •  What is the appropriate structure for our organization to consider in its participation with RPNs?
  •  Is participation in an Independent Provider Association (IPA) the appropriate strategy?  If not, why not?
  •  How many emergency room visits and hospital admission diversions did we accomplish today, this week, or this month?  How did we do it and are we receiving fair and reasonable compensation for the savings generated by utilizing lower cost sites of care? 
  •  The fundamental question that every organization must be prepared to assess and answer is, how many emergency room visits and admissions did we generate from our service population in 2013, 2014 and 2015 and what is a reasonable expectation for a percentage reduction in 2016, 2017 and 2018? 

There are no easy answers to the question of how we, as a state and nation can effectively bend the cost increase curve. Forty years of reform initiatives have not produced the desired result. It may take another 40 years and the demise of the baby boom generation before we achieve any meaningful results.

Gerald J. Archibald, a CPA, is a partner in charge of management advisory services at the Bonadio Group, and is known for his expertise in non-profit and tax-exempt accounting, management and governance issues. He can be reached at (585) 381-1000 or garchibald@bonadio.com.

12/4/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

One comment

  1. I would propose a different set of criteria:
    * Patient outcome – what methods result in the healthiest patients for the least cost. Enforce these methods across the entire health care arena. Measure hospitals and individual providers based on how healthy their patient outcomes are vs the minimum dollars spent to achieve those outcomes. Base their incentive and payback on those outcome/dollar ratios.

    Share the data among providers so that they can learn from each other. Publish the data to consumers so they can make critical health care choices based on actual health care outcomes.
    * Elimination of expensive costly testing unless it’s medically necessary
    * Pool the buying power of all insurance companies for drug purchases to drive the price down in the pharmaceutical industry.
    * Pool the buying power of all insurance companies to drive the price down in the medical supplies and durable goods arenas.
    * Remove the barriers to entry posed by our singularly hopeless medicaid organization in the county. I hear countless stories of how this system abuses it’s constituents with unanswered phone calls, constant finger pointing and runaround, and enough paperwork and bureaucracy to choke a horse.
    * Competition – the current state of only 2 insurance providers in the area, combined with the barrier to entry illustrated by the demise of Health Republic makes for a terrible combination for consumers. We need competition to drive price down for consumers, and increase competition for doctors. Alternatively we need to eliminate competition altogether and go to a single payer model, like most modern countries already hae.
    * Restrict insurance companies from using their reserves to fund driving out the competition, or buying it up. The reason that BCBS and MVP rule the roost here is because they bought up all the smaller providers using their huge reserves as collateral.
    * Get rid of the idea of using NFP status to hide from regulation and taxation. Insurance companies are for profit – just look at the huge dollars their CEOs and major executives make.
    * If they DO remain not for profit limit executive compensation to a reasonable multiplier of average worker compensation.
    * Eliminate the provider graft and corruption, including pharmaceutical paybacks and incentives, referral kickbacks, and hospitals incorporating private practice doctors to drive more business to their specialists.

    How’s that for a to do list. I know they don’t all start with C but I’m pretty sure you can figure them out anyway.

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