Healthcare Industry Trends for Anesthesiologists to Ponder
When it comes to Medicare payments to physicians, plus ça change, plus c’est la même chose. Last week Congress adopted the 17th “patch” to prevent the huge cut mandated by the Sustainable Growth Rate (SGR) formula from going into effect for another year. The legislation also kept in place the antiquated ICD-9 coding system until at least October 1, 2015.
Larger sectors of the healthcare economy are evolving in interesting directions, however. Shrinking revenues from traditional sources as well as increasing awareness of where the quality/cost relationship, i.e., “value,” can be improved are driving changes that anesthesiologists and others should keep in mind as they seek new roles and opportunities.
Hospitals and health systems are expanding their activities into areas beyond the traditional furnishing of acute care services. Two of these new areas are post-acute care (PAC) and the payer function. The specific roles for anesthesiology groups in connection with either area are unknown at this stage; all that we can say is that those roles will be defined locally and with a considerable degree of variety, as a function of the specific needs and resources of the participants. Familiarity with the new directions in which their hospitals may be venturing will help anesthesiologists open up activities that they can lead and thus become ever more indispensable partners with their institutions.
Closest to home, although not yet all that close, is PAC. As inpatient margins have approached or entered negative territory, new financial incentives including penalties for avoidable readmissions and other complications are motivating hospitals to partner with PAC providers. CMS announced last January that 232 acute care hospitals, skilled nursing homes, physician group practices, long-term care facilities and home health agencies had signed up to participate in the Medicare Bundled Payments for Care Improvement Initiative. According to Foley & Lardner, LLP’s Health Care Law Today blog entry for March 24, 2014, “Hospitals not only see PAC as a means to limit downside (e.g. readmit risk) but as a way of sourcing better margin revenues to fund their key physician, primary care, outpatient, IT and other initiatives.” The blog lists the following:
Five Areas to Watch in Connection With This Space Which Signal Opportunities
- Creative partnerships between hospitals and PAC providers, inside and outside Pioneer and MSSP [Medicare Shared Savings Program] ACOs
- Investments by private equity in the tools to facilitate patient care, patient tracking, quality measurement, and communication
- Payors providing solutions to collaboration amongst providers in form of IT help, risk management techniques, and partnership management
- Growth of care management firms that coordinate but do not provide care
- New business platforms owned jointly by PAC and inpatient acute care to address bundled payment models.
The first item on the list is the one most relevant, potentially, to anesthesiologists who can imagine responsibilities that extend beyond the time of the patient’s discharge from the post-anesthesia care unit. The Perioperative Surgical Home model has already expanded the episode of care to preoperative screening and optimization, at the front end, and as far out as 30 days postoperatively. Anesthesia’s greater contribution is typically in the preoperative phase. But now that health leaders are focusing on PAC because of the scope for both improved clinical quality and cost containment in the area—and in particular on readmission rates—could anesthesiologists be on the team that manages patients’ transition from the hospital to home care? Could anesthesiologists with advanced management and/or business training oversee the transition teams, at least for surgical patients? Could they help to design the systems that will capture, analyze and operationalize the data showing which rehabilitation or skilled nursing facilities had the best outcomes and the fewest readmissions?
The second large sphere into which health systems are venturing is the role of health insurer. As a top official of MedStar Health, the largest health system in the Washington-Baltimore area, said in an interview with an insurance industry newsletter, “for us just to focus on what we’ve historically done and be a provider of care puts us in a line of sight where we’re subject to sustained cuts.” (Overland D. Population health management propels hospitals into insurance market. FierceHealthPayer, October 11, 2013.) MedStar began offering a health plan to its own 30,000 employees last year. By October 11 percent had signed up. The objective was not so much to compete head-to-head with the traditional health insurers as to take charge of all the components of coordinated care, including the economic drivers, as the utilization of inpatient services continues to decrease.
Other large hospitals are beginning to look for ways to bring the insurance premium dollar directly into their own systems. FierceHealthPayer reported on March 31st (“Hospitals make major inroads in insurance biz”) that New York’s Mount Sinai Health System, the state’s largest, plans to begin offering its own Medicare Advantage plan next year, and that the CentraState Health System in Freehold, NJ has just launched a health plan for smaller and medium-sized businesses.
Sometimes the provider-payer integration is instigated by the payer as in the case of Wellpoint’s recent acquisition of a healthcare provider in California. Ezekiel Emanuel, MD, PhD, chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and a White House advisor, coined the term “Kaiserification” to describe the combination of health plans with hospitals and physician practices to create fully-integrated health care delivery systems.
Regardless of who the primus motor in a “Kaiserified” arrangement might be, anesthesia groups serving the affected facilities will find it more important than ever to align themselves with the hospitals that now control an even greater portion of the revenues flowing through the system. As inpatient margins shrink and anesthesia departments experience sustained pressure to hold down costs, it will be increasingly advantageous to participate in opening up services that can generate income that previously went to unaffiliated entities, including both health plans and PAC providers. These are trends that should begin to figure into anesthesiology practices’ strategic planning.