PharmExec Blog

Single Payer Issue Will Rise Again

The future of healthcare centers on scale, population health and the value of care rather than the volume of care, according to thought leaders speaking at a leadership briefing in November in Akron, Ohio. But the political atmosphere also adds layers of complexity, they say.
In order for health systems to thrive, they need to create partnerships that advance care not only as a clinical goal but as a business imperative, according to Thomas Strauss, president and CEO of Summa Health System. Larger institutions will have the economies of scale that are necessary in the new era that aims to transform volume to value.
For example, he says, as many as 40% of Summa patients in a recent clinic survey reported having a mental health issue. The data point underlines the need for patient centered medical homes to have embedded behavioral health professionals, but there’s no reimbursement for it. Beneficial clinical models that are not reimbursed often become unsustainable.
“We have to move to the total cost of care,” Strauss says.
Regulatory Implications
And the clinical aspects are only the beginning. Under health reform, hospitals have added regulatory risk that can amount to millions. Strauss says for Summa, reform could create anywhere from $19 million to $90 million in impact per year. Increasing efficiency is one way to manage the financial implications.
Every year, 6% to 8% of an acute care hospital’s revenue is at risk for penalties from readmissions, inadequate vaccinations for hospital employees and fraud audits.
“It’s not just the reimbursement, it’s also the government speed traps,” he says.
U.S. Economy
Paul Keckley, independent healthcare consultant, says the Patient Protection and Affordable Care Act (PPACA) is an imperfect law that resulted from many iterations, and it fails to address the reality of the healthcare system. It was created to help stabilize the U.S. economy—healthcare is about 17% of GDP—but the current landscape is much different than what lawmakers assumed when PPACA was written.
The healthcare cost trend has been around 6%, while GDP is only growing at 2% and workers’ wages are growing at less than 2%. Keckley says it could be another two years before the economy begins to recover. PPACA wasn’t framed for such a sluggish economic situation.
Although reform regulations by and large target health insurers, many have performed well financially since the passage of PPACA, he says. However, incentives must change to drive payers toward spending what is appropriate for population health—rather than spending “as little as possible.”
Evidence-based medicine is one solution. Consider that $210 billion is spent every year on testing patients. Although $54 billion can be attributed to defensive medicine, another $150 billion can be attributed to the reimbursement incentives for clinicians to order more volumes of tests and receive reimbursement, according to Keckley.
But he warns that farther into the future the single-payer model could rise again. He says the up-and-coming generation has an “occupy healthcare” attitude and could advocate for Medicare for all by 2020. The question at that point would be whether the industry could survive on Medicare rates.
- See more at: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/single-payer-issue-will-rise-again#sthash.qfthbDX2.dpuf

By Julie Miller, Editor, Managed Healthcare Executive.

The future of healthcare centers on scale, population health and the value of care rather than the volume of care, according to thought leaders speaking at a leadership briefing in November in Akron, Ohio. But the political atmosphere also adds layers of complexity, they say.

In order for health systems to thrive, they need to create partnerships that advance care not only as a clinical goal but as a business imperative, according to Thomas Strauss, president and CEO of Summa Health System. Larger institutions will have the economies of scale that are necessary in the new era that aims to transform volume to value.

For example, he says, as many as 40% of Summa patients in a recent clinic survey reported having a mental health issue. The data point underlines the need for patient centered medical homes to have embedded behavioral health professionals, but there’s no reimbursement for it. Beneficial clinical models that are not reimbursed often become unsustainable.

“We have to move to the total cost of care,” Strauss says.

Regulatory implications
And the clinical aspects are only the beginning. Under health reform, hospitals have added regulatory risk that can amount to millions. Strauss says for Summa, reform could create anywhere from $19 million to $90 million in impact per year. Increasing efficiency is one way to manage the financial implications.

Every year, 6% to 8% of an acute care hospital’s revenue is at risk for penalties from readmissions, inadequate vaccinations for hospital employees and fraud audits.

“It’s not just the reimbursement, it’s also the government speed traps,” he says.

US economy
Paul Keckley, independent healthcare consultant, says the Patient Protection and Affordable Care Act (PPACA) is an imperfect law that resulted from many iterations, and it fails to address the reality of the healthcare system. It was created to help stabilize the U.S. economy—healthcare is about 17% of GDP—but the current landscape is much different than what lawmakers assumed when PPACA was written.

The healthcare cost trend has been around 6%, while GDP is only growing at 2% and workers’ wages are growing at less than 2%. Keckley says it could be another two years before the economy begins to recover. PPACA wasn’t framed for such a sluggish economic situation.

Although reform regulations by and large target health insurers, many have performed well financially since the passage of PPACA, he says. However, incentives must change to drive payers toward spending what is appropriate for population health—rather than spending “as little as possible.”

Evidence-based medicine is one solution. Consider that $210 billion is spent every year on testing patients. Although $54 billion can be attributed to defensive medicine, another $150 billion can be attributed to the reimbursement incentives for clinicians to order more volumes of tests and receive reimbursement, according to Keckley.

But he warns that farther into the future the single-payer model could rise again. He says the up-and-coming generation has an “occupy healthcare” attitude and could advocate for Medicare for all by 2020. The question at that point would be whether the industry could survive on Medicare rates.

See more here.

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One Comment

  1. Posted November 15, 2013 at 2:02 am | Permalink

    • physician, hospital outpatient, and other healthcare services through its “Part B” component.

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