One year later, the Patient Protection and Affordable Care Act introduced those same providers to a proverbial forest of sticks with its emphases on privacy, accountable care and insurance coverage changes. The combination of the two acts has blotted out the sun — and nearly every other landscape feature — for most providers and provider organizations.
Controversial from the start, the PPACA was landmark legislation three years ago. It remains front and center after being tested by the Supreme Court, a Presidential re-election and a government shutdown. Like the ARRA, much of it is yet to be written, requiring tens of thousands of pages of regulations to explain the details. And like the ARRA, it is deeply flawed in places and will require many years of refinement.
The PPACA tries to supercharge the required transition from a reactive, episodic care-based payment system to one that might reward preventive care, wellness and patient outcomes. Providers generally see the promise, but they almost universally question the ability of the law to achieve its outcomes, particularly in light of the rapidly changing cost factors in medicine.
Medicine is getting more expensive to provide, and the health IT transition mandated by the ARRA has not yet reached the break-even point for expense control for many (if not most) provider organizations. Demand is down, particularly for inpatient and elective procedures, and margins are under heavy pressure.
To make matters worse, regulatory oversight is rising and is highly unpredictable. For example, on Sept. 1, 2012, CMS finalized a rule proposed five months earlier that gave eligible providers only until July 1, 2014, to begin attestation for meaningful use before penalties would apply for 2015. Until that point, providers generally believed they had as much as 15 months longer, and many found themselves in difficult straits. By contrast, in August 2012, the ICD-10 implementation date was arbitrarily delayed a full year, from Oct. 1, 2013, to Oct. 1, 2014. Regulatory changes of this nature are difficult to predict and require both flexibility and preparation from providers.
In order to survive in this environment, providers must focus on achieving the following:
1. Reduce expenses, both per-patient and fixed overhead. Admittedly, this is easier said than done.
2. Where practical, grow larger through acquisition or affiliation. This spreads fixed overhead over a larger patient volume and allows much more efficient team-based and whole-patient care. Organizations that do this need to focus most of their efforts on achieving their expected savings and values, which is not always top-of-mind for rapidly growing organizations. Where volume growth or acquisition is not possible, look to define and occupy niches of particular expertise or economy supported by cutting-edge technology.
3. Achieve meaningful use and avoid ARRA Medicare penalties. Providers who have missed meaningful use to date are now looking at reduced awards and penalties (amounting to small but significant percentages of CMS billing) beginning in just over a year.
4. Achieve ICD-10 compliance by Oct. 1, 2014, without destroying the organization. While ICD-10 is critical (not billing with ICD-10 is simply not survivable for most providers), this has become the “Y2K” for healthcare. Caution, particularly around involving physicians and mid-level providers in the minutiae of coding, is strongly advised.
5. Pursue transparency for quality outcomes and cost. Payers, employers and patients are all watching these carefully, and organizations that are not forthcoming will become less favored over time.
6. Pursue transformation in long-term healthcare, including population health, chronic disease management and wellness. Fee-for-service is likely to become far less sustainable as a primary business model.
7. Reduce clinical variation, both by pursuing good evidence where available and by achieving agreement on leading practices among providers. Much of the variability in clinical care is not associated with improved outcomes, and some of it is actively harmful, both in terms of cost and patient outcomes.
8. Recognize and honor the risk you own. Health systems have always “owned” the risk for charity and “self-pay” patients. The ones that recognize and accept this are much more likely to provide good care and also keep costs under control.
9. Look for whole-patient (“accountable”) care opportunities within your own orbit. While the PPACA set out the framework for accountable care organizations, the reality is that these are still embryonic. Organizations that begin at home will be ready for risk-sharing with outside entities when it becomes commonplace.
10. Treat your IT expenditures as long-term investments, not expenses. Organizations should expect to spend an increasing percentage of capital dollars building technology assets. Acquire standards-based IT assets that will stand the test of time. Expect, plan and capture the hard- and soft-dollar returns from them. Organizations that do this will invest at the right time and in the right areas. Organizations that view IT simply as an expense will forego future profits in the pursuit of short-term efficiency. Much of IT investment will actually be spent on the people and process changes needed to accomplish needed transformation in healthcare, and little of that will be wasted.
Dick Taylor is the managing director and CMO of MedSys Group’s Advisory Services Division. Dr. Taylor focuses on integrating IT efforts with the clinical and operational ownership needed to capture permanent and positive changes within healthcare institutions.
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