Are Hospital Business Models on a Burning Platform? Not Yet, But It’s Inevitable.

From reading recent headlines, one might easily get the impression that hospitals are resistant — or at least ambivalent — in their pursuit and adoption of accountable care initiatives.

Are Hospitals Dragging their Feet on Accountable Care?

Commonwealth Fund: “only 13 percent of hospital respondents reported participating in an ACO or planning to participate within a year”

KPMG Survey: “(only) 27 percent of [health system] respondents said current business models were either not very or not at all sustainable over the next five years”

Health Affairs: “Medicare’s New Hospital Value-Based Purchasing Program Is Likely To Have Only A Small Impact On Hospital Payments”

The Bigger Picture

Do hospitals today perceive their current business model on the metaphorical “burning platform” — when the status quo is no longer an alternative?

Physicians Shouldn’t Wait for Big Data: “Small Data” Can Jumpstart Your Care Management Program

by David C. Kibbe MD, MBA and Vince Kuraitis JD, MBA

Everywhere we turn these days it seems “Big Data” is being touted as a solution for physicians and physician groups who want to participate in Accountable Care Organizations, (ACOs) and/or accountable care-like contracts with payers. We disagree, and think the accumulated experience about what works and what doesn’t work for care management suggests that a “Small Data” approach might be good enough for many medical groups, while being more immediately implementable and a lot less costly. We’re not convinced, in other words, that the problem for ACOs is a scarcity of data or second rate analytics. Rather, the problem is that we are not taking advantage of, and using more intelligently, the data and analytics already in place, or nearly in place.

For those of you who are interested in the concept of Big Data, Steve Lohr recently wrote a good overview in his column in the New York Times, in which he said:

“Big Data is a shorthand label that typically means applying the tools of artificial intelligence, like machine learning, to vast new troves of data beyond that captured in standard databases. The new data sources include Web-browsing data trails, social network communications, sensor data and surveillance data.”

Applied to health care and ACOs, the proponents of Big Data suggest that some version of IBM’s now-famous Watson, teamed up with arrays of sensors and a very large clinical data repository containing virtually every known fact about all of the patients seen by the medical group, is a needed investment. Of course, many of these data are not currently available in structured, that is computable, format. So one of the costly requirements that Big Data may impose on us results from the need to convert large amounts of unstructured or poorly structured data to structured data. But when that is accomplished, so advocates tell us, Big Data is not only good for quality care, but is “absolutely essential” for attaining the cost efficiency needed by doctors and nurses to have a positive and money-making experience with accountable care shared-savings, gain-share, or risk contracts. The promotional literature for Big Data is peppered with jargon and catch phrases — “close to the point of care,” “synthesizing large amounts of information,” “transformational analytics,” and so on — that promise to “de-fragment” the current health care environment and offer predictive insights that the doctors, nurses, and patients do not now possess.

This all may be true. But why wait for Big Data to be put in place, when what we’ll call “Small Data” is already available and can offer information and analytical insights sufficient to get a good start on care management programs capable of improving quality and reducing some unnecessary costs?

Hospitals…Thinking About Getting Into Health Insurance? 6 Reasons To Lie Down Until the Urge Goes Away.

Greg Masters reports on a recent Kaiser Health News article: Hospitals Look to Become Insurers, As Well as Providers of Care”.

This is the dumbest idea I’ve heard since “I’m going to invest all my money in Facebook’s IPO and get rich!”

Here are six reasons why:

The ACO Antitrust Police — Nothing to Do

One of the biggest concerns about ACOs has been their potential to enable market consolidation— that by uniting health care providers the ACO gains market clout and ability to charge higher prices.

While this is a legitimate concern about ACOs, so far it’s not playing out.

Why?

 

Leavitt ACO Report: Overstating or Understating Accountable Care Activity?

Accountable Care Organizations (ACOs) have been likened to

a unicorn — a fantastic creature that is vested with mythical powers. But no one has actually seen one.

a camel — a horse designed by a committee, one that already has its nose in the tent

With this background, you can begin to appreciate the difficulty of conducting an accurate census of ACO animals in the wilderness.  Yet, this is exactly the task undertaken in the excellent Leavitt Partners report measuring ACO activity in the US.

As I will explain, the Leavitt report has the potential both to overestimate and underestimate ACO and accountable care-like activities. In my judgment, however, it’s far more likely to be understating just how much accountable care activity actually is going on.

Findings in the Leavitt Report

The Leavitt researchers “identified ACOs from news releases, media reports, trade groups, collaborations and interviews through the beginning of September 2011. Also included were entities that either self-identified as being an ACOs or specifically adopted the tenets of accountable care.”

The report counts 164 ACOs — 99 that are primarily sponsored by hospital systems, 38 by physician groups, and 27 by insurers.

Here’s how Leavitt summarized their results:

Six Quick First Impressions of the CMS Bundled Payments for Care Improvement Initiative (BPCII)

This afternoon CMS announced the Bundled Payments for Care Improvement Initiative (BPCII). For details, start reading here.

Here are six quick first impressions:

1. It’s very creative and innovative. CMS has demonstrated out-of-the-box thinking and leaves a lot of room for applicants to propose their own approaches. Expect to have to read the materials 2-3 times to wrap your thinking around it.

Unlike the Medicare Shared Savings ACO rule, the BPCII is flexible.  Anticipate some innovative and non-traditional proposals from diverse applicants. Unlike the Medicare ACO Shared Savings rule, the BPCII invites flexibility in:

  • Definition of care bundles
  • Proposal of specific financial terms
  • Participation by diverse care providers (see below)
  • Risk adjustment of beneficiaries

The Practice of Medicine: from Marcus Welby to ???

by Jaan Sidorov MD, MHSA, FACP and Vince Kuraitis JD, MBA

Physicians face great uncertainty. According to a survey conducted by The Physicians Foundation, the great majority of physicians (89%) believe the traditional model of independent private practice is either “on shaky ground” or “is a dinosaur soon to go extinct.”

In the face of this uncertainty, many physicians are jumping to a conclusion that “I have to sell my practice to the hospital.” In this post of our series on The 100 Year Shift, we will examine physician practice.  We’ll show that the economic and clinical environment  is changing rapidly and that selling to the hospital is one option. However, it is not the only option.

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???

Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center

by Vince Kuraitis JD, MBA and Jaan Sidorov MD, MHSA, FACP

In our introductory posting of this series, we noted that economic incentives previously aligning doctor-hospital interests were changing. This creates the potential for The 100 Year Shift – physicians awakening to possibilities for stronger partnerships with payers than with hospitals.

In this post, we will zero in on the changing economic position of hospitals and the effect this is having on physician-hospital relationships. We will examine the trend of hospital employment of physicians and point out challenges and tensions for the future. [This is a long post...so now might be the time to refill your coffee cup.]

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???

Will Health Plans Continue to Buy Up Hospitals?

I doubt it.

IMHO, the recent acquisition by Highmark Blue Cross Blue Shield of West Penn Allegheny Health System (WPAHS) for $475 M is unique to local market conditions. It was done as a last resort and should not be taken as a signal that health plans are starting a hospital buying binge.

Why are hospitals unattractive investments for health plans:

Payment Transformation: From Volume to Value

by Jaan Sidorov MD, MHSA, FACP and Vince Kuraitis JD, MBA

In our introductory posting, we suggested that a huge shift is underway in the health care industry.  Decades of hospital-physician cooperation are not only eroding, we suggest this trend could accelerate.  Instead of a natural clinical and economic affinity with hospitals, we foresee the potential for physicians forming a new dyad with insurer-buyers.

In this post, we will examine what we and many other commentators view as inevitable: the demise of volume-based payment systems and how the drive for greater value will cause physicians and insurers re-examine their normally antagonistic relationship.

Table of contents for the series--The 100 Year Shift? Strategic Realignment among Physicians, Hospitals and Payers

  1. The 100 Year Shift? Introduction and Overview
  2. Payment Transformation: From Volume to Value
  3. Physician-Hospital Relationships: The Hospital Morphs from Revenue Center to Cost Center
  4. The Practice of Medicine: from Marcus Welby to ???