Health Reform: What's a Provider to Do?

What should health care providers be doing in anticipation of the likely passage of an historic health reform bill?  There are at least three possibilities: (1) Lament the passing of the good old days and oppose it; (2) Insist that it isn't good enough because it is lacking some key provision (tort reform; SGR replacement; robust public option); or (3) Embrace it, because incrementalism works, and prepare for what's coming down the pike.

As you may guess, I would recommend taking the third approach, which requires focused preparation for the road that lies ahead.  So, what is a provider to do?

In the future, there will be pilots, demonstrations and mainstream programs trying to do more with less: providing health insurance and health care services to more people, with effectively fewer dollars per capita.  Payors — be they public sector or private sector — will therefore be squeezing providers.  The House and Senate versions of the health reform bill are equally clear on this point.  Providers therefore need to be proactive in preparing themselves to provide high-quality health care services at competitive rates.Instead of simply resigning themselves to negotiating percentage discounts off of current rates of payment, all providers need to be prepared to negotiate global payments, pay for performance deals, quality incentives and more — as some forward-thinking provider organizations have been doing for some years now.

In order to be able to negotiate these terms effectively, providers must have a good handle on their own cost structure, and must begin to work at developing broader alliances of providers so as to be better positioned for negotiations with public and private payors.

In my years of experience in working with health care providers at that moment — the point in time when folks with otherwise disparate interests realize the tremendous value of working together effectively in order to simultaneously promote better clinical outcomes for patients and better financial outcomes for providers — I am always heartened by the epiphanies of the providers who realize that a new approach, or a new structure, can take them beyond their historical, positional, sometimes defensive attitudes, and into a future that they are able to shape and help define.

I look forward to working with more providers and provider organizations at this critical juncture so that they can be prepared for the future that will soon be upon us, and so that they can have a hand in crafting that future.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting


Comments

  1. says

    Great article,

    My company faced the same this situation 10 years ago with the paradigm shift in software engineering when off-shoring became the norm. When you recognize a shift you need to get ahead of it so that you can control your business. You can fight and expend your energy or you can learn to adapt and control the change.

    This doesn’t mean you have to like the change. If you realize that the shift is going to happen regardless of your opinion. You are better to embrace and be viewed as a champion.

    Jeff Brandt
    http://www.comsi.com

  2. says

    David, I am not as optimistic as you regarding your comment, “I am always heartened by the epiphanies of the providers who realize that a new approach,…” Many of the ‘reforms’ imposed upon the medical profession during and prior to my 20 year career, have been accomplished because physicians and others stood idly by. I hope for some strength in unity now, but we’ll have to see. It would be hard for the medical community to speak with one voice, since we are disparate elements with competing interests, e.g. primary care vs specialists. Most of believe that the current reform legislation, if it survives in tact, will continue the trend of doctors working harder for less income. I think that private physicians like me will be siphoned into employed positions by design. As for your comments on quality, I don’t believe that pay for performance, or similar initiates, have much to do about quality. It’s more like pay for paperwork. More thoughts on these issues at http://www.MDWhistleblower.blogspot.com

  3. says

    David: nice piece yet I resonate more with Michael’s take above than your ‘hopeful’ paradigm of practical incrementalism. Our industry has ‘whack a mole DNA'; tweak it here and it compensates over there. Been that way since early 70s; not much reason to assume ‘this time it will be different.’ Though I do applaud your ‘lets get to work’ sensibilities.

    Me too on the ‘been there done that’ routine…we’ll see. One thing is for sure, the billable hours index will rise, yet despite the ‘best efforts’ of third party consultants, the systemic change meter (a tangible shift from solo to real mission based physician group practice culture) may register nuanced if any movement. Call me a cynic, but the weight of the evidence is on my side.

  4. says

    Gregg: Nothing wrong with being a cynic; single payor is not going to swoop in, so we are stuck with the “push in the balloon here, watch it pop out there” approach. My point is simply that, faced with the latest flavor of systemic change coming down the pike, whether ill-conceived or no, the provider community — physicians, hospitals, others — must be proactive in order to meet these new challenges head-on so as to come out as close to the top as is possible. Failure to prepare is a sure recipe for disaster. Organized medicine has managed to garner a 2-month delay of the latest SGR adjustment (a 20%+ cut of Medicare MD reimbursement); that is the equivalent of the finger in the dike. More comprehensive preparation for what comes next is a must.

    Michael: Not all physicians will be able to continue to resist the seismic changes to the system that have been occurring for decades, and many are, or will become employees. This is not the end of the line; it is a new paradigm for many physicians. Physicians, whether employed or bound together in other practice models, need to be prepared to contract effectively with Medicare and other payors under demos and pilots authorized by the health reform legislation and otherwise (whether initiated by governmental or private payors). You bemoan physicians standing idly by — we are then in agreeement that physicians (and other providers) need to prepare themselves for more beneficial engagement with payors under this new regime. Preparation and organization will count, and providers need to prepare now for the point in time a year or two or three from now when the rubber meets the road.

    Jeff: Thanks for your comment and perspective from another industry.