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