Top Ten Tech Trends 2018: Markets and Medicine—Where Do Physicians Land, in the Emerging World of U.S. Healthcare?

Sept. 7, 2018
Even as the purchasers and payers of healthcare push hard on physicians to embrace value-based care delivery and payment, doctors remain conflicted and ambivalent about the new healthcare.

Editor’s Note: Throughout the next week, in our annual Top Ten Tech Trends package, we will share with you, our readers, stories on how we gauge the U.S. healthcare system’s forward evolution into the future.

As consolidation among all U.S. healthcare sectors accelerates, with health plans consolidating with one another, hospital-based health systems merging and acquiring each other, and physician groups growing larger and larger, where does that leave physicians in practice? The fact is, no clear path forward exists for aligning physician and hospital interests around advancement into value-based healthcare delivery and payment. And it seems as though the U.S. healthcare system is at an inflection point right now between the world that has existed—physicians practicing in small groups and working in a mostly fee-for-service or discounted fee-for-service payment system—and physicians moving forward quickly to seize the moment and embrace the challenges of value-based care delivery and payment. Where next?

Don Crane, president and CEO of the Los Angeles-based association APG, or America’s Physician Groups, puts practicing physicians’ nearly existential position right now very bluntly. “There’s no future around fee-for-service; it’s eroding out from under doctors,” says Crane, whose association represents more than 300 physician groups operating in 45 states, the District of Columbia, and Puerto Rico. “You look at the Medicare fee schedule and increases slated for the future,” he says. “What are they? The anticipated increases to physician payment under Medicare are going to be 0.5 percent, 0.25 percent, from here out to as far as the eye can see, they’ll be nearly flat; and the increases in costs of running practices will be increasing 2, 3, 4, 5, 6 percent. So you’re quickly on the way to the poorhouse if you’re trying to stay in a fee-for-service world. So how will we make a living? To make a living doing what you want to do, you’re going to need to find a different way to make a profit under flat revenue. How do you do that? You keep the population healthier. You stare into the data and figure out who will get sick next, by using predictive analytics.”

Don Crane

Meanwhile, Crane says, the pace of advancement in terms of physician groups taking on risk “is going moderately well. Has it accelerated? No. Has it slowed? Probably not. It doesn’t feel like there’s a white-hot fire underneath it at the moment. There is a generalized belief that we need that movement to occur and succeed. At the same time, there are entrenched interests.” The reality, he says, is that most physicians are “content to sit in the status quo and make a pretty good living, and don’t want to incur enormous cost and effort unless they have to.” But pushes on the part of federal, state, and private payers will compel physician groups forward in their progress, he adds.

“As a general trend, groups would like to take on more risk. The challenge is that it hasn’t evolved as quickly as we might have anticipated,” says Fred Horton, president of AMGA Consulting, the consulting arm of AMGA, the American Medical Group Association, based in Alexandria, Va., which represents large independent and integrated health system-affiliated physician groups in U.S. healthcare. “If you look back five years ago, the perceived shift from volume to value was supposed to happen relatively quickly. It hasn’t happened as fast as expected; and it’s happened faster in some markets than in others.
The challenge for health systems, obviously, is that they have a foot in each boat. It’s almost like how it was in the 80s and 90s, where you had some fee-for-service and some capitation. What we see from the membership is that they’re investing in the systems that will work in a value-based environment and putting the incentives in place, but if the market doesn’t shift fast enough, you end up upside down for a period, right? Some of that is happening. And you’re trying to figure out how quickly we build this, and how quickly it will ultimately come.”

How to Align Physicians and Hospital Systems for the Emerging Healthcare System?

Tricia Nguyen, M.D. sees a host of challenges, as well as definite opportunities, in the near future, in terms of how to get physicians and hospital-based health systems on the same page, and aligned to partner for the emerging future of healthcare.

Nguyen, a senior executive at the Falls Church, Va.-based Inova Health System, came to Inova last year in order to help to lead and expand a clinically integrated network and joint-venture insurance company that Inova had created with Aetna. “My title was CEO of Commonwealth Health Innovation Network,” she explains. “But as it turns out, I found within 30 days that we didn’t have much to scale, so I’ve been focused internally, and now lead our population health efforts under the title of senior vice president for population health.”

Tricia Nguyen, M.D.

Speaking of the northern Virginia healthcare market in which the five-hospital Inova system has a significant market share, Nguyen says, “This market is in a bubble; 70 percent of the population is insured by some carrier, employer-sponsored generally,” she says. The system serves a very affluent population, with “double-income, double-degree families”; and Inova controls 60 to 70 percent market share in its area. Given that market dominance, she says, “For the system, there’s not a real pressure to change, but we saw a real opportunity in this joint venture with Aetna. Providers are still making a lot of money on the fee-for-service payment schedule, because so many of their patients are commercially covered, so they don’t have to deal with a lot of government products. Some family practice and internist physicians have a high percentage of Medicare, but many are no more than 50 percent Medicare. Many are 70 to nearly 100 percent commercial. So as far as fee-for-value, they’re worried about MIPS and MACRA, and they want help with that.”

The important revelation that’s emerging for her and her colleagues, Nguyen says, is the realization that physician alignment to date has been missing a key component. “The primary care physicians have essentially been doing value-based care for several years here, but only for the CareFirst population,” she says, referencing CareFirst, a regional BlueCross BlueShield company that offers a range of health plans across Maryland, the District of Columbia, and northern Virginia. “Have they changed practice patterns? A little bit, but not much.”

And, importantly, she says, she and her colleagues are realizing that “Fuller value will come when we can identify the high-value specialists, those who are high-performing, low-cost, given the way they practice, and use them. That to me is the secret, and no one has that secret mastered quite yet. And that’s because the tools don’t really exist to help. I believe that ACOs are too focused on primary care, and that primary care has to bear the burden to drive down the costs of care, when in fact it’s going to take collaboration with the specialists. While care coordination is important for holistic health, to generate real savings, you’re going to have to drive down specialty care costs as well.”

Even physician groups that have been moving forward on their journey into value for more than a decade are finding the path to involve some rough sledding, says Barbara Spivak, M.D., president and CEO of the Mt. Auburn Cambridge Independent Practice Association, or MACIPA. Spivak, who has been lead ing the now-500-physician IPA since 1987, and who led it into the Pioneer ACO Program, before shifting it into Track 3 of the Medicare Shared Savings Program (MSSP) after three years in Pioneer, says the transition from volume to value is taking its toll on many of her colleagues. “There’s a whole lot of discussion about burnout and physicians being unhappy with the practice of medicine. And I think when you look at physicians in private practice or employed, in their day-to-day world, physicians are asking, how is this going to make my life better and make it easier to take care of patients?” Spivak relates, speaking of the challenges involved in constantly improving efficiency and outcomes under value-based contracts. “Private practice doctors feel like they have a little bit more control, because they can control their staff and work-life balance—but even they, because it’s so hard to keep their income up to expectations, and overhead is so high, are feeling challenged” by the current realities of physician practice.

So the current moment in the evolution of the U.S. healthcare system is a particularly tricky one for physicians in practice. Faced with pressures from the purchasers and payers of healthcare to move forward into value-based care—the August announcement by Seema Verma, Administrator of the federal Centers for Medicare and Medicaid Services (CMS) of a new proposal called “Pathways to Success,” designed to compel patient care organizations participating in the MSSP program to take on two-sided risk more quickly, is a timely example here—physicians and physician group leaders are gradually evolving forward into the new healthcare. But despite the efforts by purchasers and payers to push physicians and physician groups forward quickly, physician group leaders will need more time than purchasers and payers would like, to collectively move to the next level when it comes to aligning with health systems and moving fully into that new, value-based world.

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