Healthcare

Surveys such as the Health Leaders Media survey, Physician Alignment: New Leadership Models for Integration, indicate that physician employment will continue to be a primary integration strategy for many hospitals and health systems. Where saturation of primary care and specialist practice acquisitions and employment has occurred, several markets have moved to a second or third tier, such as urgent care centers and related physician employment. It seems that some markets are only limited by the supply of viable targets.

Physician practices, however, are not created equal, and hospitals and health systems are becoming increasingly savvy in targeting groups for alignment that can demonstrate delivery of high-quality care. As the reimbursement model continues the shift from a volume-based to value-based system, physician participation in meeting quality and cost-saving targets will require a greater nexus to methods of physician compensation. In an increasingly competitive environment, it may be difficult to meet the need for quality care without a carefully selected and motivated physician network.

The early experience with ACOs has not been very good. The cost of implementation has been higher than expected, and population health management has been difficult to achieve. Data released last October showed that out of 220 CMS ACOs, only 52 were able to share savings, and 115 ACOs had no cost savings. The CMS ACO spend was reduced by a paltry 1%.

So why were the results so underwhelming? It was harder to reduce costs than expected. Low hanging fruit did not exist. The outcomes could have been better if they had deployed these three important strategies.

All hospitals want to be quality leaders. They all want to have the best outcomes at the lowest cost. 

One of the biggest challenges in implementing a quality improvement strategy is figuring out where to begin. Most of the quality improvement efforts hospitals currently focus on are centered around mandatory monitoring regulations (CMS and otherwise). This tends to be effective for specific measures, but tackles only a small piece of the puzzle.  

It is not uncommon to see parties to a transaction or arrangement engage more than one valuation firm to arrive at fair market value. This is especially true when the parties have both referral and financial relationships and risk implicating federal physician self-referral laws. However, there is a difference between using separate appraisers and “opinion shopping,” the latter of which can be a very risky proposition. The scenarios below provide some examples of the use of multiple valuators, when they are effective, and when they become very costly.

On Day 2 at the AHLA Physicians and Hospital Law Institute, three themes ruled the day. Here’s a quick recap:

Telemedicine

A technology driven revolution is taking place in healthcare. The traditional patient/physician relationship is changing, and consumer demand will cause telehealth to become mainstream healthcare.  Remote access and patient monitoring will become more prevalent. Access to care will improve, as it will be available in locations where it is limited, or doesn’t exist, today.
 
The Federation of State Medical Boards (FSMB) has adopted the “Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine.” Leadership in your facilities should be familiar with FSMB policies.   

Act Now to Increase Your Odds of Success

Yesterday, the HORNE Healthcare team made notes of key points in sessions with over 400 of the nation’s leading healthcare attorneys. The presentations reinforced the idea that disruptive change is creating opportunities in the industry:

Volume-based, fee-for-service reimbursement is gradually being replaced with value-based reimbursement. In fact, CMS recently announced a target of 50 percent of Medicare payments tied to quality or value through alternative payment models by 2018. A Clinically Integrated Network is one type of model that is helping move the industry from volume to value. In the CIN, providers collaborate to achieve enough integration at the clinical level to contract jointly with payers and reach the Triple Aim — better patient care, better population health, and lower cost of care. 

One factor that helps ensure the success of the CIN is the method by which the organization compensates participating providers for furnishing high quality, cost-effective care. In this environment of delivery and payment system reforms, distribution models based on the value contributed to the organization by its providers are better positioned to achieve organizational objectives.

As the healthcare delivery system undergoes the transition from an environment where greater volume generally equates to higher revenues, to a world where utilization (i.e. volume) will no longer be a source of revenue but viewed as an expense, a question naturally arises - “How is one supposed to compensate physicians in a world turned upside down?” Here enters the vaunted term “value-based compensation” to answer the question – save that few people can then actually explain the intricacies involved to execute a “value-based compensation” arrangement. However, fear not, the basic composition of value-based compensation arrangements are what we will explore today.

Just days before the end of 2014, the IRS released long-awaited final regulations under Section 501(r) for charitable hospitals exempt under Section 501(c)3. These regulations are in response to requirements enacted under the Affordable Care Act and finalize regulations first proposed in June 2012 to hold tax exempt hospitals to a higher standard.

The final regulations not only clarify language but also make several significant changes that both increase and decrease the burden placed on tax exempt hospitals.

Here are 3 key takeaways from the finalized regulations:

Clarity on Government Hospitals and 501 (c)3 Status

Final regulations confirm government hospitals previously recognized as exempt under 501(c)3 are subject to all of the 501(r) regulations. The IRS notes these hospitals can request to voluntarily terminate their section 501(c)3 recognition to avoid being subject to the regulations.

The mindset of many hospitals over the last several decades has been to be everything to everyone. There was a desire to create a complex organization offering many different services. The challenge with this organizational philosophy is multi-fold, especially for rural hospitals that find themselves funding specialty services that are low in demand, sometimes at the expense of serving more pressing needs of their community.

Hospitals might want to take a page from the Proctor & Gamble playbook that changed from offering many different products in many different sectors to a simplified offering of their most profitable and targeted product lines. You can read more about it here in an interesting post on the story and its lessons for hospitals.

Nearly a year ago, we started our conversation on this blog about the big ideas and important news driving big changes in healthcare delivery. There are many challenges to face, but also many opportunities that can be mined. It’s an exciting and pivotal time for healthcare leaders and our goal remains the same as we approach 2015: to help our clients meet the future armed with the information that matters.

As you look toward leading your organization into the new year, here is a resource center of articles to help you move your workplace culture forward, note important regulatory deadlines and stay compliant, and secure patient health information (PHI). We look forward to continuing to bring you the resources you need to make informed decisions that protect and grow your organization. Happy New Year from our team to yours!

With most hospitals paying for emergency department on-call coverage, it is important to understand the factors that influence the value of these arrangements. Following these simple ABCs make understanding and documenting fair market value a lot less complicated.

In earlier days of hospital-based physician coverage, specialties were mostly limited to radiology, pathology, anesthesiology, and emergency medicine. As the hospitalist specialty developed, more hospitals began contracting for inpatient coverage to provide a broader continuum of care. Later, additional specialties, including pediatric hospitalists, intensivists, nocturnists, laborists, surgicalists, and neonatologists, grew in popularity.

Coverage by hospital-based physicians can be based on shifts or hourly or daily coverage, and can extend to multiple facilities and hospital departments. Coverage can include restricted and unrestricted on-call coverage as part of the arrangement. In addition, administrative responsibilities, quality improvement, and program development are often required.