Healthcare

Team-based Care – Part II

Look into many markets in the U.S. and you’re likely to find non-physician providers in greater demand and better paid than in the past few years. The 2013 HORNE Medical Office Staff Salary Survey supports this by reporting a significant upswing in the demand for non-physician providers. Survey results show a startling 68% jump in the number of non-physician providers added to hospitals and practices from 2009 to 2013. But perhaps the quick rise in demand isn’t as surprising when put into the context of the Affordable Care Act, and shrinking reimbursement. 

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Team-based Care – Part I 

Are we facing a health care disaster due to an increase in demand for primary care and a decrease in availability of providers?  Should we be concerned that statistics from the Association of American Medical Colleges predict we will lack more than 60,000 physicians nationwide by 2015?  It is definitely true that the number of insured individuals is increasing due to the Accountable Care Act (ACA); baby boomers are aging and will require more medical attention; and the number of primary care physicians is decreasing.  But the prognosis isn’t necessarily grim as this imbalance of supply and demand creates opportunities for new health care delivery systems. 

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The consequences of a shift in the Fee-for-Service (FFS) revenue model to outcomes-based compensation is creating a tsunami of change for hospitals. Let’s look at how this shift is affecting the valuation of hospitals in a buy or sell situation. 

In an FFS revenue model, valuations were based on how much revenue generated was attributed to volume. That is all changing with the Affordable Care Act (ACA). Today, hospitals face a variety of issues that impact day-to-day operations and the bottom-line:

• Declining inpatient volumes
• Lower reimbursement rates  per patient from Medicaid and Medicare with private payors starting to follow the trend
• The advent of high deductible plans in private pay
• Changing diagnosis codes
• Enhanced regulatory vigilance 

These factors contribute to a financial model where  operating expenses are outpacing revenue.

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Here is a round-up of health care stories that are catching our interest this week.

Is the Health Care Workforce Prepared for an Increase in Alzheimer Patients?

The April issue of Health Affairs is devoted to the latest research and thinking about Alzheimer’s disease. Alzheimer’s cases already overwhelm health care facilities and families. The challenge is expected to worsen with an increase from 5 million cases in 2013 to 13.8 million cases in 2050. Here is detailed look at how to increase and train a work force that is prepared for the challenge. 

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Median expenditures for emergency department (“ED”) call coverage, according to the 2012 Sullivan, Cotter & Associates Physician On-Call Pay Survey Report, increased for both trauma and non-trauma hospitals between 2009 and 2012. So paying close attention to fair market value in ED on-call arrangements is as important as ever. This means that filtering through anecdotal information is critical to avoid missteps when hospitals enter into on-call payment arrangements.

An important distinction in ED on-call pay is found in the difference between independent physicians and many physicians employed by the hospital. Two central economic concepts related to ED on-call pay – compensation for physician availability and reimbursement for uncompensated care – may be vastly different for an independent and an employed physician. Continue reading >

Few subjects have provoked as much passionate debate in the health care valuation community as relying on the asset approach as the sole basis for a conclusion of physician practice value when the income approach indicates no supportable intangible value, including the value of a trained and assembled workforce. A new white paper, Intangible Asset Valuation, Cost Approach Methods and Procedures, authored by highly regarded valuation expert Robert Reilly and published by the AICPA, is a much needed and generally well-written technical resource on the application of cost approach methodology to the valuation of intangibles.

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As hospitals continue to ramp up efforts to acquire and contract with physician practices, they must do so in a way that reflects not only good market strategy, but also protects future financial stability and regulatory compliance. Hospitals that are in an aggressive acquisition mode often point to the looming changes in reimbursement models that shift payments from fee-for-service to an outcomes-based model focused on episodes of care. Many hospitals feel that in order to stay competitive in this changing market , they need to align with physician practices, and do it expeditiously before competitors beat them to the punch. But at what cost?

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There are a flurry of stories lately about telemedicine and they are not just in health care publications. Whether it is the New York Times or Forbes or other major outlets, telemedicine is being talked about and here’s why:

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There have been serious, but somewhat quiet experiments going on for years around using bundled care to improve patient outcomes and cut costs. Prepare for some noise as states like Arkansas start figuring out the formula for making it work. The spotlight on bundled care as a potential successor to the Fee-for-Service (FFS) model is getting brighter driven by the Affordable Care Act (ACA) and the search for new payment models that can support the high costs of offering health care benefits to an expanding (and aging) population.

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Cutting administrative costs has traditionally been the first strategy hospitals use to make up a budget deficit. But in today’s health care environment, it will take more than reducing personnel and operational expenses to make up the shortfall that is on its way, if not already here. There are a variety of reasons why cutting administrative spending won’t balance the budget – but in a nutshell, it’s not enough and it does not drive better patient care. 

Many hospitals already lose money on Medicare and Medicaid and those reimbursement amounts continue to drop. It is also anticipated that private payers will reduce their rates in proportion to the federally funded programs.  Medicare Fee-for-Service (FFS) reimbursement models are on their way out. Physicians and health care systems will be forced to adapt to changing models in order to stay in business. 

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Health care in 2014 is in a state of flux. The Affordable Care Act (ACA) Health Insurance Exchange Marketplace opened in October 2013 with a rough start that has still not gained traction. Meanwhile, Medicare and Medicaid are squeezing reimbursement. And there is a growing population paired with a shrinking supply of doctors. These are only a few of the challenges facing health care professionals this year. 

So what are administrators doing to meet these challenges and transform their institutions to meet the new health care realities? For one thing, forward-thinking leaders are not sitting on the fence. They are accepting the reality of lower reimbursements - taking a hard look at old thinking and throwing it out if it doesn't make sense anymore. Here are four habits of highly effective health care leaders: 

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“Status quo is not a strategy”

Welcome to our conversation about changing the culture of health care organizations. Each week we will dive deep into the challenges facing health care providers and the big ideas that are solving them. We’ll also monitor trending news to bring you stories that are important to improving the health of medical providers.

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