Summary
Many risk assuming entities are available to doctors and hospitals courageous enough to believe they have the talent to manage their local healthcare market. Some 10-12 years ago we saw the market go nuts for Physician Practice Medical Groups (PPMGs), Group Practices without walls (GPWW’s), Independent Practice Associations (IPA), Physician Practice Organizations (PHO), Provider Sponsored “Medicare” Plans (PSO’s) under Medicare Part C, and leaving the best for last – Provider Sponsored Health Plan joint ventures between physicians and hospitals aka Private Label plans. Columbia/HCA raised 5 billion in 2 years and started applying competition to many hospitals used to not worrying about competition. The market knew that the most efficient model has physicians actively directing care and being financially rewarded or penalized accordingly.
Analysis
The common denominator to the “business of healthcare” is the assumption and management of financial risk. Fewer and fewer insurers will allow physicians and hospitals a blank check going forward, and our government will set the pace of the charge because of the burgeoning Medicare and Medicaid entitlement programs. The sooner medical providers realize their future autonomy hinges on balancing cost with efficacy of care, the better chance of keeping control. The AMA has been enormously effective at repealing federal fee schedule cuts, but that cannot be counted on forever. The AHA has been noticeably ineffective in getting cuts repealed. Should the national insurance advocates have their way, tremendous change is in store for hospitals, physicians, health insurers and consumers.
Community hospitals do not like doctors cherry picking their cash cow. Their concern about being stuck with the train wrecks is very real. But, given their track record at leading doctors into a risk bearing health care contracts, it presents at least a starting point of getting doctors to the management table and improve our massively fragmented health care system. The 45 million, some say is 80 million uninsured tell a clear story that if doctors and hospitals don't figure out a better way to work together, the government will do it for them, and soon. For commercially funded insurance to survive, somebody other than the employer is going to have to take responsibility for the cost of care to the patient. Under fee for service medicine, we can expect everyone to maximize production and profits until the system crashes. It is happening now for growing numbers of individual and small group insured who can no longer prefund their access to care with insurance.
Maintaining professional and financial autonomy going forward requires managing predictable and unpredictable financial risk. The market is aggressively competing for both – especially the unpredictable risk ceded with stop loss and reinsurance agreements. Successfully navigating the turbulent waters ahead mandates motivating physician leadership to collaborate with a well articulated vision. The rest of the world runs on budgets, and so will medicine. Whether you call it capitation or budget, the cost of care is still born by many medical providers whether they contract to accept the risk or not.
