PRIORITIES ARE CHANGING FOR PATIENTS AND PROVIDERS
For the past decade, healthcare has become recognized as one of the most important social and economic issues in our country. After the passage of the Affordable Care Act in 2009, the first and biggest issues that emerged were focused on payment for services and legal changes that were required to enact the new law. The ACA created myriad changes in the way healthcare is delivered and paid for, and many of these were not foreseen, producing many unintended consequences of the new law. The latter half of the past decade has brought forth multiple responses from the private sector as it adjusts to answer the challenges foisted upon it by the ACA.
As a result, medicine is changing and not only federal law, policy, and economics, but also patient values, attitudes and behaviors are driving this. Patients are becoming more informed and empowered; their preferences and expectations for healthcare services parallel consumer trends in general, such as: Instant Response and Feedback, Convenience and Ease of Use, Lowest Cost, and Integrated Experience (today’s patients consider this just as important as Quality). What else is at work here? Several factors, including the influence of the Millennial generation, who prefer to choose healthcare providers that have good online reviews and impactful websites, online and timely scheduling, and good customer service. Physicians expectations are also changing and desires are shifting so that younger physicians prefer regular hours and adequate time off for a family life in addition to their busy professional lives.
For providers, the creation of alternative payment models (APMs) to reward value over quantity of services provided is now taking hold in a serious way. In the first few years they were put into use, providers could opt out of participation, or were incentivized by receiving upside payments if they met or exceeded pre-determined quality thresholds, typically based upon achieving a good outcome without complications for the covered patient types and encounters, and cost savings over traditional models of care. However, now the focus of these programs is changing to require provider participation and to penalize providers by withholding a percentage of payment if quality goals are not met. The upside rewards associated with APMs will eventually be eliminated entirely. This has created a complex system of misaligned incentives for different providers. Unless there is strong alignment between physicians of different specialties and health systems, management of the bundled and shared savings revenues could devolve into an ugly display of competition between the providers involved. Progressive health systems must learn to leverage aligned physician networks in order to increase APM participation and, ultimately, to provide improved quality of care for the APM to function optimally. Given this reality, it is expected that further consolidation and clinically integrated networks will grow and expand across larger regions.
Disruption within the healthcare marketplace is pushing innovation and growth of new models of healthcare delivery outside of traditional settings. Entry into the healthcare market by companies such as CVS/Aetna, Albertsons/Rite Aid, and Cigna/Express Scripts will create opportunities for vertical integration of healthcare services that will disrupt traditional healthcare delivery models. Increasingly, consumers are responding favorably to these changes with over half of those surveyed signaling a willingness to receive healthcare outside of traditional settings. Traditional service delivery in the hospital setting is expensive, slow, redundant and generates high out of pocket costs, high deductibles and co-pays for patients. This trend will continue as many services are removed from the hospital setting. Unless health systems can devise creative ways to lower their cost structures, and improve patient experience, they will likely be unable to compete with these new market entrants.
Yet another newer trend is direct contracting of large employers with health systems or other provider networks directly, rather than going through traditional third party payers (i.e., the major commercial insurers). This provides the opportunity to standardize care provided and lower costs for the employers and their employees. Currently only
about 3% of self-insured employers contract directly with providers for employee services but expect to see this trend expand in the coming years.
Finally, there is an emerging trend with bipartisan support for major reform of the pharmaceutical market. Loopholes that allow pharmaceutical companies to unduly preserve patent protections and delay competition are being seriously curbed by new legislation, and the FDA is also stepping up its initiative to foster more competition by fast tracking generic drug applications. The Department of Health and Human Services is also rigorously examining how drug prices are initially set to achieve greater parity with other countries and also to directly negotiate drug prices from manufacturers for Medicare patients, a practice currently prohibited by federal law.