Physician Enterprise Market


Overview

Advancing a patient-centered health system requires a fundamental transformation in how physician deliver care. During the past five years, we have seen significant action taken by the government and private payers to move physician reimbursement to creation of alternative payment models- Medicare Access and CHIP Restoration Act of 2015 (MACRA) . CMS anticipates that by the end of 2016, 85% of traditional Medicare payments will be tied value-based payment (1). Anticipating that value-based payment models will likely equal about 50 percent of their total compensation in the next 10 years, physicians are aware that the shift to VBC is happening and inevitable (2). But they are reluctant to participate, preferring the status quo, and concerned about the consequences of financial risk.

  1. Embracing EHR Meaningful Use Program

 Inherent to this shift of payment model is the necessity for physicians to adopt and use evidence based policies and procedure to ensure compliance with the 2017 Medicare Shared Saving Program and Merit-Based Incentive Payment System.  Additionally, the shift to value based care will make it increasing important that physicians embrace and implement new practicing procedures.  As with the implementation of Patient satisfaction surveys, physicians will be rated by their patients and this will be used as one of the determinant factors of a physicians’ reimbursement.  The elimination of the sustainable growth rate (SGR) formula with the passage of the Medicare Access and CHIP Reauthorization Act in 2015.

Most importantly, maximizing reimbursement and reducing cost will remain high on a physician’s priority list.  It can be expected that the drive to reduce overhead costs, increase care coordination and reap maximum reimbursement will be the main driving force in the industry.  Physician practice consolidation into larger freestanding physician practices or integrated delivery systems to achieve 5% participation bonus will continue and may increase in the coming year.  This is an attempt of physicians to limit the administrative burdens associated with smaller practices to better focus on the delivery of patient-centered care.  Secondly, the drive for coordinate care and patient engagement will increasing be a strategy to decrease costs and increase patient outcomes.  Finally, remaining ahead of the shifting reimbursement methods by payers will remain a constant area of concern for physicians.

Physicians will increasingly be paid in capped payment methods of Medicaid Managed-care plans as opposed to the fading fee-for-service method.  More physicians will be offering chronic care management CCM services and promote the five comprehensive primary care functions which were promoted by the CPC initiative.

The frustration and burnout that physicians increasingly feel have their roots in the elements that distract and redirect doctors away from direct patient interaction. Part of the answer may involve implementing technological solutions that make information more easily available. A recent Accenture survey reveals that independent physicians most commonly cite reimbursement pressures as the biggest concern with remaining in independent practice. Physicians are experimenting with low-staffing models and some will optimize their cost structure with innovation.

Physicians will play a significant role in championing the transition from current payment models to value-based care models and will need to understand the distinctions of value-based care. As value based care becomes a more significant aspect of their income, physicians likely will need choose to work with health systems consultants that fully and fairly enable an equitable approach to compensation. As partners have the capability to move quickly to attract and support physicians by providing them with the clinical and business resources they need; doing so could enhance collaboration and, potentially, lead to market advantages over time.

  1. Shift to Population Health

Physicians are continuing to get their arms around population health so they can better manage groups of patients. Clinical care providers are likely to experience a shift in patient populations, a new payer mix and healthcare delivery challenges. The Accenture survey shows that nearly a fifth (17 percent) of independents report that they are participating in accountable care organizations (ACOs) and 7 percent are participating in patient-centered medical homes (PCMH) (3).

As the nation fails to abate the rise of obesity and chronic disease, and the population ages, demand for services across the continuum will continue to be relatively strong. Emergency departments will continue to be capacity-constrained until efforts to empty volume through urgent care, better care management or redesigned primary care models begins to take effect.

Physicians must participate in and be prepared to lead strategic-planning and decision-making sessions. Physician insight into what steps an organization may undertake to accomplish organizational goals, based on improving clinical care delivery using the right resources is the key. Compensation remodel to move away from strictly productivity-driven models will be a priority. The expansion and merging of clinically integrated networks will continue as a vehicle to align incentives in population health and value-based payment models, as well as minimize the need for owning and controlling the continuum.

Demand from hospitals and other healthcare providers is primarily related to the general health of the population, demographic trends and healthcare technologies. Overall, EHRs are expected to emerge as a U.S. population health management enabler by 2020 according to Analysis from Frost & Sullivan report. 100 vendors are purporting or positioning to offer some kind of population health- or accountable care organization (ACO)-related IT support in the U.S. alone. Due to more competitive pricing, Healthcare consultants typically advise these healthcare providers in financial management and methods to reduce supply costs. Increasingly hiring consultants for advice related to EHR systems, which off based physicians are increasingly important to the success of organization.

  1. Rising Prescription Drug Costs.

The cost of prescription drugs has soared in recent years, making it challenging for patients to afford their necessary medications. From the 2015 AMA Interim Meeting, they convene a task force to launch an advocacy campaign to drive solutions and make prescription drugs more affordable (5).

Following several years of slowing growth, the global market for medicines annual global spending will reach nearly $1.2 trillion by 2016. According to the Food and Drug Administration (FDA), the number of high-risk Class 1 medical device recalls skyrocketed to the highest point ever in 2010 (6).

Pharmaceutical companies primarily utilize the industry’s logistics, human resources, public relations and strategic management expertise. The pharmaceutical industry has faced challenges of its own, however, stemming from the slowdown in the primary care market and heightened regulation for the industry. As a result of these trends, fewer drugs are gaining approval. Consequently, pharmaceutical industries are under increased pressure to reduce expenditures, which has led to greater demand for healthcare consultants to cut costs.

  1. Better Coordination Through Referral and Data Exchanges

Public opinion appears to be shifting toward increased acceptance of personal health data exchange. In contrast to previous sampling that showed Americans to be severely protective of their personal health information, a  survey from the Pew Research Center, reveals a heightened level of openness to participating in a doctor-accessible health information website.

As more organizations move into population health management models or bundled payment, many organizations are directing their efforts at primary care physicians aligned to their health system. Also, the creation of preferred networks of post-acute providers, repurposing acute care facilities into post-acute facilities, and more transactions involving post-acute providers will result in increased upheaval in the post-acute world. As health systems look to rationalize their clinical service lines into system wide services to reduce disparity in quality and cost, physician alignment with these moves will be one of the critical success factors.

Health plans in many markets have an opportunity to play an important role in driving market-specific or national-level technology standardization, health information exchange adoption, universal patient identifiers, best-in-class clinical pathways, and transparency to address such structural challenges. Physicians must understand data, data warehousing, and data analytics. They must be able to use data in order to identify trends and improvement opportunities, make decisions, monitor improvements, and determine whether implemented interventions are having the desired effect.


1. HHS.gov. January 26, 2015. http://www.hhs.gov/about/news/2015/01/26/better-smarter-healthier-in-historic-announcement-hhs-sets-clear-goals-and-timeline-for-shifting-medicare-reimbursements-from-volume-to-value.html

2. Deloitte. 2016. http://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lchs-value-based-world-120814.pdf

3. Accenture. Jun 8, 2015. https://www.accenture.com/t20150608T044420__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_15/Accenture-The-Doctor-Will-Not-See-You.pdf

4. Frost and Sullivan. 2015. http://www.frost.com/sublib/display-report.do?id=NFA7-01-00-00-00&src=PR

5. AMA. Nov 17, 2015. http://www.ama-assn.org/ama/pub/news/news/2015/2015-11-17-ban-consumer-prescription-drug-advertising.page

6. Pharmatech. Feb 02, 2013. http://www.pharmtech.com/tracking-growth-biologics

7. Spectrum Science. November 1, 2010. http://www.spectrumscience.com/our-thoughts-and-perspectives

8. Healthitinteroperability. Jan 15, 2016. http://healthitinteroperability.com/news/americans-opening-up-to-health-data-exchange-with-doctors

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