The Impact of Health Care Reform:
10 Factors Physical Therapists Can’t Ignore
By Jim Hoyme
Health care reform has been on a rampage since 2010 when President Obama signed into law the Affordable Care Act (‘ObamaCare’). Although the controversial law has faced challenges on many fronts, The ACA has endured and continues to be the driving force behind the many dramatic changes in health care delivery and how its providers are paid for the services they deliver. But the government is not the only ‘powerful decision-maker’ in our health care market.
Here are 10-Key Health Care Reform Factors to address for long term stability of your practice:
1) Downward Pressure on Reimbursement. Health care costs must come down. Government, employer groups, and health plans are looking for ways to reduce expenditures, and the logical solution is to reduce payments to providers.
2) The Triple Aim: Measurable Quality – An Exceptional Patient Experience – Lower Total Cost of Care. Health plans and ACOs are rallying around this powerful concept that appeals to the 3P Stake Holders – patients, providers, and payors. Providers must measure their outcomes; provide highly impressive customer service; and manage their care in ways that drive down total costs related to an episode of care. The Triple Aim offers a big opportunity for physical therapy practices that can demonstrate tangible value.
3) Volume-to-Value Risk Sharing. Value = Quality + Service/Total Cost of Care. Health plans are transforming payment models from traditional volume-based fee for service to various value-based methodologies such as case rates, bundled payments, capitation, and shared savings models. The ACA, health plans and ACOs all expect providers to share financial risk. Decision-makers are looking for creative solutions that lower their costs, improve population health, and reward providers for delivering value.
4) Patient Centeredness. This term means actively engaging patients and their families in health care decisions and in the self-care of their conditions. It means offering treatment and management solutions based on what the patient wants, not on what is most convenient for the provider.
5) Collaboration. Historically most physical therapists have engaged in ‘turf battles’ with chiropractors, athletic trainers, personal trainers, and other provider types. Policy makers and consumers of health care expect providers to work collaboratively with other provider types to create patient centered programs that enhance the patient experience and improve their overall health.
6) Consolidation. Consolidation, or integration, occurs when 2 or more groups organize in some way under a single tax ID number. Consolidation brings stability, simplicity, and predictability to health plans and can take the form of organic growth, acquisition, full asset merger, or management services organization (MSO). Organizing loosely in a network or IPA is NOT consolidation; they are too unstable. Provider groups are consolidating for many reasons, but 5 stand out:
- Gain negotiating strength with payers
- Reduce the risk of financial risk sharing
- Better manage the expectations and risks of increasing government regulations
- Achieve economies of scale in administrative services
- Improve bottom line value
7) ACOs. Accountable Care Organizations (ACOs) are a form of provider integration based on primary care. Most ACOs have hospital(s) as well and have 2 major responsibilities: 1. Deliver a broad range of quality health care services and 2. Manage the cost of those services. ACOs may be government or commercial based and nearly all now receive at least some payment via value-based models. In collaboration with health plans, ACOs are forming ‘narrow networks’, who will consist of the providers chosen to see patients within their ACO. ACOs offer private practices either a huge threat or fantastic opportunity.
8) Patient Centered Medical Homes (PCMH). An ACO is like a ‘community’ and a PCMH is like a ‘home within the community’. The ACO has greater financial risk by being held ‘accountable’ for all care costs. PCMHs are primary care clinics that have the cost of care provided by their clinic and by those to whom they refer ‘attributed’ to them. Some of their reimbursement is at risk and may increase or decrease relative to the costs attributed to them. Since both ACOs and PCMHs are concerned with costs, efficient and effective independent physical therapy practices may bring these organizations tremendous value.
9) Increasing Regulatory Pressures. The ACA has created hundreds, if not thousands, of new rules, regulations, and other edicts with which health care providers must comply. Compliance is complex and costly. And the price providers pay for non-compliance is steep. It is very hard for a small practice to deliver and manage a thorough compliance plan.
10) Innovation. Health plans and ACOs do not have all the answers. In fact, they are seeking solutions from creative providers. Like you. Independent physical therapy practices can offer creative solutions that will result in Triple Aim value. This is an opportunity to be a real hero and create long term, trusted relationships with health plans and ACOs.
Most of these changes are challenging and expensive for the small private practice to implement and create strategies around. Integrated, large provider business models can make a more powerful impact in their market based on size and value delivery. The powerful health care decision-makers in your community are looking for innovators who can efficiently and effectively help them drive down total cost of care. In our next blog we will talk about strategies to put some of these ideas to work as you grow your practice and build value-based relationships with health plans and ACOs.
If you are interested in learning more about the MSO business model and how it can provide independent practice owners long term stability in this changing market, contact me at Jhoyme@therapypartners.com. We are confident this model can add value to your market and bring long term success to your business.
Upward & Onward!
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