Weighing the risks of value-based medicine
Industry gears up for move away from fee-for-service model
NASHVILLE, TN - In a Sept. 7 panel discussion at Vanderbilt University hosted by the Association of Management Consulting Firms (AMCF), industry leaders concurred that the journey from fee-for-service to value-based medicine will not be for the faint of heart.
"The road ahead is indeed risky," said John Keith, a principal at Deloitte Consulting in Philadelphia. "That's why we need to figuratively do what Cortez did when he landed in the New World with 37 men. He burned the boat so there was no other option but to move forward.
"What we're talking about is changing the entire business model in healthcare," said John Waltko, vice president of regulatory reporting at Quorum Health Resources in Brentwood, Tenn. "I'm only half-joking when I say that if I were a hospital CFO, I'd start investing in gyms. It's impossible to underestimate the importance of wellness and population management from now on."
Herb Fritch, president of Nashville-based HealthSpring (which was sold to Cigna earlier this year) stressed the importance of making primary care more attractive to providers. "Value-based medicine has been thriving in California for 25 years, thanks mainly to Kaiser Permanente," he said. "But in other parts of the country, nobody wants to be the first to jump in the pool. That's why we created primary care networks in the Southeast that pay physician bonuses up to $250,000 for improved population management. As a result, we've doubled the percentage of diabetics who are receiving evidence-based care and screenings."
"There's strong momentum now for what I'd call appropriate reimbursement," said Michelle Hoppes, senior vice president for risk management at Allied World Assurance in Lansing, Michigan. "In the past, hospitals often made money if a patient accidentally fell at the facility. There were additional fees for surgery and rehab, and that kind of thing is going away. We're seeing a common-sense approach to risk-sharing."
The panelists agreed that peer pressure will be one of the main catalysts for change. "In HealthSpring's primary care networks, doctors are really making a mind-flip," said Fritch. "If one of the other physicians in the network is clinging to the fee-for-service approach, his peers are more apt to say, 'Hey, you're messing with my bonus.'"
Keith added that when providers are paid by populations, there's a strong incentive to reach out to people who don't get regular screenings. "The physicians start to realize that there are 'time-bombs' in their community - people who wait too late to get treatment. So we're seeing a new push to engage and retain these patients."
Waltko noted that value-based care is more than simply preventing errors. "In any other industry, what we call a 'readmission' would be intolerable," he said. "If your Mercedes had to go back to the dealer within the first 30 days, you'd be outraged."
Fritch added that the biggest impediment to quality-based care is the system's open-access model. "Most employer health plans are still open access, where you can self-refer to any specialist you want," he said. "But you'll never rein in costs that way. It will be interesting to see if employers start implementing more of the structured products you see in the Medicare Advantage market."
