Top 10 Trends That Will Transform Healthcare in 2012

The US healthcare industry is in the midst of the “perfect storm”.  The issue of cost cannot be kicked down the road any further and payers, including the government, are pursuing cost reduction strategies by any means necessary.  Although the Fee-For-Service (FFS) reimbursement model is often cited as the root cause of the dysfunctional care delivery system, it cannot be changed overnight.  In an effort to catalyze the necessary transformation, the government has created several programs and incentives to model, test and drive care delivery in a more functional direction.  Combined with market forces, all payers are expected to follow suit in one way or another to shift the incentives and financial reimbursement model in a more rational direction.  All of these efforts are heavily dependent on upgrading the Information Technology and analytic infrastructure of the industry.  Healthcare has greatly lagged other information intensive industries, such as banking, in investing in and leveraging technology.  All of these efforts will transform the industry and there clearly will be winners and losers.  The early and effective adopters will be well-positioned, although there will certainly be a transition period when overall results may slip.  It will be important to find and take advantage of the synergies in these drivers so as to respond most effectively and without wasting resources.  The basis of competition in the industry is changing and that will be transformative.  The following are the top 10 most important drivers to pay attention and respond to.

1) Healthcare Reform

The broad and comprehensive reforms put forth in the Patient Protection and Affordable Care Act of 2010 legislation will be tested at the highest level this year.  The Supreme Court decision will have fundamental impact on which components of the law can go forward and which cannot.  The increased covered lives is not only an important objective but also bringing healthier enrollees into the pool would make providing health insurance more financially viable.  If this form of healthcare reform fails, an alternative would have to be found quickly or draconian cuts in public programs will be likely and private insurance would not be able to make up the difference.  The impact on reimbursement for some providers would be devastating for some.

2) Patient-Centered Medical Home (PCMH)

The PCMH is a driver which already has tremendous momentum.  There has been unprecedented industry alignment around this concept and adoption is rapidly spreading through primary care practices.  Many early tests are beginning to show results.  The challenge is the reimbursement model and creating a “medical neighborhood” that is aligned with the PCMH.  The most important work of the PCMH is often the uncompensated work of coordinating care.  This is where the FFS reimbursement model comes into direct conflict with more effective reimbursement models.  Many groups and payers are testing hybrid models to see if they can be mutually beneficial.  This model of care is also very dependent on technology and care teams to support the work of coordination and outreach as well as better engaging the patient.

3) Accountable Care Organizations (ACOs)

As one of the programs of the healthcare reform act, testing of Accountable Care Organizations (ACOs) was established to drive a system orientation for the care of a designed population of patients.  This approach incentivizes the development of Integrated Delivery Systems (IDSs) as the “medical neighborhood”.  The results are expected to be better than the failed movement in the late 1990’s to develop IDSs because incentives are better aligned between providers and payers, quality is more defined, measurable and expected and technology is more mature and affordable.  This is a heavily technology and analytics dependent model in that it means that providers must become more like insurance companies with the attendant need to manage risk.  Data and analytics are the lifeblood of an ACO as what you don’t know can really hurt you.  This will be transformative at a macro level for the entire industry.

4) Population Health Management (PHM)

Population Health Management (PHM) attempts to strike at the root cause of high healthcare costs.  The cost of healthcare has now reached a crisis level.  To solve this crisis, we have to go where the money is.  The costs of care are extremely unevenly distributed with 1% of the population generating 20% or more of the costs.  Chronic conditions are a driver of as much as 75% of costs.  These are patients that you cannot wait until they show up in your emergency room or clinic.  They may be well on their way, by that time, to generating high levels of cost.  ACOs will have to manage risk to be successful and that means becoming very good at PHM.  It will be critical to identify and outreach to high risk patients and mitigate their risks before the clinical time bomb goes off.  This will become the basis of competition as value-based reimbursement becomes more prevalent.  The move to PHM will be a powerful driver of transformation of the system.

5) Health Information Exchanges (HIEs) 

As one of the elements of the stimulus program, funding to support the development of Health Information Exchanges (HIEs) has increased dramatically the number of viable exchanges in the country.  This concept has had appeal for a number of years under different names (e.g. CHINs and RHIOs) but financial sustainability has always been an issue.  HIEs may finally have a sustainable business model in that ACOs and PCMHs need the knowledge of patient care activities that HIEs can potentially aggregate and make available.  Care coordination and proactively managing risk in a population is important because, if you are an ACO, what you don’t know can hurt you.  HIEs will help with tracking patients in and out of your system.

6) ICD-10

Although not scheduled to become mandatory until October 2013, the switch to ICD-10 is expected to have significant and far-reaching impact on the delivery of health services.  And preparation must begin far ahead of the deadline.  There is the priority one issues of ensuring that operations can continue with the switch and that cross-walks create comparable financial scenarios.  However, the transformative aspect is the increased clinical granularity of the codes.  This is expected to drive more effective analytics and understanding of care delivery.  Also the richer code set will enable more precise Clinical Decision Support (CDS) to be deployed.

7) Big Data

An interesting development, just in time to consume the volume of new EHR data that will be produced, is the concept of “Big Data”.  Big data is a term applied to data sets whose size is beyond the ability of commonly used software tools to capture, manage, and process within a tolerable timeframe.  Big data sizes are a constantly moving target currently ranging from a few dozen terabytes to many petabytes of data in a single data set.  The research group, Gartner, has defined the challenge data growth challenges (and opportunities) as being three-dimensional: not only increasing volume (amount of data) but also increasing velocity (speed of data in/out) and variety (range of data types, sources). This certainly describes the situation in healthcare as EHRs, outcomes data, predictive models and genomics are creating increasingly large and varied data sets.  Big Data technologies are tuned to manage these huge volumes of data with acceptable processing times.  This capability, especially in analytics, will be critical for healthcare quality and care management as an organization can move to near real-time decision support and rapid cycles of improvement.

8) Meaningful Use

The Meaningful Use incentives have created a powerful catalyst for organizations to implement Electronic Health Records (EHRs).  Although the incentive will not pay the total freight for implementation, it does defray a significant amount of costs and the looming penalty phase should push the laggards in this direction.  More than $1.3 billion in Medicare and $1.1 billion in Medicaid EHR Incentive Program payments have been made between May 2011 by the end of December 2011.  The result will be the retooling of the entire Information Technology (IT) infrastructure of the healthcare industry.  There will likely some come a time when you are not competitive if you do not have an EHR.  Most importantly, the basis of competition will shift from whether you have an EHR to how effectively you are using your EHR.

9) Personal Health Records (PHRs)

The Personal Health Record (PHR) is seen as an important tools as we move to managing populations and reducing risks associated with chronic conditions.  Engagement of the patient will be essential.  Consumerism and personal accountability for health will gain increased momentum especially as consumers continue to pay more out of pocket for health costs.  Access to quality information and guidance through remote and mobile technologies will be critical to the consumerism revolution. As we move to PHM approaches, it will be important for healthcare providers to use technology to electronically create a “continuous healing relationship” with the patient as well as support caregivers.  Having patients and caregivers empowered, engaged and knowledgeable about their illness and managing their own care is the most cost-efficient and, generally, high quality care delivery model.

10) Social Media

As with many other trends, healthcare has lagged the general business community in adopting certain approaches and technologies.  Social media is one of those technologies.  Issues of privacy are obviously a barrier.  However, the impact of social networking and social media is so important and pervasive that increased healthcare adoption would be transformative.  It is important to recognize that not only is social media technologies useful for engaging with patients but it is also valuable for internal use within the healthcare organization.

The Next 5 Years Will be Transformative for the Healthcare Industry

Rarely has there been so much change in play in the healthcare industry.  There is much at stake in this trillion dollar industry.  There clearly has to be winners, losers and change if we are to bend the cost curve.  In this transformative phase, some organizations will fail, some specialties will see decreased reimbursement, many roles and responsibilities will change and the patient will have to become more accountable for his or her own health.  However, as has typically been the American way, with innovation, influence of market forces and the right level of government intervention, we can come out of this transformation with a stronger, cost-efficient and high quality system that will, once again be competitive on an international scale.

To Transform Healthcare, We Have to Fix the Primary Care Physician’s Day

Of all of the challenges in transforming our healthcare system, the most fundamental is transforming the Primary Care Physician’s (PCP’s) day.  If we don’t fix the PCP’s day, high-quality, efficient and reliable care will be elusive.  PCP’s have to have the time, capacity and energy to do what they do best, make clinical judgments, build relationships with patients and their families, define and manage a care plan and lead a team of care providers.  Primary Care is defined as “care provided by physicians specifically trained for and skilled in comprehensive first contact and continuing care for persons with any undiagnosed sign, symptom, or health concern (the ‘undifferentiated’ patient) not limited by problem origin (biological, behavioral, or social), organ system, or diagnosis.  Primary care includes health promotion, disease prevention, health maintenance, counseling, patient education, diagnosis and treatment of acute and chronic illnesses in a variety of health care settings (e.g., office, inpatient, critical care, long-term care, home care, day care, etc.)”.  Our current model of primary care delivery was developed in the mid-1800’s when acute “undifferentiated” patients and infectious diseases were the primary reasons for a visit to the doctor.  The industrial age Taylor assembly line “scientific management” model of business design was popular during that time from which doctor’s offices and hospitals borrowed.  The volume and nature of the patient demand fit the design.  So an acute-care focused, reactive, visit-based model of care became the norm.

However, the patient demand has changed dramatically, especially over the past 30-40 years.  Not only has the prevalence of chronic diseases increased dramatically but the complexity of delivery has increased due to fragmentation and new specialized technology. In addition there is increasing demand for performance on quality metrics for acute, preventive and chronic care in the quest for increased value.  This new and changed patient and stakeholder demand has overwhelmed the primary care delivery system.  When you consider that for a typical panel size, if a PCP endeavors to deliver on all of the quality requirements for chronic and preventive care he or she would have to spend 17 hours a day, the problem becomes clear.  Adding insult to injury is that compensation has been flat for PCPs and a fraction of what many specialists make.  Not only does the Fee-For-Service (FFS) system provide perverse incentives to focus on volume over value but it also does not pay for things it should such as care coordination.  The fact that we have a mix of payment mechanisms from pure FFS to capitation and everything in between adds to our schizophrenic care delivery model.

A recent snapshot of a PCP’s day shows the chaotic and overwhelming nature of primary care practice.  Greenhouse Internists is a community-based internal medicine practice employing five physicians in Philadelphia.  They have had an electronic medical record system since 2004.  In 2008, they analyzed the typical PCP day for their practice active caseload of 8440 patients between 15 and 99 years of age.  They had a interesting payer mix which is fairly typical for practices living in the two worlds of FFS and capitation.  Their payer mix included 7.2% of payments from Medicaid, 21.5% from Medicare (of which 14.0% were FFS and 7.5% capitated), 64.7% from commercial insurers (34.5% FFS and 30.2% capitated), and 6.5% from pay-for-performance programs. With the exclusion of copayments and fee-for-service payments received on behalf of patients in capitated plans, 35.2% of their total revenue came through capitation.  In a typical day, each doctor saw 18 patients, made 24 telephone calls, sent 17 e-mail messages, and reviewed 31 laboratory and imaging reports and 14 consultation reports.  In general, the telephone calls, email messages, test report reviews and consultation report are not reimbursed in a FFS model.  In fact, this non-visit uncompensated care assessment and care coordination is some of the most value-added work a PCP does, especially as it relates to decreasing unnecessary cost and improving patient safety.  Uncoordinated care costs America an average of $240 billion a year, according to a recently published study based on analysis of more than 9 million insured lives in five states.  That population includes those who are receiving extremely fragmented care and are accessing the system in a very inefficient and uncoordinated manner.  The study found the average annual cost for an extremely uncoordinated care patient was more than five times higher than other patients. Additionally, the study found that patients with the most uncoordinated care represented on average about 10 percent of the patient population, yet accounted for approximately 45 percent of drug costs, 30 percent of medical costs, and 35 percent of total health care costs annually.  The uncompensated and high value care plan assessment and care coordination that PCPs provide also takes a lot of time.  In one study, Faber found that the mean time spent per physician per week on uncompensated care was 112.2 minutes (range, 36 to 260 minutes), which represents an additional 6.7 minutes (range, 1.7 to 13.8) of care provided outside of office visits for every 30 minutes of time spent scheduled to see ambulatory patients. For a full-time physician scheduled to see 14 patients per day in 30-minute visits over a 5-day workweek, this would represent an extra 7.8 hours of clinical work per week.

How do we fix the PCP’s day?  The most important intervention is establishing the Patient-Centered Medical Home (PCMH) as the new standard model for primary care delivery.  This model recognizes the need for team-based care, use of technology, outreach, access and patient-centered care.  Most importantly, the compensation model must change so that PCPs are compensated and rewarded for delivery of value-based care.  Through the use of technology and process redesign, routine activities should happen automatically, in the background (e.g. A1c testing for diabetics).  PCPs will need to learn to delegate, lead teams, trust “the system” and become more of a coach.  Distributing and automating the work is the only way to reliably deliver high-quality care according the new demands of proven high-value chronic and preventive care.  With PCPs feeling their work is valued and supported and with more time for non-urgent but important activities such as truly coordinating care and building trusted relationships with patients and their families, value in the system will increase.