Challenges and Changes Ahead for Physician Practices

Central Ohio ChapterHFMA

March 15, 2013

Disclaimer

Where are we headed? No map, no compass, no GPS,

destination is changing…

What country spends the most on Health Care?

How much do we spend as a nation?

$2,800,000,000,000

•25 % ($765 billion) of current spending is wasteful

• $210 billion Unnecessary Services• $190 billion Insurance and Bureaucracy • $130 billion Preventable errors/mistakes• $105 billion Excessive prices• $ 75 billion Fraud• $ 55 billion Missed preventive opportunities

$2,800,000,000,000

• Four times the amount spent 20 years ago

•Medicare, Medicaid & Social Security

• 2 % of Gross Domestic Product in 1965•10 % of Gross Domestic Product in 2010•20 % of Gross Domestic Product in 2055

$2,800,000,000,000 Total Inflation for the past 20 years – 65% If health care costs increased at the same rate of

inflation the total would be $1.2 trillion not $2.8 trillion

The current path is not sustainable for us or the next generation

Where does the US rank in outcomes ?

Value ??• 37th in health according to World

Health Organization

• 180,000 Medicare patients die each year from hospital accidents, errors and

infections.

What is driving Change?

• Government ?•Market Forces ?

Medicare Allowable per RVU (Relative Value Unit)

1992 $372013 $35

What was provider response when Medicare reduced payments?

What was provider response when Medicare reduced payments?

More Volume !!

Physician Contracts

OLD1. Volume Based

a. Productivity (rvu’s) b. Patients seenc. Procedures performedd. Dollars collected

New2. Value based

a. Outcomesb. Patient Satisfactionc. Cost savings

What is ValueValue (economics)

From Wikipedia• Economic value is a measure of the benefit that an economic actor can gain

from either a good or service. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service"?

• Value is linked to price through the mechanism of exchange. When an economist observes an exchange, two important value functions are revealed: those of the buyer and seller. Just as the buyer reveals what he is willing to pay for a certain amount of a good, so too does the seller reveal what it costs him to give up the good.

• Additional information about market value is obtained by the rate at which transactions occur, telling observers the extent to which the purchase of the good has value over time.

• Said another way, value is how much a desired object or condition is worth relative to other objects or conditions. Economic values are expressed as "how much" of one desirable condition or commodity will, or would be given up in exchange for some other desired condition or commodity. Among the competing schools of economic theory there are differing metrics for value assessment and the metrics are the subject of a "Theory of Value." Value theories are a large part of the differences and disagreements between the various schools of economic theory

Value (ethics)From Wikipedia

• In ethics, value denotes something's degree of importance, with the aim of determining what action or life is best to do or live (Deontology), or at least attempt to describe the value of different actions (Axiology). It may be described as treating actions themselves as abstract objects, putting value to them. It deals with right conduct and good life, in the sense that a highly, or at least relatively highly, valuable action may be regarded as ethically "good" (adjective sense), and an action of low, or at least relatively low, value may be regarded as "bad".[citation needed]

• What makes an action valuable may in turn depend on the ethic values of the objects it increases, decreases or alters. An object with "ethic value" may be termed an "ethic or philosophic good" (noun sense).

Who publishes prices?

• http://video.app.msn.com/watch/video/how-much-for-surgery-answer-often-hard-to-find/2j8o04766

Number of Doctors in US

• 650,000 - .6% of employed persons• What is prediction for the future?

Physician Shortage?

Result of decrease in # of Drs.

• Mid level providers• Wellness programs• Alternative treatments• Personal responsibility • Telemedicine• Improved diagnostic• Reduced testing• Centers of Excellence

Centers of Excellence

Competing for Patients

Reduced Testing?

Or Appropriate Level of Care?

Incentivize Personal Responsibility

Jeopardy?

Technology Changes

• Watson – Super Computer Beat Human Contestants

• Commercial Application• Used by WellPoint in Diagnosis and

authorizing treatment• Medical literature is doubling every five years• Benefit of Electronic Medical Records

Technology Changes

• What is it?

Technology Changes

• Star Trek – Tricoder• X-Prize for Development• $10 million

Technology Changes

I phone app for Moles/Skin Care

Medicare Payment Incentive/Penalty Programs

2011-2021

Navigating the Road Ahead…..

Value Based Modifier

Future Course/Path?

• Consolidate• Educate• Affiliate• Compensate