Trendspotter: What health reform will mean for you

By Ken Terry


While congressional leaders dicker over the details of healthcare reform legislation, this is a good time for physicians to take stock of how reform will affect them and what they can do to help repair the system.

On the issue of Medicare reimbursement, don’t expect the Senate to follow the House’s example and restore projected Medicare cuts to physicians for the next 10 years. The Senate earlier rejected this permanent fix, and it is unlikely to reverse its position. Instead, the final reform package will probably eliminate the planned cuts this year and perhaps next year, according to consultant Julius Hobson, former lobbying chief for the AMA. After that, the issue will again come up for debate.

However, I do not believe that we will see Congress continue to do its annual dance with the AMA over these cuts, giving back the money at the last minute without solving anything. The direction of Medicare reimbursement will be increasingly tied to approaches like the value-based purchasing and payment bundling proposals in the Senate bill, as well as to the accountable care organizations (ACOs) that the measure encourages providers to form. These aggregations of hospitals and physicians, similar to the Mayo Clinic or the Cleveland Clinic, but perhaps more loosely organized, will deliver care within some kind of budget and will be able to keep a portion of any savings they achieve. If Medicare starts doing this, look for private payers to follow suit.
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So how will all of this affect you if you don’t belong to an ACO and are not involved in a CMS demonstration project? It won’t affect you immediately, but eventually the tsunami of change will reach your practice. When it does, you may find that what worries you now is no longer relevant. In fact, the issue that medical societies have emphasized during this reform season — how much the government will pay doctors for each unit of service — will eventually become moot, because fee for service is on its way out. In five or 10 years, you’ll be paid on an entirely different basis.

This is going to happen because fee for service is one of the key drivers of healthcare inflation in the U.S. Don’t be fooled by the recent announcement that health cost growth in 2008 dropped to its lowest level in decades: That was largely due to the recession, and the growth in spending was still far higher than general inflation or the rise in GDP. Costs are still out of control; the number of uninsured is rising; and more and more employers will drop coverage of their workers unless something is done. If you think that won’t affect your business, you’re living under a rock.

The current reform legislation is a step in the right direction: by expanding coverage and making it easier to afford insurance, it should result in more timely and comprehensive care that will keep many out of the ER and the hospital. But the measure will also create a couple of problems for physicians and patients. First, it is going to produce a tremendous demand for services from the previously uninsured without increasing the number of doctors. (This has already become a problem in Massachusetts, which enacted similar reforms.) And second, it does too little to restructure healthcare financing and delivery. So in essence, the reform is going to pile more volume on a system that is outmoded, wasteful, and inefficient.

What can you do about it? To begin with, recognize the simple fact that, despite your belief that payers control the game, physicians actually have the power to effect meaningful change. After all, your medical decisions determine how about 80 percent of the money in the system is spent. So if you start changing how you practice, you can have a surprisingly large impact. Of course, that might reduce your income, because the system is not yet set up to reward quality or nonvisit care.

The medical home movement is trying to show physicians how to do this without losing money, but it’s still a daunting challenge, especially for small practices. So another thing to consider is how you and your colleagues can start to change the equation in your own community, perhaps through your IPA, your PHO, or your hospital.

While I don’t have the space to discuss this in detail, I’d heartily recommend an article in The New England Journal of Medicine by Elliott Fisher, MD, a Dartmouth professor who has done important research on regional variations in Medicare costs; Donald Berwick, MD, president and CEO of the Institute for Healthcare Improvement; and Karen Davis, president of the Commonwealth Fund, a New York think tank. Entitled “Achieving Healthcare Reform — How Physicians Can Help,” the essay argues that physicians should join integrated delivery systems, which could be “virtual,” to achieve the aims of the Institute of Medicine report “Crossing The Quality Chasm.”

ACOs are already being formed across the country on a de facto basis, as more and more physicians go to work for hospitals. Already, more than a third of all doctors are employed by healthcare systems. But you don’t necessarily have to give up private practice to get involved in some kind of physician organization. The important thing to recognize is that the small, unaffiliated practice is a dinosaur. Only by connecting with your colleagues can you hope to have a voice in the changes that are going to remake medicine in the coming years.

Ken Terry is a New Jersey-based freelance writer and the author of the book "Rx for Health Care Reform." In his weekly Trendspotter column, Ken is looking out for trends and changes that may affect your practice.