Questions Related to Reform

“A year from now, you will wish you had started today.”    ~ Karen Lamb

Several of my columns in 2015 focused on a continued emphasis on revolutionary federal and state health-care reform initiatives. In these columns, you have read about the objectives related to continued reforms of the state Medicaid and federal Medicare programs. This column takes a forward-thinking strategic positioning approach for each and every organization that provides health care and/or social-welfare services. 

Remember that the health-care reform initiatives are both revolutionary and, in many cases, unproven. Reform of this nature, in which the state and federal governments are plowing new ground, creates both opportunities and challenges for all health-care providers. Through my participation over the past 18 months in these reform initiatives, I have developed the following list of the Seven Cs of our health-care system. These seven attributes will most likely be more difficult to navigate, than the “Seven Seas” several centuries ago. Each and every provider and stakeholder in health care and human services, on a prospective basis, must adopt an attitude consistent with the following required objectives:

- Cooperation among providers

- Collaboration with others

- Competition for service referrals

- Compensation allocation among providers

- Care coordination with a more intensive scrutiny on identifying the most appropriate and cost-effective site of care

- Convergence of provider activities resulting in shared services, mergers, and affiliations

- Contracting transition from fee for service to value-based performance metrics and outcomes

It is difficult to identify any other industry in our global economy that operates with the attributes listed above. I challenge you to identify any other sector that could operate successfully in an environment that requires complete and total commitment to individual cost-effective outcomes. I have not found one industry that could remotely describe itself as being able to collaborate and compete at the same time that compensation and revenue allocations were being directly impacted by the structural-reform initiatives. 

These current reform initiatives follow roughly 40 years of both failed and successful events at controlling the rate of increase in health-care costs. You should remember that the United States spends close to 18 percent of GDP on health-care services. This spending has consistently been at more than twice the rate of any other industrialized nation. Interestingly, our increased spending habits have not resulted in better health outcomes for our citizens in comparison to those nations that spend half of what we do in the U.S. The reasons for this unexplained disparity in spending are complex. While there is no one simple answer or approach, our efforts over the past four decades are certainly appropriate since we must be able to “bend the cost increase curve.” Constraining costs at the same time that 10,000 “baby boomers” each day turn age for the next 17 years will be a monumental challenge. 

Before I provide the typical questions that should be addressed by providers, keep in mind the impact of the five 5 As:

- Aging

- Alzheimer’s

- AIDS

- Alcohol and substance abuse

- Accidents

Because of these factors and technological changes, we find ourselves on the doorstep of fundamentally changing the American society’s general expectation that our citizens will “be kept alive” regardless of cost. 

So, we have tried many models of health-care reform. You might say that the entire health-care industry and its providers are “experienced veterans” of constant reform and change initiatives. The following list of questions can be both strategic and operational in your organization’s services. Each of them should be considered in a board and management brainstorming discussion, preferably in the next six months. 

Strategic/operational questions to be addressed

1) What is the best strategic position for our organization to participate in the DSRIP Medicaid / PPS initiative and the value-based payment reforms being implemented by New York State Department of Health? 

2) What is the likelihood or probability of success to our organization if we remain autonomous and “go it alone”? 

3) If autonomy is not an option, how many and which regional provider networks (RPNs) should we participate in?

4) What can our organization effectively do to achieve the goal of hospital-facility diversion that is the fundamental objective of DSRIP/PPS for eligible Medicaid individuals? 

5) What is the definition of “avoidable hospital facility utilization,” and have we established clear policies and procedures for all staff to follow? 

6) Do we have the necessary technology sophistication to be able to make “real time” triage decisions? 

7) What is the appropriate structure for our organization to consider in its participation with RPNs?

8) Is participation in an independent provider association (IPA) the appropriate strategy? If not, why not? 

9) How many emergency room visits and hospital-admission diversions did we accomplish today, this week, or this month? How did we do it, and are we receiving fair and reasonable compensation for the savings generated by utilizing lower-cost sites of care? 

10) The fundamental question that every organization must be prepared to assess and answer is, how many emergency room visits and admissions did we generate from our service population in 2013, 2014, and 2015, and what is a reasonable expectation for a percentage reduction in 2016, 2017, and 2018? 

There are no easy answers to the question of how we, as a state and nation, can effectively bend the cost curve on health care. Forty years of reform initiatives have not produced the desired result. It may take another 40 years and the demise of the baby boom generation before we achieve any meaningful results.           

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at The Bonadio Group. Contact him at garchibald@bonadio.com