Former executive at Temple University Health System Inc
- Key purchasing trends and developments across large hospital systems
- Impact of CMS’ [Centers for Medicare and Medicaid Services] procedural shift to outpatient settings from inpatient on large hospital systems' strategies
- Impact of No Surprises Act being pushed by CMS on providers and MCOs (managed care organisations) and resulting reimbursement dynamics
- Staffing challenges and dynamics with physicians continuing to refer patients out of network
- Outlook for Q2 2022 and beyond
ASCs [ambulatory surgery centres] are being highlighted as a roughly USD 60bn opportunity, and that number relates to the migration of inpatient procedures to the outpatient ASC setting. Importantly, ASCs see this opportunity as materialising over the next 5-10 years, and the entity driving this is CMS [Centers for Medicare and Medicaid Services]. It is continuing to advantage the outpatient surgical facilities, and for good reason, as it’s looking for cost savings, but it does create a bit of a challenge, especially for physician staffing dynamics. CMS has highlighted over 300 procedures in the musculoskeletal treatment space to transition from the inpatient-only list to outpatient. What are your views on CMS’ direction with this migration and could it go too far? I’ve heard pushback from lobbyists already representing the facilities side, that if CMS continues down this path, it could lead to disruption of service in certain areas of operation.
Why is the No Surprises Act being driven by CMS? If the agency wasn’t unfairly underpaying for Medicare and Medicaid procedures, then the providers wouldn’t have to price gouge managed care in order to subsidise their money-losing efforts on the CMS side. CMS, through its own unfair frugality and need for cost savings, has put the provider in a situation of having to constantly ask for higher commercial reimbursement, and managed care is getting tired of it, because their clients are saying, “We want cost containment.” Where does this end? This ends with some of this coming back from the outpatient to the inpatient. Is there a possibility that CMS ever starts paying fairly, especially given the cost pressures already in that system, and what will be the natural result of pushing more power to MCOs [managed care organisations] with the No Surprises Act?
Which companies are best-positioned to take on value-based care through partially or fully capitated contracts, and more interestingly, how do you view the blurring of the lines in terms of managing the reimbursement dollar that the payers set? Do you see a blurring of lines between payer and provider? I mention this because UnitedHealth just announced the acquisition of LHC Group, which is a large home health and hospice operator, so now you’re seeing a pure provider being absorbed by one of the largest MCOs. Which player is best-positioned to take on risk? How are larger players such as Community, Tenet and HCA thinking about capitation? How does this play into how they’re going to manage physician staffing?
You referenced the challenges in trying to optimise physician referrals. You’re an employed physician, and yet you’re sending procedures outside of the system, potentially to settings that are more expensive. Yes, legally doctors have a right to refer to wherever they want, even if they’re employed by a provider. Aren’t doctors leaning a little heavily on the Hippocratic Oath around this law to say, “It’s in my discretion to send the patient to where they’re going to get the best care?” Contractually and legally, can they really make that argument if the care in network can be argued on a merited basis to be at parity? Shouldn’t hospitals then try to use their power to change that law, realising that there will be an uproar from physicians who are doing these referrals, maybe for their own selfish financial interest?
Let’s say you have a doctor at the end of the year and he’s employed, and you’re reviewing and say, “You put all this work out. We had all these capabilities and you can’t argue that our quality is any less. We have scores.” Are the financial incentives so high for the folks that are doing it for their own benefit? Maybe they are employed, but they also work in an outpatient setting. I don’t know if that’s allowed. Is there a way to incentivise them to say, “You have a bigger earnout at the end of the year, as part of your year-end bonus, when we review your referral patterns,” or does that get you in a sticky situation?
Given that physician staffing is critical, and everyone is competing for them, is there even an option for the hospital to decide not to renew an employment contract, as a reaction to a referral pattern, or is that beyond the pale, because they need that physician and getting rid of that person is worse than keeping them?
With most procedures, hospitals either lose money or break even. Almost everything that’s coming your way through CMS, whether it’s Medicare or Medicaid, loses money. You make all of your margin on the neonatal and OR [operating room] side, and yet you see this migration of OR from the inpatient to the outpatient and you’re saying, “How do I prop this hospital up by backfilling?” For the providers that are unable to do that and find themselves with significant Medicare and Medicaid exposure, does this push for value-based care lead to them going out of business? Does that create real problems down the road, where there are communities that don’t have immediate access to care? As we look at backfilling, how many of those procedures are actually available? They’re obviously the most complex and could create real profitability, but my view is there’s probably not enough of those procedures to go around for everybody. Who’s in the best position to do that? What do all the disadvantaged providers do who can’t capture this volume? Will we have a shake-out that only is beneficial to the stronger players over the long term?
You mentioned closing SNFs [skilled nursing facilities] and LTACHs [long-term acute care hospitals]. It certainly sounded like negative sentiment. We do need a continuum of care. There are certain patients that obviously need to be on vents on the LTACH side. What’s your outlook for LTACH operators? Are you saying that there’s over-utilisation in this space? I know in the ICU, you’re trying to move those patients out of the ICU and into the LTACH, and there’s plenty of good reason to have people go into a SNF. Is your opinion that those areas of the healthcare system have a more challenging outlook?
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