Now that the arguments at the Supreme Court regarding the Patient Protection and Affordable Care Act are over, the nation is now, more than ever before, confronted with uncertainty in healthcare. The Court’s ruling on President Obama’s healthcare reform law, regardless of whether it affirms the law or strikes it down, will be have a profound impact on how healthcare in America is delivered, paid for and regulated. While the arguments down in Washington may be consuming the headlines and suggest that change is coming, the development of accountable care organizations and the physician migration to hospitals indicates that change is here.
The accountable care organization (ACO) model of healthcare delivery brings a group of health care providers together in order to provide healthcare to a population of patients with the providers being responsible for the cost, quality and overall care of the patients. This system is intended to tie provider payments to quality of care metrics and total cost reduction with this. While there has been much discussion about ACOs, there has been limited progress made with regard to implementing is healthcare delivery model. However, ACOs have the ability to fundamentally transform healthcare, so their development should be watched closely.
The ACO model is provider-led (physician and hospital) and required a holistic approach to healthcare management. This model is then combined with an economic model in which the ACO the providers will share in any cost savings realized by their management of the healthcare needs of this group, but such cost sharing will be dependent on the providers achieving certain quality of care requirements. The goal of this model is to better align the interests of the patients, providers and payors so that providers will have an incentive to increase the quality of the care and reduce the cost in order to best manage their patients’ healthcare needs.
While the successful implementation of this model could result in a fundamental and seismic shift in healthcare delivery the model has not yet been widely implemented. Currently, many healthcare systems are working to come together to form unified groups of providers in order to provide services using an ACO model. This process has been slow to develop as the complexities of integrating multiple healthcare provider groups has proven to be difficult. While the implementation may be several years away, this is the direction where healthcare is headed.
Another change to the healthcare industry that must be watched is the dramatic increase in the migration of physicians into hospitals and hospital systems. This migration has resulted in fewer independent physician practices and a large percentage of New Hampshire’s physicians becoming hospital employees. There are several reasons for this change, including decreasing reimbursement rates, increased administrative costs associate with running a practice, the need for hospitals to support significant capital investments, and uncertainty regarding healthcare regulation changes. From the hospital’s perspective, by controlling the physicians it can preserve market share, put it in a better position to negotiate with payors, and prepare it for regulatory changes that require bundled payment systems or creation of accountable care organizations.
In the short term the movement of physicians has limited impact on patients. However, over the long term this may lead to a significant consolidation of control in the hospital. Although hospitals are highly regulated, too much consolidation can begin to influence how services are delivered.
While healthcare is constantly evolving and changing, the impact of the opinions of the Supreme Court on the Patient Protection and Affordable Care Act legislation and the direction these opinions provide to the nation with regard to viability of national healthcare, the continued implementation of ACOs will challenge traditional payment and delivery models, and the movement of physicians into hospitals and healthcare systems will impact how healthcare services are delivered. Each of these issues will have a fundamental and profound impact on how your health will be cared for in the future.
Patrick Closson chairs the Healthcare Group at the law firm of McLane, Graf, Raulerson & Middleton, Professional Association. He can be reached at [email protected] or (603) 628-1457. The McLane Law Firm is the largest full-service law firm in the state of New Hampshire, with offices in Concord, Manchester and Portsmouth as well as Woburn, Massachusetts.