Best Practices

Healthcare Reform: Does It Really Matter?

By Bruce Mailer

Election-year politics have thrust healthcare reform back into the limelight. President Obama continues to promote the benefits of the Patient Protection and Affordable Care Act (PPACA), while the Republican Party clearly wants to repeal the new healthcare law if Gov. Romney wins the November election.

Surveying the market, I wonder if any of this really matters. When faced with the threat of healthcare reform legislation during the Clinton Administration in the early 1990s, the market decided not to wait for legislative reform, taking matters into its own hands by instituting measures to address patient access and the escalating cost of care.

Enter Managed Care

The result of this activity was significant growth in what we now refer to as managed care. Payers introduced many new products that targeted the commercial and Medicare sectors. Providers responded by forming contracting groups such as physician-hospital organizations (PHOs), independent practice associations (IPAs), and physician practice management companies (PPMCs), to name a few.

The overarching strategy of these groups was noteworthy, but most failed to have any market impact because they either did not have adequate capital or could not effectively integrate and achieve their stated objectives. It was a case of an interesting idea introduced when the market and its participants were either not ready or could not come up with sustainable business models.

In recent months, many clients have shared with me stories of new developments or consolidation activities in their markets. Although many use the term accountable care organizations (ACOs) when describing this activity, what we are seeing is very similar to what we experienced nearly 20 years ago. Provider organizations of all types are forming in an effort to enhance care delivery and take costs out of the system. The platitudes are familiar, and results are difficult to predict and to fathom.

Scramble for ACOs?

Since late 2011, the government has approved 154 ACOs. However, hundreds of groups are scrambling to assemble disparate parts of a delivery system to assume financial risk and more effectively manage care. I suspect the vast majority of these organizations will not cease their development activities if PPACA is repealed. Hospital and managed-care executives fully understand the market has “moved,” and that the name of the game will be about controlling market share and delivering on the “promise” that fueled passage of PPACA in the first place.

Ophthalmologists are somewhat confused about how to react to these activities. As was the case in the 1990s, many fear losing access to large segments of the population. Over the past 20 to 30 years, advances in cataract surgery and the emergence of ambulatory surgical centers have been key drivers in moving ophthalmologists away from the “mainstream” medical community. Ironically, many ophthalmologists now question how they can have a “seat at the table” or be seen by the medical community as an important part of the patient-care continuum.

Ophthalmologists should take comfort in knowing that patients, most notably seniors, have a need for medical and surgical eye care. In fact, the cost of providing medical eye care to the senior population is one of the more significant cost centers for a health plan. The organization faced with the challenge of managing a healthcare budget must insure that it can meet this need with a highquality, cost-effective option.

Back in the Nest

This will require ophthalmologists to be seen as an integral part of a larger solution that measures care and provides it cost effectively. Eyecare providers will have to adapt to different payment models, including capitation and bundled payment options, and be able to cover the full continuum of eye care. While it will not require ophthalmologists to own or control all lines of business, it will require the group or network to manage and measure outcomes while controlling its costs.

In the end, the successful ophthalmology practice will need to effectively reintegrate into the mainstream medical community. This process may require a bit of humility as primary and other specialty care providers reluctantly welcome you back into a nest you voluntarily vacated many years ago.

Changes in healthcare tend to play out at the state and local level. Yes, federal legislation can and does influence market activity, but in the end the real action takes place inmarket. The next five to 10 years promise to be an interesting period in healthcare. OM

Bruce Maller is president and CEO of BSM Consulting, an internationally recognized healthcare consulting firm. For more information about BSM and resources, visit www.BSMCafe.com.