Don't assume providers are onboard with new focus

May 1, 2013

Providers are understandably anxious about mechanisms that reduce their income

You might have missed the introduction of the Partnership for Sustainable Health Care and its whitepaper outlining a roadmap to affordability and quality. While the group does bring some diverse stakeholders together, the recommendations are pretty much the same-old same-old.

Ascension Health, the Pacific Business Group on Health, Families USA, the National Coalition on Health Care and America’s Health Insurance Plans basically rehash the key reform themes of value-based payment, evidence and patient-centeredness. It’s interesting to note that no major provider organization is really onboard with the group, although the American College of Surgeons apparently joined some of the discussions.

I suspect the reason why providers aren’t enthusiastic about the proposal is because it calls for a reduction in per-capita spending, which translates to a smaller pie from which they can cut their slice of revenue and profits. Even the best-performing providers should be prepared for possible pay reductions under a system that expects less spending on health overall.

Providers aren’t shy about the fact that, yes, they want to make more money. Solo practitioners especially want to recoup their education costs and maintain enough revenue to pay staff and make investments in technology, all while putting a decent salary in their own pockets.

Real dollars and cents

Too many observers and policymakers operate on the assumption that providers are willing-even begrudgingly-to adopt value-based payment for one reason or another. Perhaps they envision that providers believe in a new system of equity that will reward excellence. Perhaps they assume that the top performers are going to successfully champion the cause across the entire industry.

Everyone wants to see less spending on healthcare, including federal and state governments. But let’s not be too quick to believe that providers are okay with the idea.

The Journal of the American Medical Association notes in a recent analysis of  34,000 surgical patients that hospitals gain $17,000 of profit for privately insured patients without complications compared with $56,000 in profit for patients with complications. That’s not to say hospitals don’t want to ensure safety and quality, but rather that new payment mechanisms will need to address real dollars-and-cents propositions.

So what can be done to entice providers to participate in the cost-cutting programs?

At best, stakeholder groups can work on strategies to make the provider’s day-to-day operations easier or less costly. Time is money.

Health plans increasingly are partnering with providers to share data and help them manage risk, for example. Consider as many solutions as you can possibly dream up to help them make the most of their time.

The Partnership for Sustainable Health Care does point out that administrative processes should be streamlined to reduce waste, noting that 14% of total health spending in the United States is attributed to administration. But that seems to be the only point that addresses practical support for providers beyond the concept of incentives.

A consistent set of measurements, simplified data collection and uniform transactional activities are critical changes that can’t be discounted. However, it still might not be enough to win over reluctant providers that have devoted all of their attention and anxiety to the inevitability of reduced income.