Category Archives: Physician Incentives

The Value-based Care Agenda in Trump 2.0 Healthcare

Posted on by • Posted in 2028 Election Issues, Accountable Care Organization (ACO), Alternative Payment Model, Center for Medicare and Medicaid Services (CMS), Center for Medicare and Medicaid Innovation (CMMI), Fee for Service Reimbursement, Medicare, Medicare Advantage, Pay for Performance, Physician Burnout, Physician Incentives, Physician Leadership, Physician Practice Management, Risk-Based Compensation, Risk-Based Contracting, Value Based Care Model, Value-Based Care Functions, Value-Based Contracting, Value-Based Healthcare • Leave a comment
The Value-based Care Agenda in Trump 2.0 Healthcare

This week, the House Energy and Commerce and Ways and Means Committees begins work on the reconciliation bill they hope to complete by Memorial Day. Healthcare cuts are expected to figure prominently in the committee’s work.

And in San Diego, America’s Physician Groups (APG) will host its spring meeting “Kickstarting Accountable Care: Innovations for an Urgent Future” featuring Presidential historian Dorris Kearns Goodwin and new CMS Innovation Center Director Abe Sutton. Its focus will be the immediate future of value-based programs in Trump Healthcare 2.0, especially accountable care organizations (ACOs) and alternative payment models (APMs).

Central to both efforts is the administration’s mandate to reduce federal spending which it deems achievable, in part, by replacing fee for services with value-based payments to providers from the government’s Medicare and Medicaid programs. The CMS Center for Medicare and Medicaid Innovation (CMMI) is the government’s primary vehicle to test and implement alternative payment programs that reduce federal spending and improve the quality and effectiveness of services simultaneously.

Pledges to replace fee-for-service payments with value-based incentives are not new to Medicare.  Twenty-five years ago, they were called “pay for performance” programs and, in 2010, included in the Affordable Care as alternative payment models overseen by CMMI. But the effectiveness of APMs has been modest at best: of 50+ models attempted, only 6 proved effective in reducing Medicare spending while spending $5.4 billion on the programs. Few were adopted in Medicaid and only a handful by commercial payers and large self-insured employers. Critics argue the APMs were poorly structured, more costly to implement than potential shared savings payments and sometimes more focused on equity and DEI aims than actual savings.

The question is how the Mehmet Oz-Abe Sutten version of CMMI will approach its version of value-based care, given modest APM results historically and the administration’s focus on cost-cutting.

Context is key:

Recent efforts by the Trump Healthcare 2.0 team and its leadership appointments in CMS and CMMI point to a value-agenda will change significantly. Alternative payment models will be fewer and participation by provider groups will be mandated for several. Measures of quality and savings will be fewer, more easily measured and and standardized across more episodes of care. Financial risks and shared savings will be higher and regulatory compliance will be simplified in tandem with restructuring in HHS, CMS and CMMI to improve responsiveness and consistency across federal agencies and programs.

Sutton’s experience as the point for CMMI is significant. Like Adam Boehler, Brad Smith and other top Trump Healthcare 2.0 leaders, he brings prior experience in federal health agencies and operating insight from private equity-backed ventures (Honest Health, Privia, Evergreen Nephrology funded through Nashville-based Rubicon Founders). Sutton’s deals have focused on physician-driven risk-bearing arrangements with Medicare with funding from private investors.

The Trump Healthcare 2.0 team share a view that the healthcare system is unnecessarily expensive and wasteful, overly-regulated and under-performing. They see big hospitals and drug companies as complicit—more concerned about self-protection than consumer engagement and affordability. They see flawed incentives as a root cause, and believe previous efforts by CMS and CMMI veered inappropriately toward DEI and equity rather than reducing health costs. And they think physicians organized into risk bearing structures with shared incentives, point of care technologies and dependable data will reduce unnecessary utilization (spending) and improve care for patients (including access and affordability).

There’s will be a more aggressive approach to spending reduction and value-creation with Medicare as the focus: stronger alternative payment models and expansion of Medicare Advantage will book-end their collective efforts as Trump Healthcare 2.0 seeks cost-reduction in Medicare.

What’s ahead?

Trump Healthcare 2.0 value-based care is a take-no prisoners strategy in which private insurers in Medicare Advantage have a seat at their table alongside hospitals that sponsor ACOs and distribute the majority of shared savings to the practicing physicians. But the agenda will be set, and re-set by the administration and link-minded physician organizations like America’s Physician Groups and others that welcome financial risk-sharing with Medicare and beyond.

The results of the Trump Healthcare 2.0 value agenda will be unknown to voters in the November 2026 mid-term but apparent by the Presidential campaign in 2028. In the interim, surrogate measures for performance—like physician participation and projected savings–will be used to show progress and the administration will claim success. It will also spark criticism especially from providers who believe access to needed specialty care will be restricted, public and rural health advocates whose funding is threatened, teaching and clinical research organizations who facing DOGE cuts and regulatory uncertainty, patient’s right advocacy groups fearing lack of attention and private payers lacking scalable experience in Medicare Advantage and risk-based relationships with physicians.

Last week, the American Medical Association named Dr. John Whyte its next President replacing widely-respected 12-year CEO/EVP Jim Madara. When he assumes this office in July, he’ll inherit an association that has historically steered clear of major policy issues but the administration’s value-based care agenda will quickly require his attention.

Physicians including AMA members are restless: at last fall’s House of Delegates (HOD), members passed a resolution calling for constraints on not-for-profit hospital’ tax exemptions due to misleading community benefits reporting and more consistency in charity care reporting by all hospitals. The majority of practicing physicians are burned-out due to loss of clinical autonomy and income pressures—especially the 75% who are employees of hospitals and private-equity backed groups. And last week, the American College of Physicians went on record favoring “collective action” to remedy physician grievances. All impact the execution of the administration’s value-based agenda.

Arguably, the most important key to success for the Trump Healthcare 2.0 is its value agenda and physician support—especially the primary care physicians on whom the consumer engagement and appropriate utilization is based. It’s a tall order.

The Trump Healthcare 2.0 value agenda is focused on near-term spending reductions in Medicare. Savings in federal spending for Medicaid will come thru reconciliation efforts in Congress that will likely include work-requirements for enrollees, elimination of subsidies for low-income adults and drug formulary restrictions among others. And, at least for the time being, attention to those with private insurance will be on the back burner, though the administration favors insurance reforms adding flexible options for individuals and small groups.

The Trump Healthcare 2.0 value-agenda is disruptive, aggressive and opportunistic for physician organizations and their partners who embrace performance risk as a permanent replacement for fee for service healthcare. It’s a threat to those that don’t.

Is Corporatization Killing Primary Care?

Posted on by • Posted in Corporatization of Primary Care, High Value Care, Physician Employment, Physician Incentives, Physician Independence, Primary Care, Primary Care Delivery Model, Quality of Care • Leave a comment

One emerging model brings hope for independent primary care in a rapidly transforming healthcare landscape.

More than 48% of all U.S. physician practices and nearly 70% of physicians are now owned or employed by either hospitals or corporate entities, according to the latest research.

Add to this shift the recent news of Amazon’s new One Medical benefit, billed as delivering access to high-quality primary care and 24/7 on-demand virtual care to the company’s more than 160 million Prime subscribers, and it’s clear that the corporatization of primary care is showing no signs of slowing.

As two primary care physicians committed to providing the best possible care for our patients, we have a front-row seat to the threat that corporatization poses to the very essence of independent primary care. We also have hope.

One emerging model is successfully embracing the tenets of independent primary care, shining a light on the path to better patient health in a rapidly transforming healthcare landscape.

Defining high-value primary care  

High-value primary care relies on maintaining its independence. Independent primary care physicians (PCPs) excel at providing personalized care by fostering meaningful relationships with patients, ensuring that medical decisions are tailored to individual needs, and focusing on prevention to avoid health catastrophes and improve overall health. They often integrate with community leaders, influence local health policy, and mobilize community resources to help patients facing socioeconomic challenges.

In the independent setting, patients of these PCPs benefit from a continuous relationship with the same PCP over time, leading to better health outcomes born of a deeper understanding of their unique healthcare needs.

Notably, these PCPs (and their patients) are less likely to be influenced by the economic incentives that perversely drive patients back to hospitals and health systems in search of expensive but preventable or unnecessary care.

In fact, primary care owned or employed by a hospital is often seen as a loss leader for downstream revenue generators. Hospital-based PCPs are also more likely than their independent peers to experience a loss of autonomy over patient care decisions.

A recent survey from the Physicians Advocacy Institute found that 60% of physicians believe that the trend away from private practice ownership has reduced care quality, largely due to a lack of clinical autonomy and an increased focus on cost savings by facility leadership. These collective factors are obstacles to the sacred physician-patient relationship in service of a hospital-driven agenda and slow-moving bureaucracy.

Collaboration over corporatization

Maintaining independence in primary care has become increasingly difficult due to powerful industry headwinds that often lead previously independent practice owners to sell their businesses in defeat. Fortunately, PCPs have more options beyond joining hospitals, health systems, or emerging corporatized healthcare, where financial and operational pressures can form barriers to better care.

Collaborative primary care networks, also known as “enablers,” are entities that combine the strengths of independent primary care with the bargaining power and economies of scale associated with larger corporations. These network groups offer a viable way for practices to maintain independence by working together under a federated body to pool resources and improve infrastructure, thereby reducing administrative burden on the practice and bringing in new technologies and care coordination capabilities. These enablers also help independent practices negotiate collectively to secure better payer contracts, which ensure sustainable revenue streams without sacrificing their patient-centered approach. 

Collaborative primary care networks are effective because they embrace the power of consolidation crucial to the success of corporatized care models while preserving practice autonomy, divorced from upstream economic incentives, which place patient care at risk. Such groups are financially rewarded for keeping patients healthy and out of the hospital, which is ultimately what independent primary care does best. 

Incentivizing value alignment 

Only time will reveal Amazon’s impact on care, but the rise of corporate primary care doesn’t have to spell the death of patient-centered care. What we do know is that primary care innovations deliver true value only when the right incentives are in place, as demonstrated by independent primary care. 

When corporatized primary care organizations function independent of misaligned financial incentives, success can instead be defined through health and well-being. When aligned with the values of independent primary care, corporatized primary care can invest in robust multidisciplinary teams, focus on preventive care, and use technology to improve efficiency in a new model of care delivery that combines the best of what corporate and independent primary care each have to offer.

When independence is maintained, high-quality, personalized primary care will retain a meaningful place within the U.S. healthcare system and continue to help patients live healthier, longer lives. And that gives these two veteran physicians more hope for a brighter future.

Chasing downstream margin over downstream revenue

Posted on by • Posted in Health System, Hospital, Hospital Industry, Labor Spend Management, Operating Expenses, Operating Margin, Operating Margin Drivers, Physician Compensation, Physician Downstream Margins, Physician Employment, Physician Incentives, Physician Productivity, Physician Reimbursement • Leave a comment

https://mailchi.mp/fc76f0b48924/gist-weekly-march-1-2024?e=d1e747d2d8

A recent engagement with a health system executive team to discuss an underperforming service line uncovered a serious issue that’s becoming more common across the industry. 

“Our providers are more productive than ever,” the CFO informed our team, “and yet we keep losing money on the service line.” 

After digging into their physician compensation model, we came upon one source of the system’s issue. Because it was incentivizing physician RVUs equally across all payers, its providers responded, quite rationally, by picking up market share where growth was easiest: Medicaid patients, who weren’t generating any margin. 

“We recognize that we’ve been employing these physicians as loss leaders in order to generate downstream revenue,” the CFO shared, “but what’s the point of that revenue if there’s no longer any downstream margin?”
 


The economics of physician employment becomes a tough conversation very quickly; it’s a sensitive topic to many, and one with myriad facets. 

But the loss leader physician employment model obviously only works when it produces positive downstream margins. 

We’re in a critical window of time, where hospital margins are just beginning to recover as volumes return—but those volumes are not necessarily in the same places as before. 

The opportunity is ripe for systems to work closely with their aligned physicians to reexamine the post-pandemic margin picture for individual service lines and ensure incentives are aligning all parties to hit operating margin goals. 

Are these kinds of conversations taking place at your health system?