Healthcare Triage: The 2017 Flu Killed 80,000 in the US. Get a Flu Shot!
Influenza killed 80,000 people last year in the United States. That is the highest number of deaths since the CDC started keeping records in the 1970s. Help protect yourself and those around you. Get a flu shot!
The conditions follow a Health Policy Commission report that warned the merger could result in a $128.4 million to $170.8 million increase in healthcare spending for inpatient, outpatient and adult primary care services and up to $59.7 million for specialty physician services.
The commission concluded that while the merger could lead to improvements in quality and efficiencies, the companies hadn’t explained how that would happen. The new conditions call for a second report in five years to assess the merger’s impact on healthcare costs and services in the state.
BIDMC CEO Kevin Tabb called the commission’s conditions “strict,” but said they won’t discourage the planned merger. “While the conditions are unprecedented, we are eager to move forward together as Beth Israel Lahey Health,” he told Healthcare Dive via email. “The status quo in this market is unacceptable, and it’s time to do something different.”
As mergers and acquisitions continue in healthcare, potential problems could lead to more stringent conditions. Research has shown, for example, that horizontal mergers can drive up costs. Once completed, Beth Israel-Lahey Health would rival Partners HealthCare System in terms of market share in Massachusetts. The new company could use its increased bargaining power to raise prices for commercial payers, increasing healthcare spending.
A recent National Bureau of Economic Research analysis also played down the extent to which hospital mergers increase efficiencies. According to NBER, acquired hospitals save just 1.5% of total costs following a merger — or an average of $176,000 a year.
And a recent University of California-Berkeley study of health system consolidation in the state found that highly concentrated markets led to higher hospital and physician service fees, as well as higher Affordable Care Act premiums, especially in northern California.
https://us17.campaign-archive.com/?u=526c5e99ee0439b6f83f7c051&id=1f51eaa989
Recall that over the past few weeks, we’ve been sharing our framework for thinking through the path forward for traditional health systems, as they look to drive value for consumers. We began by describing today’s typical health system as “Event Health”, built around a fee-for-service model of delivering discrete, single-serve interactions with patients. We then proposed the concept of “Episode Health”, which would ask the health system to play a coordinating role, curating and managing a range of care interactions to address broader episodic needs. Finally, last week we shared our vision for “Member Health”, in which the system would re-orient around the goal of building long-term, loyalty-based relationships with consumers, helping them manage health over time. In this broader conception, the health system would “curate” a network of providers of episodes, and events within those episodes, and ensure that the consumer (and their information) moves seamlessly across care interactions.
As we mentioned earlier, most successful health systems will play a combination of these roles at the same time, pursuing strategies that allow them to manage episodes while moving closer to a risk-based model that gives them the ability to create a member value proposition for consumers. As the graphic below illustrates, however, that pluralistic approach will create some important tensions for the health system.
Episode Health is fundamentally a fee-for-service approach—these systems will become specialists in delivering specific episodes (e.g., joint replacement), and will seek to drive increased volume through their model. That may not be an ideal outcome on the Member Health side of the business, however, where more episode volume could mean lower profitability, given the capitation-like incentives of “owning lives”. That’s a tension that faces every health system with its own health plan—even systems that have been pursuing both strategies for years still find it challenging to manage across conflicting incentive models. (Witness Intermountain Healthcare, long a pioneer of the Member Health model, which is in the midst of a structural overhaul to allow it to better manage across the two businesses.)
Recognizing the tensions inherent in shifting away from Event Health toward more comprehensive approaches is critical for organizations looking to make the leap forward. Health systems run the risk of being doomed by their own success if they don’t take steps to realign operating structures, administrative and clinical incentive schemes, and even market-facing branding to navigate the complexity inherent in running parallel business models.
It’s not all bleak and this is part of a larger talk on healthcare as a zero sum game. But here are 11 headwinds facing systems.
1. Pharmaceutical costs particularly non-generic.
2. Payers expanding into providers and combining with providers.
3. Payer market share.
4. Health IT and cybersecurity costs.
5. Labor costs and a labor intensive business.
6. High costs of bricks and mortar.
7. Medicare as a larger percentage of health system revenue and Medicare reimbursement softening now and over time as federal deficits rise.
8. Slowing overall healthcare inflation as hospital costs rise.
9. Siphoning off of better paying commercial patients.
10. Siphoning off of profitable ancillaries.
11. Entry of big technology firms into healthcare.
