Stories You Won’t Read In 2015

Paul KeckleyThe headlines and their storylines that you’re not likely to read in 2015:

Physicians optimistic about their future. They’re wildly enthusiastic about the mandate to use electronic medical records to coordinate patient care more effectively, and see the shift away from volume to value as positive trend for the industry. Increased penalties about unnecessary care and report cards about their clinical performance are welcomed as physicians embrace transparency. NOT!

Facts: Trust in physicians remains high but has slipped in recent years. Their compensation remains high relative to overall population at 5.8:1, but physician discontent is palpable. And the visibility given their business dealings vis a vis the Physician Sunshine Act and Medicare Physician database is unwelcome and discomforting.

The Affordable Care Act repealed. Overcoming a President veto, the Senate and House approved repeal. The newly insured in Medicaid and health exchanges will be easily absorbed into the current insurance system so the ranks of the uninsured will not swell. NOT!

Fact: Republicans control the majorities in both houses of Congress in the upcoming 114th Congress that convenes January 3: Senate 54 R, 44 D, 2 I, House 247, R 188 D. IF the Senate passed a law to repeal the entire ACA following the House that has passed similar legislation 6 times, the President would likely veto the law. Overriding a Presidential veto requires two-thirds majorities in both houses which is not likely. More likely are changes: elimination of the individual mandate and medical device taxes are two frequently mentioned. Per pundits, the strategy for centrist Republicans and moderate Democrats in Congress will be “fix and repair” rather than “repeal and replace.”

Health insurance plans struggle. Profits in 2015 failed to match record profits since passage of the ACA. The expansion of Medicaid and enrollment surge through the healthcare exchanges contributed to eroding margins due to their unanticipated high health costs. NOT!

Fact: Increased enrollment in Medicaid programs coupled with diversification into retail health, information technology and analytics, and global ventures portends another robust year for health insurers. And insurer balance sheets are cash rich; their war chests are strong.

Hospitals post strong margins. The acute sector’s operating margin reversed a skid on the strength of higher payments by Medicare, Medicaid, large employers and commercial plans, and lower bad debt. NOT!

Fact: Hospital operating margins shrank from 2.6% in 2012 to 2.1% in 2013. The addition of newly insured might help reduce bad debt, but the inpatient business is under pressure. Insurers are demanding steeper discounts and pushing providers to assume more financial risk. It’s not likely to change in 2015. Exceptions are investor owned systems that have shown substantial improvements in profits since passage of the ACA.

FDA loosens reins on device, pharma manufacturers. The FDA determined its increased vigilance around product safety and increased requirements for scientific evidence was inhibiting innovation and risk taking by life science manufacturers. NOT!

Fact: The FDA is stepping up efforts to insure manufacturing safety, efficacy and effectiveness in medical device, over-the-counter, prescription drug and biotech sectors.

CVS rethinks its health strategy. Following its transition to “CVS Health” and elimination of tobacco product sales in its stores, revenue growth for the retail chain skidded as consumers pushed back against the changes. NOT!

Fact: CVS Health is a disruptor in the scheme of healthcare. Its decision to drop tobacco products and focus on a wider range of health services and programs is the centerpiece of CVS’s strategy for growth.

Meaningful use suspended by Congress. Congress decided to stop implementation of the HITECH Act as criticism from physicians and hospitals persisted. NOT!

Fact: Congress has had multiple opportunities to raid funds for “meaningful use” but the $27 billion commitment remains intact. Meaningful use of health information technology is not going away, but Stage 3 might be many years away!

CMS kills ACOs; reverses volume to value transition. Medicare, noting that 4 of 5 of its shared savings programs had failed to save money for the program after 2 years, announced they are suspending the program and reverting payment policies to fee for service. Bundled payments and value-based purchasing—though effective in reducing costs—are also suspended as CMS concludes they’re too disruptive. NOT!

Fact: CMS continues to announce expansion of its ACO program: the latest—last week’s addition of 89 new participants. And employers and plans have discovered bundled payments for big ticket items like joint replacements an important vehicle to drive greater value.

Healthcare spending down as consumers drive cost reduction. In 2015, for the 5th year in a row, annual health spending increased less than 4% as consumers’ price sensitivity takes hold. NOT!

Fact: My July 24th knee replacement charges were $71,058.07. Discounts negotiated by my insurer reduced the charges to $44,661.50; and my out of pocket payments (deductibles, co-pays, drugs, etc.) came to $3,014.58. I have been a student of the industry for almost 40 years: price transparency is a piece of complicated puzzle toward empowered consumers. But it’s still not the norm. The system revolves around patients, not persons or consumers.

Investors exit healthcare. Investors pulled funds out of healthcare bets citing slower demand and lower spending. NOT!

Fact: Healthcare spending is expected to increase 6% annually for the next decade. It’s almost 18% of the GDP now, and it’s growing. Investors will continue their active role in the industry.

Healthcare will be prominent in the headlines next year. Demystifying our complicated industry, explaining its operating models and emergent trends is mainstream media coverage. There are few secrets in our system.

Paul Keckley is with Navigant Consulting. He blogs at Paul Keckley.com, where this post first appeared.

3 replies »

  1. “Patients Refuse Sensitive PHI Entry into EHRs”

    I am amazed this issue isn’t discussed more….I don’t know how commonly patients raise questions with their docs about what is being entered into the EHR system….but I agree, the issue will become big once a big politician has his or her sensitive information released…..psychiatric med use, abortion hx, addicton tx….whatever.

  2. Patients Refuse Sensitive PHI Entry into EHRs
    Fact: After the massive Sony data loss, skittish patients begin to refuse entry of sensitive medical data into their EHRs, exclaiming “This is the last straw. Nothing is secure.”

  3. “Fact: Congress has had multiple opportunities to raid funds for “meaningful use” but the $27 billion commitment remains intact. Meaningful use of health information technology is not going away, but Stage 3 might be many years away!”

    The bulk of that money has been paid out. We’re now increasingly into the reimbursement reduction penalty phase. ONC is now out of leadership, out of real money, and out of much of anything beyond Brave Face press releases and beltway bandit contractor Interoperababble “Strategic Reports.”