I cannot think of another industry that is undergoing more scrutiny, uncertainty and volatility than healthcare. All of the major stakeholders: physicians, hospitals, insurers, employers and consumers are trying to set course on the sea of change. The future of healthcare is fraught with opportunity and pitfalls and physicians will bear the brunt of change. While no one can predict how things will play out several years from now, physicians will see the rate of change in the marketplace accelerating in 2013.
President Obama was elected to a second term. The controversial Patient Protection and Affordable Care Act (ObamaCare) is law of the land and cannot be repealed. Most states will accept the new federal funding, which extends Medicaid coverage, with all the strings attached. In 2013, states will be gearing up for an influx of newly insured in 2014. ObamaCare will actually have less of an impact on states like NYS that already have a relatively low uninsured rate (9%) and more liberal benefits for Medicaid. So, NYS providers should not experience a sudden tsunami on 1/1/2014. The states where ObamaCare will have the most impact, (for example Texas with 30% uninsured rate) could choose not to accept the new federal funding being offered, preferring to leave their Medicaid programs right where they are.
In January 2013, the first wave of new Federal funding will come to NYS to pay for preventive services to current Medicaid recipients. In addition, Primary care physicians serving Medicaid recipients must be paid at least 100% of the Medicare physician fee schedule.. By October 2013, the feds will provide NYS with two more years of funding for children not eligible for Medicaid (CHIPS). Finally, insurance exchanges should be open for business by the end of the year. Believe it or not, members of Congress will be getting their insurance through the exchange in their respective states.
More and more seniors will elect Advantage plans over regular Medicare next year. The commercially sponsored plans will see a record number of participants in 2013. Advantage plans pay for services not normally covered by regular Medicare and some pay physicians 90% instead of 80% of the Medicare MD fee schedule. The most misleading accusation during the presidential campaign was that Obama was “raiding” Advantage plans to pay for ObamaCare. The absence of any agreement or lobbying by commercial insurers was a good indication that they knew that wasn’t true. It is estimated another 1.5 million seniors will opt for an Advantage plan in 2013 bringing the total to close to 15 million.
More organizations, primarily hospitals serving urban areas, will seek ACO approval in 2013. This will accelerate the formation of strategic alliances between these hospitals and their key medical groups including the outright purchase of a practice by the hospital/ACO. Primary care physicians, surgeons and some internal medicine subspecialties remain prime targets. Most primary care groups will eventually be owned by an ACO as they are the foundation/crux of an ACO. The more primary care providers the better as their patients count towards ACO membership. ACOs will seek to employ key specialists like surgeons (68% are employed) and some internal medicine subspecialties. 31 million of us are already receiving care through an ACO.
The private practice of medicine will continue to shrink in 2013. Established medical groups will continue to find it difficult to attract and retain younger physicians. Very few new private groups are being established any more. The business of medicine with all its inherent headaches does not appeal to the vast majority of recent medical school grads. Younger physicians prefer the stability, security and life style of employment. It is the nature of their generation. Law firms and accounting firms are experiencing the same phenomenon. According to the consulting firm Accenture, only 36% of physicians will have an ownership stake in a practice by the end of 2013. Physicians do not have to surrender their independence completely. Many private specialty groups will remain intact by contracting with one of more ACOs.
By mid 2013, bundled or flat payments for specific episodes of care and some form of capitation will become more prevalent. The prevalence of alternative reimbursements will depend on the number of medical homes and ACOs in the local marketplace. Urban areas will see more of this well before rural areas. Physicians without electronic records will begin to feel the pinch from payers. The alternative reimbursement schemes will place more responsibility on the patient for their overall health. Patient compliance will become crucial to a provider’s financial success. Patients will be allowed to access their physician and monitor their care on line. There will be less unnecessary face to face contact.
ObamaCare will continue to create rapid changes in the market place as more provisions are implemented through 2019. If you are still in private practice, what is your business plan? If it’s to sell to a hospital/ACO, you don’t need a business plan going forward. Have your practice evaluated so you have some idea of your worth before you approach a hospital/ACO. Be forewarned that intrinsic or goodwill value of most practices is declining. The average age of the partners is increasing. It is becoming increasingly difficult to predict cash flow and profitability. The type of future reimbursement let alone the level of future reimbursement gives practice valuators angina. If your plan is to remain independent, then you really do need a good business plan going forward if you are to survive all the changes confronting you over the next seven years.