Surviving healthcare reform: Setting a strategic direction

October 25, 2010

Healthcare reform is game changer but nobody can yet fully articulate the impact of the new rules. How do you plan for the future when there are so many unknowns? This is the second article in a series that examines how healthcare reform is likely to affect radiology practices and how they can prepare for drastic changes to come.

Healthcare reform is game changer but nobody can yet fully articulate the impact of the new rules. How do you plan for the future when there are so many unknowns? This is the second article in a series that examines how healthcare reform is likely to affect radiology practices and how they can prepare for drastic changes to come.

To plan for life under healthcare reform, it is important to look also at other changes looming in the near future, especially since so many of us have a tendency to procrastinate when a deadline is several years away. As mentioned in the first article in this series, (Surviving healthcare reform: Get lean, learn the insurance game), it is time to get our radiology house in order with the goal of developing a lean and flexible business entity with the capacity to adjust to major financial changes. There is still more we don’t know than we do know about the demands of healthcare reform, but the relationship of several expectations to existing programs provides some hints.

Accountable care organizations (ACOs). Accountable care organizations are one of the mechanisms planned to increase efficiency and reduce administrative costs. Of course we don’t have clear definitions yet of what it takes to qualify as an ACO, but so far they sound a lot like the Physician Hospital Organizations (PHOs) that cropped up in the 1990s as an effort to reduce costs by “aligning incentives.” Aligning incentives frequently meant the hospital employed physicians or otherwise integrated them under a PHO model. Many of these organizations foundered as hospitals learned that physicians as employees are less productive than they are in the private practice setting. In most parts of the country, the PHO concept failed to achieve the goals of improving care and reducing costs.

Preliminary ACO development activity has begun, although much of it seems to be concentrated in large multispecialty groups that would like to make sure they meet the structural definitions so they can be players in the new world of reform. In some parts of the country, radiology practices have moved to ensure an early place at the negotiating table. But overall, our specialty seems to have adopted a “wait and see” attitude. I expect the intensity of ACO development will vary widely from one market area to another (probably depending on the PHO local track record) and that radiologists may find it beneficial to be included, but will probably not be leading the charge. My recommendation? Pay attention to what’s going on, prepare to cooperate if it makes sense, but don’t be the drum major in the parade.

Emphasis on quality and patient safety. There is little room for argument regarding the growing emphasis on quality and patient safety. Radiology practices have generally been proactive in regard to accreditation and radiation safety issues, but as nonradiologist imaging facilities proliferated, ignorance of radiation safety sometimes crept in. In these instances, accreditation seems to have been viewed as additional “overhead,” especially when it represented a voluntary program with costs that did not result in additional revenue.

As of Jan. 1, 2012, accreditation of advanced imaging modalities is no longer optional, thanks to the Medicare Improvements for Patient and Providers Act of 2008. While itself not a product of healthcare reform legislation, the move to mandatory accreditation will help Medicare “thin the herd” of imaging service providers to reduce costs and is indicative of the types of changes likely to occur in the future. Again, physicians are inclined to agree with the emphasis on quality. Radiologists will no doubt applaud having the quality bar raised across the country.

What else can we expect? The Medicare Physician Quality Reporting Initiative (PQRI) is currently a voluntary program, with financial rewards tied to the submission of successfully completed indicators. Medicare’s website advises, “Eligible professionals will have the opportunity to use participation in the PQRI program to improve the care of the patients they serve through the evidence-based measures that are based upon clinical guidelines. Participating in PQRI is a way to prepare for future pay-for-performance programs.” The key words here are “Future pay-for-performance programs,” which are mentioned (but yet undefined) in the healthcare reform law.

With mandatory accreditation imminent and requirements for quality reporting increasing, what does it mean to the radiologist as a physician and small business owner? The costs of administrative overhead will continue to rise while reimbursements decrease. This isn’t a new song, but represents the addition of many new verses to the familiar tune of doing business in radiology. Theoretically, physicians should fare better as the promise of “insurance for all” is fulfilled. At the same time, however, payment restrictions are increasing and most growth is predicted to occur in Medicaid, the least desired insurance class.

 

FINAL COMMENTS

Like many small businesses across the country, medical practices look to a future of great uncertainty. How do you plan for that? Most practices are hunkering down, slowing investments in new imaging equipment and business expansion while seeking ways to be more productive. Maximizing technology on the business side of the practice may free up staff time to maintain documentation and manage the accreditation and quality programs. Again, nobody argues with the goals of quality and patient safety but getting there without excessive duplication of effort needs to be a goal-and there aren’t signs that will happen.


Ms. Kroken is a consultant and principal in Healthcare