The Future Is Not What It Was Supposed to Be
Amid regulatory and market uncertainty, more than 30 healthcare CEOs assembled in Washington, D.C. for Huron’s 2017 CEO Forum. The purpose: to assess the industry’s turbulence and chart a course through it. Anthem Chairman, President and CEO Joseph Swedish captured the prevailing mood as he kicked off the Forum, saying “The future is not what it was supposed to be. It speaks to how quickly the landscape is changing.”
A series of presentations, discussions and debates followed that reflected the challenges healthcare organizations are facing to deliver the best quality care at the best price for the best patient outcomes.
Challenges and Complexity
Complexity, change and uncertainty were watchwords for many speakers, including Amitabh Chandra, the Malcolm Wiener Professor of Social Policy and Director of Health Policy Research at the Harvard Kennedy School of Government. “It is much harder to be a CEO of a health system than a CEO of a tech company because you’re doing more than selling a single product,” Chandra said. “The environment is so complex and challenging.”
Those challenges include changing demographics, lower reimbursement rates, the rising cost of care, the need to attract and retain top talent, and the disruptive potential of technologies that impact everything from how providers get paid to patient outcomes.
In recent years, the industry has looked to meet those challenges with regulatory and market-based reforms—including policy and payment structures such as Accountable Care Organizations and high deductible health plans, for example. But as Joseph Swedish and other speakers pointed out, things haven’t quite worked out as expected—at least not yet.
From Payment Reform to Payment Uncertainty
Not long ago, when CEOs talked about payment reform, they were referring to the shift from volume to value and looking for more clarity. What they face instead is more uncertainty.
At this year’s Forum, the conversation was all about market instability—the difficulty of knowing what policymakers will do next. “This is a challenging time in our industry,” Swedish said, “and it is extremely difficult to price uncertainty into the premium.”
An example from the provider side: Last year, MACRA seemed set to become a foundational part of the payment framework. Now, is MACRA back in play? Maybe so, according to Chandra.
“There are two types of economists: those who cannot forecast and those who do not know they cannot forecast,” Chandra said. “So I can’t say definitively what will happen to MACRA. There could be a lot of pressure to undo MACRA, because it is deeply unpopular with many physicians.”
A different view came from Ezekiel Emanuel, one of the architects of the Affordable Care Act and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania. Emanuel’s take: Doctors will eventually embrace MACRA. As they begin to appreciate the potential upside, it will bring out their entrepreneurial spirit.
Elliot Joseph, CEO of Hartford HealthCare, argued that MACRA may be here to stay, noting that it passed with bipartisan support. “Embedded inside MACRA is a pretty existential change: if you want to pay primary care physicians more, you have to do less specialty care. I think that could be a major disruptive force that is going to drive transformation.”
Planning For Value, Praying For Volume
The heightened uncertainty around payment reform makes the “foot in both worlds” problem more challenging. Or as Rich Statuto, president and CEO of Bon Secours Health System put it, “We are throwing everything we have at value-based payment, but I go to sleep every night praying for volume.”
The survey discussed consolidation, the journey of value, technology and innovation investments, advancements in big data and precision medicine, consumerism and health systems of the future. Read more.
Checking The Sky
Another sign of the times: Questions about single payer. In six previous CEO Forums, the phrase has never merited any serious talking time. This year, executives were curious about getting a read on the subject—in the same way a sailor might check the sky for storms.
“I’ve been surprised by the public discussion of single payer,” said Gary Kaplan, M.D., chair and CEO of Virginia Mason Health System. “It feels like the conversation might be a little different than it has been in the past.”
Swedish pointed to the resounding single-payer ballot measure loss in Colorado last year as evidence that the public is not sold on the concept—and Chandra offered an economist’s point of view: “One side-effect of single payer is that innovation would slow. We’d still be giving people 2017-style healthcare in the year 2027. But we would be able to give everyone 2017 healthcare.”
Are Accountable Care Organizations Delivering What They Promised?
Accountable Care Organizations (ACOs) were supposed to be a big part of the solution to increase quality and lower costs. Again, it hasn’t quite turned out that way.
“I wrote some of the early papers arguing for ACOs,” Chandra said, “and by some measures they do look incredibly successful.” They certainly reduce utilization, but it turns out all that care coordination costs money.
“The typical Medicare beneficiary spends $10,000 a year in fee-for-service medicine,” Chandra said. “In two recent studies, ACOs only lowered that by 1.2 percent or $120. We need a completely different way of thinking about bending the cost curve.”
Skin In The Game Is A Good Thing — Except When It Isn't
Like ACOs, high deductible health plans (HDHPs) have performed differently than expected just a few years ago. Giving consumers skin in the game is still the right incentive, and the good news is that HDHPs do save money. But that’s also the bad news.
Chandra briefed CEOs on a Fortune 10 company that moved 180,000 employees into a HDHP with $6,000 deductibles per family. Total cost savings averaged around 14 percent. But employees were just as likely to cut out essential care as unnecessary imaging. Half the savings came from the sickest patients who were already over their deductibles.
“The high-deductible plans are designed by economists who assumed patients are also economists. But they’re not. They are people who are sick, confused by what we’ve provided, and not experts at figuring out the complicated plan-design behind them,” Chandra said.
“The Forum made clear that there are no silver bullets,” said Jeff Jones, Huron managing director. “Solutions will have to be developed market-by-market. For most systems, that means meeting short-term needs while managing in ways that will meet long-term goals. The common theme is the need to drive efficiency and lower the cost structure, so that organizations are ready no matter how the landscape may change.
Discussions at Huron's 2017 CEO Forum ranged from disruptive innovation to cybersecurity. No matter the topic, the theme was clear - to thrive in heathcare's brave new world, organizations must:
- Think Differently
- Plan Differently
- Act Differently
Understand how changes in the healthcare landscape will impact payment reform and care delivery
Develop new capabilities and partnerships
Drive efficiency in current business models to generate the revenue needed to create the business models of the future