A new survey of healthcare providers, plans and pharmaceutical companies reveals that these institutions have internally contradictory approaches in managing the changes wrought by healthcare reform, especially as it relates to the shift from fee-for-service to a more value-based system.
For instance, when healthcare providers were asked by KPMG how important it is to at least maintain and potentially increase commercial insurance reimbursement rates compared to Medicare and Medicaid, 50 percent of providers said it was extremely important. Additionally, 80 percent of these large health systems believe they have the market position to do just that. However, they contradicted themselves by saying in an answer to a different question that raising prices on commercial payers is “not a very important factor in developing a sustainable long-run business model,” the survey found.
“The findings really underscore the key question of whether or not any organization can be both committed to nonvolume-based care economics while at the same time working to sustain a volume-driven reimbursement status quo,” said Ed Giniat, national sector leader, KPMG Healthcare & Pharmaceuticals, in a news release. “The institutional schizophrenia that emerges will be challenging to manage at best.”
The survey conducted between January and June polled104 healthcare system executives, 51 health plans executives and 54 pharmaceutical executives.
It also found that a large group of respondents — 40 percent, 53 percent and 43 percent of systems, plans and pharmaceuticals, respectively — said that their current business model was somewhat sustainable over the next five years. Between 20 percent and 27 percent of respondents in each group, however, believe that present business models were either not very or not at all sustainable over the next five years.
While many responded that current business models are somewhat sustainable, in an apparent conflict, many providers (65 percent) and plans (41 percent) do expect to see changes in the business models in the next five years. A majority of pharma executives (63 percent) expect only moderate changes.
Again, while nearly 50 percent of healthcare providers and plans showed that they wanted a quicker transition into a value-based format, most believe that the change will happen gradually over time, “with less than a quarter of all provider reimbursement fashioned as some type of value-based payment” according to the survey.
“Organizations are clearly considering the effectiveness of their fee-for-service business models, but migration to more value-based models will take some time and will include a mix of old and new delivery and payment systems,” said KPMG’s Giniat. “The only way for more rapid integration to occur is for these stakeholders to lead the change and make it happen, but many of these organizations are using techniques more aligned with sustaining existing models.”
Other findings include:
- 55 percent of payers said it was possible to have partnerships with providers and suppliers;
- 47 percent of pharma executives said a move toward accountability is a net plus for the healthcare industry and 70 percent said comparative effectiveness research would help describe the value of products;
- yet, more than 50 percent of pharma execs said CER would be used as a tool to cut prices and 40 percent said reimbursement reform is to blame for a relatively sparse product pipeline.
Reserve your seat now for MedCity CONVERGE, to be held July 9-10 in Philadelphia. Discover strategies, solutions and startups in healthcare innovation. Be a part of this gathering where the entire healthcare ecosystem converges.
By Arundhati Parmar
Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.More posts by Author
You know, I really and truly wish mental health terminology would cease to be used to describe things other than mental health conditions.
In lieu of my experience with the current operations of our hospitals across the country since after 911, I've become aware that medical fraud, professional identity theft, property piracy and the use of new age medication, that has 9-20 side affects and causes memory loss, is a multi-billion dollar business and as long as you're addicted, from the drugs they pump u up with, a alzheimer patient, psychotic or amputee-whether you consent to it or not, like me...then you can get medical assistance until they get all your information then tell you your insurance don't cover it and you'll wind up in a psychriatric ward for not wanting to take their medication, an amputee or incompassitated from their medication because they want to keep you quiet or make it so no one finds you....$$$$$$$$$$$$$$$$$$$$$$$.@
I posted many times , and on many places my comments on our health industry. Even I sent a letter to the President , and requested that allow me couple of years on voluntarily basis to take care of this white elephant . I am a public health researcher , administrator , educator and a health care provider . I spent my 13 years of life , and about half a million dollar to discover a unique way to take care of diseases NATURALLY called DCP , an abbreviation of Doctor of chemical philosophy which is based upon my " Disease Theory " . . My book , An Introduction to DCP , is a ray of hope for every person in this complicated health industry where every person is interested in making money but no body helps the humanity.As we know that our doctors treat the patients sign and symptoms on the basis of laboratory reports but actually do not know the cause / causes of a disease. In my book , I explained the causes of a disease , and made life very easy for the doctors so that they would work in the right direction instead of wasting money and time of the patients. Conventional medicine is only helpful for acute diseases but failed to provide good results in chronic diseases. We have 90% chronic diseases in our community which are managed through the medication. It means that to cure one disease we create another disease because of the side effects of the medication. We can cure these chronic diseases even without medication if our politicians would intend to do so , and by applying this simple principle we would save trillion of dollars . This is just a very simple example to reduce the burden of health care on our scattered economy , and I have the whole plan if apply properly would take care the health needs of every person of our nation even without spending a dime per person.Actually we need a good team who would use their brain but not the computers , and cooperation from the politicians . GOD BLESS AMERICA !
The schizophrenia demonstrated here is not surprising. The switch from one business model to another is fraught with numerous types of risk. The players must hold on to the present AND move forward with the new, particularly when the end state is so ambiguously defined. What could be helpful to the leaders is to specify the path forward...what they will do to embrace the new model AND what they will do to continue to nourish the old..and what of the old must be discarded. I have an article which will appear in Becker's Hospital review within the next few weeks which provides a blueprint. If you are interested, let me know and I will forward it to you when it is published.
@Ralph Jacobson Sorry, but there is no "schizophrenia" being demonstrated here, unless of course the industry is experiencing delusions, hallucinations and impaired cognitive processing. Again, please do not use this mental illness as a metaphor; it is incorrect, misleading and stigmatizing. Switching from one extreme to the other is NOT schizophrenia. I'm sure your comment is important and meaningful, but unfortunately leading with a comparison to a major mental illness diminishes its validity.
Capitilism seems to have gone through a full circle and staring at socialism! This will be a shocker for a lot of Americans who are die hard capitalists. At the end of the day if growth and development is not inclusive, it is bound to result in large scale disatisfaction. Obamacare may be a third world ideology that is only preached and not practiced in most of third world. However the essence of it is that American healthcare system and the physicians had it good for too long and it is time to look at it from the society's view point. Healthcare is a service industry and inclusion/ compassion needs to be bundled together. It is time to make some scrifices and belt tightening for the larger good.
I was also going to ask if the industry was suffering hallucinations and paranoid delusions, since that's what schizophrenia is. I'll refer Schizophrenia Supporters comment:
"The word 'schizophrenia' is used incorrectly in this article, unless you mean to say that the health care industry is delusional and is suffering from hallucinations and mental confusion. If you mean to suggest that the industry is conflicted and divided in it's approach similarly to someone with dissociative identity disorder, you've used the wrong term. Using the term schizophrenia in this way fosters misconceptions about what schizophrenia is, that people with schizophrenia and their loved ones have to work hard to counter. Please don't do it."
I usually can give the general public a pass when they use the term flippantly. As a "medical" journalism site, I find your use of a mental illness as an adjective, much less that you used it incorrectly, abhorrent.
health care industries and health care journalists should know better than to use the term schizophrenia flippantly or inappropriately
@Not surprised !!! compulsions ,Needs(consumerism) and wants of of 21st century are driving people crazy.It is reflecting the current chaos in the lifestyles and behavior of people / minds and also has ripple effect in the global giant leading companies they are heading
Something tells me those surveyed have not fully considered the ramifications of a Five Year FREEZE on premiums, the forced MLR rates, and the loss of plan accreditation for benefit summary guidelines outside of the 'Exchange' tiered coverage architectures.
Too many hospital CEOs and physicians support one payer models and were in support of Obamacare. They believe that they will be better off because they will get paid for the uninsured. They forget the dismal reimbursement that government programs like Medicare, Medicaid and Worker's Comp provide. And if Obamacare survives it will be much worse. Hospitals and physicians will be squeezed to balance the budget (along with rationing of care). Just run the numbers with all of your business being paid at Medicaid rates. Feel better about eliminating that bad debt now?
The word 'schizophrenia' is used incorrectly in this article, unless you mean to say that the health care industry is delusional and is suffering from hallucinations and mental confusion. If you mean to suggest that the industry is conflicted and divided in it's approach similarly to someone with dissociative identity disorder, you've used the wrong term. Using the term schizophrenia in this way fosters misconceptions about what schizophrenia is, that people with schizophrenia and their loved ones have to work hard to counter. Please don't do it.
Hello,
The phrase "institutional schizophrenia" was part of a quote that the KPMG executive used. I believe KPMG was trying to say that there is tremendous dichotomy within the industry. I understand your sentiment however.
@Arundhati Parmar Oh I am well aware of the source of he quote (Ed Giniat, national sector leader, KPMG Healthcare & Pharmaceuticals), and I fully understand what he was trying to say, and that's exactly my point: this "leader" in the Healthcare and Pharma sector is attempting to draw a comparison between the shifting (and contradictory) goals of the sector and a very serious mental illness, the latter of which is NOT about being "split personality" or contradictory. I repeat: it is inexcusable that someone in healthcare is using this mental illness as a metaphor in this way. It is outdated, harmful and stigmatizing.
Thanks. I was just about to post how head-shakingly ironic it is that a "leader" in health care used the word "schizophrenia" in such an outdated, incorrect and harmful way.