Recent acquisitions in healthcare remind me of wandering through a house of mirrors — it is impossible to understand what you are truly looking at. As physicians, we have made a habit of losing ourselves within the medicine while the systems around us evolve. However, massive changes in those systems represent an unprecedented opportunity for the profession.
What Happened?
Over time, the complexities of healthcare have created a layer cake of opacity in the industry. These dynamics have driven greater disparities in pricing, profit balance, and overall costs. Corporate America is feeling the effects of healthcare’s unchecked “condition,” with climbing costs (6 percent+ growth) significantly biting into operating budgets (on average, healthcare represents 7.6 percent of all operating expenses for companies). Fixing it the right way goes directly to the bottom line and can significantly impact workforce productivity.
Incentives established to align systems for growth and advancement are now counterproductive. Facilities have become dominant vehicles for care delivered via advanced, high-capital fee-for-service (FFS) procedures. Further, an amalgamation of business models has enveloped providers, fractalizing services into multiple discrete units (urgent care, ED, cancer center, surgical center, primary care office, etc.). For provider systems, this necessitates grabbing control of the supply chain of patients to drive top-line growth in higher cost services in an effort to improve bottom line through volume.
Meanwhile, payment structures are changing and while fee-for-service is not going away, increasingly configurations are weighted more towards outcomes and value. Provider systems have been playing a zero-sum game on reimbursement for a while and will continue to do so, with only limited increases expected that match inflationary changes, particularly in relation to Medicare, or new models that present an opportunity to further diversify and protect their position. Further challenging the market are the shifting demographics of commercially covered individuals to Medicare beneficiaries, putting even greater downward pressure on pricing and revenues (Analysis indicates there will be just 2.4 workers for each Medicare beneficiary by 2030, down from 4.6 at Medicare inception, and 3.3 in 2012).
On the other side, payers struggle with balancing competitive benefits packages and rising costs across services. Over time, this has led to the development of administrative services only offerings to offload risk onto employers. But employers are realizing that they are catching the bulk of the increased costs, and this shell game is coming to an end. Groups of employers are expanding their leverage and sophistication with new analytics tools and insights to grapple with the costs. The payers know this as well, and it has caused a flurry of vertical activity up and down the delivery stack and value chain from pharmacy benefits management to lab facilities, surgery centers, and physician groups. As a result, the previously simple business of insurance has become far more complex. This further alters the physician experience and the service of healthcare.
Independent entrepreneur physicians are a dying breed — as more and more doctors are employed by others, the number of doctors “putting up their own shingle” has diminished. And it’s not just evolution in a physician employment, the tasks they perform are also evolving, and the tools they use are often designed without their input or a true understanding of clinical workflow. Innovations may hold great promise, but there is a fear that they might also push the physician into irrelevance.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Over the course of the last ten years, a physician may have gone from being an independent practitioner to working at a hospital, and then to being “owned” by a payer. The irony is that all of this might have happened while continuing to see the same panel of patients. Mrs. Smith’s annual visit would have occurred like clockwork despite the significant evolution of the practitioner’s employment relationship. This quirk, along with limited models where lifetime value of patient care could be quantified, led to the ghosting of independent practices — limited compensation and closing doors. Now imagine that same physician wondering which way the wind is blowing when the iconoclasts of our day suggest their role will be replaced by an algorithm in the next ten years.
What’s Happening Now
Disruptive response to this state of affairs is surfacing. Witness the Amazon/JPMorgan/Berkshire, the CVS/Aetna tie-up, and more recently, the possible Walmart/Humana deal, and the HTA alliance. The shape of healthcare is evolving rapidly, and new foundations for the coming decades are being determined at this very moment. Technology is playing a major role, and physicians have to step in.
The multibillion-dollar changes in the healthcare business are geared toward the same thing that physicians have been striving for over the last two centuries: better health for the individual and for groups of people. The doctor was the first advocate for personalized medicine; it’s how they have always approached each patient. Throughout the evolution of healthcare as a business, the physician has been the steward of scarce resources deployed for desired outcomes — of time and cost for health. We cannot replace that function with decision trees and controls that do not accommodate nuance. If we learn anything from the current state of our system, it should be that incentives alone are not intentional to the end state they produce. Wholly swap the humans for technology without shifting the incentives and we may lose even more control — and arrive at an outcome no one wants.
The time is ripe for the physician group to find its voice. In this environment, we must contemplate our future roles and decide how we can foster an innovative, adaptive, and leading profession. We can’t be Luddites and must shape how our profession interacts with technology. Input from practicing physicians ensures good actors are leading the revolution. The person best equipped to chart the course through the data-deluged wilderness of complicated information, and evolving systems, and “intelligent” devices, and continuous care is a practicing physician.
However, the answer cannot be that physicians leave their profession in order to supply the rational voice. We need to find a middle path — to mentor and train leaders from within, support physicians in modified roles of practice and influence and fix the fractured financing of medical education. We can collectively supply an authoritative view and work towards the future state of practice, producing a single clear voice that pings as a beacon of meaning and intention into a universe of changing market dynamics.
What Must Happen
Any system that negates the indispensable role of the physician — the one check we have always had — risks setting us all back rather than moving us forward. The message that physicians need to heed amid this great time of change is that we are where we are because of our own efforts (or lack thereof) and we must involve ourselves with defining the future.
Standing up to support these big moves and decisions is the right thing to do. In some ways, we’re entering a state similar to those days when medicine was all about visits in the community and tinkering with new tools to improve care at the individual level — intensely interpersonal and innovative. The community has evolved, as have the tools, but it is clear the market is looking for ways to fix itself and recapture the value in interpersonal and innovative care delivery. Since physicians are the lynchpin of healthcare, we have a duty in driving its evolution. Let’s embrace the future, provide our insight, grow our influence, and determine our role — and ensure our profession stays relevant for the next 200 years.
Photo: mediaphotos, Getty Images
