Five Trends in Healthcare that Will Change the Way Managers Manage

Medical practice administration has existed as a profession for almost a century. The job description for a practice management professional includes certain time-honored tasks. In a recent article in another trade publication, David N. Gans described a speech given in 1926 by one of the founders of the profession, Joseph W. Jackson. In the summary, Gans points out that then, as now, “the basic tasks of managing a medical group” included financial oversight, revenue and expense reporting, human resource management, stewardship of the physical plant, and diplomacy working with healthcare providers.(1)

However, dramatic changes in the healthcare environment in the United States require practice managers to expand their knowledge and modify their management styles if they hope to remain at the top of their profession. The changes have been driven by economics, government regulations, and shifts in the country’s population. In particular, the aging of the baby boomer generation has opened the eyes of the nation to the potential for costs of healthcare that are unsupportable within the current system. Although the attempted reforms in the delivery and payment for healthcare services could best be described as a series of “fits and starts,” those responsible for managing the industry must prepare to adapt when and if a comprehensive strategy with staying power is adopted in the United States.

In May 2009, I gave a speech at the Texas Medical Group Managers Association annual meeting in which I described five trends that I thought would radically change the way managers manage. They were:

• Quality as a criterion for reimbursement;

• Regulatory controls on fees and services;

• Consumer influence on healthcare payments;

• Full disclosure of claims data (i.e., transparency); and

• Increases in active patient load per physician.

The passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) has altered my focus on some of these trends, but it has not altered their importance for effective medical practice management into the next decade. MACRA combines several programs aimed at improving both quality of care and providers’ reliance on technology to improve efficiency while reducing overall costs. It also increases flexibility for individual practices and hospitals to choose a pathway to success. This flexibility is welcome, but it increases the need to fully understand the regulations and develop strategies to carry them out while undertaking acceptable levels of financial risk. Managers must not only find the time to master the ramifications of these latest trends on operations but must teach (or seek assistance in teaching) the practice’s employees how to change their approach to their jobs in order to succeed in the changing environment. For example, with the complexity of the MACRA rules, there is an opportunity for practice administrators to delegate responsibilities for certain phases of the program to lower-level employees. This can pay dividends in terms of supplying training and responsibility to employees of the millennial generation, who are often hungry for more challenges and higher pay in order to remain loyal to their employer.

Performance Monitoring and Quality Improvement

On average, Medicare represents approximately 31% of the typical physician practice’s revenue.(2) As directed by Congress, CMS has been gradually introducing performance reporting as a determinant of payment rates since 2006, beginning with the Physician Voluntary Reporting Program. Over the past decade, the emphasis on performance reporting expanded from a short set of reporting measures to several performance measure sets that increase or decrease Medicare payments to physicians by small percentages. Among these are the Physician Quality Reporting System, the Medicare and Medicaid EHR Incentive Programs, and the Physician Feedback/Value Modifier Program. With the 2016 introduction of the “Medicare Program; Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models” final rule effective for 2017, the potential reductions in Medicare payment rates will soar from 4% to 9% of all Medicare Part B allowable payments, beginning with payment year 2019.

Making informed choices in the selection process will be critical.

CMS estimates that only a small percentage of eligible providers will participate in the type of risk-bearing Accountable Care Organizations that will qualify for the APM payment structure. This means the rest will need to adopt the reporting requirements in MIPS. In addition, CMS projected that private physician groups of less than 100 providers are far more likely to receive penalties than earn bonuses. Careful monitoring and management of quality, practice improvement, and advancing the use of care information within the electronic health record system by the group will become a vital function of practice management.

Developing a comprehensive understanding of the MIPS requirements and careful selection of the measures that the practice chooses to report on will occupy large chunks of the administrator’s time for the foreseeable future. Once those choices are made, additional time and effort will be devoted to coaching the practice staff and physicians in how to carry out these reporting requirements efficiently in order to minimize the penalties levied against Medicare revenue. Making informed choices in the selection process will be critical. For example, one of the MIPS categories for scoring under the new rules requires that the practice undertake certain “clinical practice improvement activities.” MIPS “defines an improvement activity as an activity that relevant eligible clinician organizations and other relevant stakeholders identify as improving clinical practice or care delivery, and that the Secretary determines, when effectively executed, is likely to result in improved outcomes.”(3) One option for achieving the MIPS improvement activities performance category is to achieve accreditation as a Patient-Centered Medical Home or a comparable specialty practice. Such accreditation guarantees a full performance score for this MIPS category. An administrator for an accredited practice who is fully aware of these rules will realize that there is no need for further effort to succeed in this performance category.

Regulatory Controls on Fees and Services

Medical group managers have come to expect that business operations for the group will be affected every year by the introduction of new regulatory guidance. Past examples include HIPAA and the recent required conversion to ICD-10. Recent introductions of new ancillary services or new technologies by practices seeking additional revenue have resulted in more accreditation and safety requirements for groups that offer these services. New requirements in 2016 will force more medical practices to offer affordable health insurance to their employees, be more prompt in returning overpayments to Medicare, expand on their compliance with providing interpreter services to patients with limited English proficiency, expand Medicaid managed care plans, and comply with new guidelines for prescribing opioid pain medications.(4)

To survive in this rapid-fire era of regulatory compliance, managers must develop a process to remain aware of regulatory changes and the associated deadlines. Participation in practice management listservs, blogs, and journal clubs can help ensure that a critical requirement is not overlooked, which could result in penalties to the practice. Again, opportunities exist within this process to delegate these reviews to other staff members.

Consumerism Driven by Increased Patient Financial Responsibility

Two major factors have shifted a larger share of the healthcare bill to patients. First was the introduction of the health savings account in 2003, spurred by increasing sales of high-deductible health plans to employers by the commercial insurance industry. Midway through 2016, the number of health savings accounts exceeded 18 million.(5) In 2010, passage of the Affordable Care Act (ACA) opened the floodgates for millions more Americans to obtain private health insurance. Most of these insurance policies also carried high deductibles.

With patients bearing a larger share of the burden, many are looking for a billing and payment interaction that is similar to what they are accustomed to in other market segments. This includes online payment options, rewards programs for certain health improvement behavior, and so on. They expect more flexibility in scheduling to allow them to see their doctor on their time schedule, including evening and weekend appointments and virtual visits from the privacy of their home.

Many payers are encouraging provider groups to measure and report patient satisfaction scores.

In addition, many payers, including those funded by state and federal government programs, are encouraging provider groups to measure and report patient satisfaction scores. For example, the aforementioned MIPS quality reporting system includes credit for use of the Consumer Assessment of Healthcare Providers and Systems (CAHPS) patient surveys as one of the approved measures for credit. Managers will be expected to devote time to training staff on being more “patient friendly,” enhancing communication with patients on payment policies, adding collection gateways to the practice website, and reacting quickly to changes in patient survey scores.

Disclosure of Provider-Specific Data

As part of the consumerism movement, healthcare insurers and the government have begun publishing provider-specific data gathered from claims, quality reporting, patient satisfaction surveys, managed care contract rates, and other sources. One example is the Medicare Provider Utilization and Payment Data website maintained by CMS.(6)

Although it is not well known by most healthcare consumers, it is publicized annually by major news outlets such as The New York Times because it contains actual dollars paid to individual providers by Medicare. Comparison shopping for healthcare based on quality and costs is encouraged on many fronts. Commercial insurers regularly publish data on physician-specific cost, clinical quality, and efficiency information in an effort to drive covered beneficiaries to contracted providers. More and more patients seek information for healthcare reporting websites such as Healthgrades (www.healthgrades.com/), where patients can post reviews of physicians. Managers should develop their own transparency plan to identify practice strengths and market them aggressively. Areas to focus on include:

• Quality reporting participation;

• Cutting edge services;

• Insurance plan participation;

• Rapid appointment access;

• Working with local hospital to publish average episode of care costs;

• Publishing your patient satisfaction scores (if favorable); and

• Publishing favorable comments from patients or referral sources.

If the practice’s average episode-of-care costs are higher than those of competitors, develop a strategy to justify them with additional information. In certain areas, you may realize a positive return on investment by hiring a public relations expert to help you put the best possible spin on characteristics of your practice that the insurance companies might describe as disadvantages.

Increases in Patient Load per Physician

According to a CBS News report on July 3, 2015, “A growing population, with a large aging segment, is growing faster than the minting of new doctors. The expected result will be a shortfall.”(7) Physician demographics match closely those of the general U.S. population. As physician baby boomers age, they tend to reduce their call responsibilities, cut back on working hours, and eventually retire from active practice. The increase in the demands for healthcare from the aging population and from patients newly covered under the ACA, coupled with a reduced supply of physicians, will place larger burdens on remaining physicians in the workforce. The Council on Graduate Medical Education has warned for years that without increases in funding, the supply of physicians will not meet demand by 2020. Practice leaders will need to employ a host of strategic initiatives to avoid physician burnout. They include:

• Streamlining the record-keeping process through enhancements in electronic record keeping;

• Expanding service capacity through use of non-physician providers;

• Investigating the potential for efficiency measures such as group patient visits and telehealth services;

• Evaluating the practice’s payer mix and jettisoning contracts with lower profit margins per patient seen; and

• Working with other community providers and patient advocacy groups to eliminate duplicate care and improve patient and family involvement in the healthcare process.

These tactics may provide opportunities for a savvy practice manager to keep aging physicians actively engaged in the practice in a part-time status after they otherwise might have retired.

Conclusion

So how will management styles change as a result of the transition to this new paradigm?

First, day-to-day management decisions will focus much more on what is going on outside the four walls of the practice. Payers, consumers, and collaboration with other providers will play a far more important role in determining profit levels than they ever have before.

Next, every administrator will be expected to run a lean and efficient business operation. Developing skills for more accurately measuring the actual practice costs to deliver patient services will allow the practice to tailor their service offerings in ways that will enhance revenue while improving patient satisfaction.

Finally, rewards will come from the manager’s and physician’s ability to spot new opportunities to enhance the practice’s reputation as the best choice for care. Using social media and improving the functionality of the practice website will sharpen the image in the eyes of existing and potential new patients that the practice can fill their needs.

References

1. Gans D. The role of the administrator: history repeats itself. MGMA Connection. September 2016. www.mgma.com/practice-resources/mgma-connection-plus/mgma-connection/2016/september-2016/the-role-of-the-administrator-history-repeats-itself Accessed October 16, 2016.

2. MGMA Cost Survey: 2014 report based on 2013 data. Key findings summary report. Medical Group Management Association. www.mgma.com/Libraries/Assets/Key-Findings-CostSurvey-FINAL.pdf?
   source. Accessed October 18, 2016.

3. Medicare Program; Merit-based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models. Federal Register. 81:214 (November 4, 2016) 77177.

4. 2016 will bring flurry of new rules and regulations affecting healthcare. Modern Healthcare. January 2, 2016. www.modernhealthcare.com/article/20160102/MAGAZINE/301029961 . Accessed October 19, 2016.

5. 2016 Devenir mid-year HSA research report. Devenir.com. www.devenir.com/research/2016-midyear-devenir-hsa-research-report/ . Accessed October 19, 2016.

6. Medicare Provider Utilization and Payment Data: Physician and Other Supplier. CMS.gov . www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/medicare-provider-charge-data/physician-and-other-supplier.html . Accessed October 25, 2016.

7. Sherman E. Too many patients, not enough doctors. CBS News Moneywatch. July 3, 2015. www.cbsnews.com/news/too-many-patients-not-enough-doctors . Accessed October 25, 2016.