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What Will It Really Take to Shift from Volume to Value? Physician Leaders Ponder Engagement, Data Issues

April 11, 2016
by Mark Hagland
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At the World Health Care Congress, physician leaders reflected on the challenges involved in the shift from volume to value

How difficult is the shift from volume to value turning out to be, in U.S. healthcare? A spectrum of perspectives on that question was shared by panelists participating in a panel entitled, “The Journey Toward Higher Value: Stakeholders on the Shift to Value-Based Care,” on Monday morning at the World Health Care Congress, which is being held at the Marriott Wardman Park Hotel in Washington, D.C.

Kavita Patel, M.D., a nonresident senior fellow at the Brookings Institution (Washington, D.C.) moderated a panel of all physician executives. Her fellow panelists were Richard Migliori, M.D, executive vice president and CMO, UnitedHealth Group (Washington, D.C.); Paul Rothman, M.D., CEO, Johns Hopkins Medicine (Baltimore); and Marc Rothman, M.D., CMO, Kindred Healthcare (Louisville, Ky.).

Dr. Patel began the discussion by noting that a recent survey found that anywhere from 10 percent to as many as 45 percent of all U.S. healthcare financial arrangements are “value-based” in some fashion, and adding immediately that, clearly, what constitutes “value-based,” and how big that proportion is, could be defined in any of a number of ways.

Patel then asked the other physician leaders on the panel why they believe (or don’t believe) that value-based healthcare will succeed in the U.S. healthcare system in the coming years. UnitedHealth Group’s Dr. Miglori stated that “This isn’t the first time this journey’s been undertaken, but this time it has its greatest promise. I say that,” he said, “because I think there are three trends in place that appear to be enabling a more successful journey. First, there’s more interest—we see more and more physicians wanting to be a part of an entity capable of taking on risk. The second is new technology. One of the things that happened in 1997 when we ham-handedly passed risk to a clinician environment,” he said, “is that physicians had very little in the way of navigation tools. Now there are some great navigation tools out there. In the days of fee-for-service medicine, physicians would worry about who’s’ in the waiting room. In the days of population health management,” he noted, clinician leaders are now “worrying about who’s not in the waiting room. Who’s sickest, and who are they caring for? It gets into the clinical and economic issues, and how to connect” with patients.

The third reason he is optimistic this time around, Miglori noted, “is the emergence of real leadership,” of two types. “There is clinical leadership to help a group of physicians becoming instead of individual contributors, now part of an integrated team. The other type of leadership is good sound financial healthcare leadership: the ability to know what kind of deal to get into, how much to go at risk, how to manage a transition so you can keep cash flow coming while going through value-based contracts. And I think because of those three trends, things will be different this time around,” compared to the managed care efforts of the 1990s and early 2000s. At UnitedHealth Group, he noted, “we will pay out about $100 billion this year to physicians and institutions, outside of pharmacy, for reimbursement. And 43 percent of that reimbursement is tied to contracts in which there is an element of value. And I’m pretty confident that we’ve passed the biggest hurdle, which is getting people going.”

Paul Rothman, M.D. noted that Johns Hopkins Medicine encompasses both a school of medicine and a six-hospital health system, along with health insurance products, as well as the fact that “We also help manage hospitals and health systems in 22 countries, from Chile to Saudi Arabia. So we’ve been thinking about value for a long time,” he said. “And for us at Hopkins, value always starts with innovation. We believe that the transition will occur, but that it will require innovation,” both clinical and medical-technological innovation, and innovation in terms of payment systems. He noted that providers like Johns Hopkins Medicine have been reimbursed since 1977 by the all-payer reimbursement system in Maryland, which is now a demonstration project, under the auspices of the Centers for Medicare & Medicaid Services (CMS). In the push for value, the Maryland payment system is generating “some great things, as well as some things that still need work” in terms of refocusing provider incentives, he noted. “But in terms of total cost, it’s certainly doing better than expected,” he quickly added. “In fact, our Medicare expenses actually decreased state-wise. And we’ve done well on some measures but not on all measures. So it’s an interesting system. We’re seeing a variety of behaviors. Hospitals are no longer going to get more revenue for higher volume. So you see good things in terms of not admitting people not necessary. But you also see hospitals… some behaviors that one would expect if one would want to decrease volumes. So we’re trying to work that out. So it’s an interesting model. I think it is going to be challenging for a place like Hopkins that innovates. So if you have a new procedure, how will you get reimbursed for that, because you have a global cap.”