At the HFMA conference last week in Las Vegas, Marc Halley, president and CEO of Halley Consulting Group, LLC, Westerville, Ohio, described a perfect storm of unprecedented demand, declining reimbursements, and increasing regulations and costs that will affect healthcare more than anything coming out of Capitol Hill. He says these factors put the patient-centered medical home into context. 

Healthcare costs now account for 18 percent of the gross domestic product, he noted, and healthcare is highly visible to government regulators. The cost of compliance will increase, he says, noting that RAC auditors essentially get paid a commission for finding something amiss. “Many hospitals don’t contest decisions, which further drives up the costs of healthcare,” he says. Added to the mix are 78 million baby boomers who will demand more choice in their healthcare; they will descend on hospitals and medical practices in unprecedented numbers and with unprecedented demands, he said. Those three underlying trends will do more to change health than anything going on in Washington, he said.

Halley pointed to several implications of the trends:

• A focus on quality and pay for performance; not only do they have to provide quality, but they will have to prove they provide quality care.
• Fewer, larger systems of providers. “We see consolidation going on all over the country, hospitals consolidating into larger networks and medical practices,” he said.
• Greater competition for insured patients. “We don’t turn those who can’t pay away, but we need to do a better job of managing those who can’t pay; and we also have a payroll to meet, so we also have to have a fair share of those who can pay,” he said.
• Emphasis on cost and productivity performance improvement. Physicians in primary settings are seeing more patients per day, which requires more delegation of tasks to nurses. Patient satisfaction in the team setting goes up, because the nurse spends more time with the patient, he said. “We are seeing that kind of intent and contemplation around productivity. Because if reimbursement is dropping, and costs are going up and demand is increasing, you have got to have increases in productivity,” he said.
• Technology. Medical practices need a well functioning EMR and a well-functioning practice management system.
• Rigor of business. “We need physicians and staff involved in being successful in a medical practice setting, because it is going to get tougher and tougher to do that,” he said.

Halley said these trends imply four strategic imperatives:

• Control market share. He noted that women make 85 percent of the healthcare decisions in a typical household. In urban and suburban settings, more than half of patients select a primary care physician within a 10-minute drive. Primary care physicians hold the market share; which benefits hospitals and the specialists that are affiliated with a large number of PCPs who have large patient panels, he said.
• Providers must demonstrate both service quality and clinical quality. Halley said he asks PCPs what motivates them to send their patient to a particular specialist. The top three reasons are access, communication, and the patient experience.
• Access to capital. The hospital supports the community health system, so if the hospital is in trouble, the community is in trouble.
• Productivity, which is critical under a capitation model.