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Could SGR Imperil HITECH for MDs?

October 26, 2010
by Mark Hagland
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Interview: William F. Jessee, M.D., President and CEO, MGMA

At the press briefing hosted midday on Monday by the leaders of the Medical Group Management Association (MGMA), which is currently holding its annual conference at the Ernest N. Morial Convention Center in New Orleans, William F. Jessee, M.D., MGMA’s president and CEO, presented members of the media with the results of recent MGMA member surveys and other research, and offered his interpretations of some of those findings, as well as responding to questions from the press.

Among the most dramatic findings of an MGMA member survey from this summer: among 2,860 groups representing 63,000 physicians in practice, based on the prospect of a 23.6 percent cut scheduled for December 1 in Medicare’s sustainable growth rate (SGR), and an additional 6.5 percent cut scheduled for January 1, medical groups plan drastic changes, including:

  • 76.6 percent will likely delay the purchase of new clinical equipment or facilities
  • 60.5 percent will likely reduce the number of administrative support staff
  • 54 percent will likely reduce clinical staff
  • 49.5 percent will stop seeing new Medicare patients
  • 45.3 percent will likely delay the purchase of electronic health record (EHR) systems
  • 27.5 percent will cease treating all Medicare patients

Indeed, in reaction to the series of developments this summer, in which SGR-related cuts were expected to materialize, MGMA member groups had already taken certain actions, including the following:

  • 37.3 percent delayed purchasing EHR systems
  • 31.7 percent cut the number of administrative staff
  • 29.5 percent cut the number of appointments for new Medicare patients
  • 27.5 percent cut clinical staff

Following the press briefing, Dr. Jessee spoke exclusively with HCI Editor-in-Chief Mark Hagland regarding the interrelationship between potential SGR-related Medicare cuts and EHR development, and other strategically oriented topics. Below are excerpts from their interview:

Healthcare Informatics: Looking at the above survey results, in which MGMA members reported that even the anticipation this summer of SGR-related cuts led them to delay EHR implementation, and in which more than three-quarters said that anticipated cuts coming in December and January would lead them to pull back on EHR implementation going forward, what’s your reaction, particularly given the need to move forward under HITECH [the American Reinvestment and Recovery Act/Health Information Technology for Economic and Clinical Health Act]?

William F. Jessee, M.D.: It’s interesting, because I’ve had this conversation with David Blumenthal [National Coordinator for Health Information Technology David Blumenthal, M.D.]. And I said, you guys need to understand, it’s not a matter of whether our members like the EHR or not, it’s about everything going on in medical practice. And it’s hard for us to advocate this when the SGR thing could really have a negative impact. [Blumenthal] says he’s only concerned with the EHR piece. But I think right now that the SGR/EHR piece is the biggest obstacle right now to EHR implementation. Some of the vendors are trying to get around this now through SaaS [software as a service], which will help. But nobody’s rushing to take on new costs in this uncertain environment. And the uncertainty is probably the worst thing; because when people are uncertain, they tend to get into paralysis mode.

HCI: Do the majority of MGMA members understand that they need to move forward on EHR implementation and automation generally?

Jessee: If it weren’t for the money, yes, they absolutely do. And those in larger organizations, they’ve got more access to capital. They see that this is a large part of preparing to be an accountable care entity. So they’re moving forward regardless. And 44 grand [the $44,000 that eligible providers are qualified to receive under the HITECH provisions] is nothing to sneeze at; but whether or not they get that 44 grand, they’ll do it anyway. Ironically, it’s the smallest guys who are really the target of the ARRA-HITECH who are most hesitant to move forward. And it depends on specialty. I’m on the CCHIT [Certification Commission for Health Information Technology] board of trustees. And we’re getting requests for specialized certification. My dentist has been using an electronic dental record for years. And he can show me the image of a crown from seven or eight years ago, stored.

HCI: What are you hearing on ACOs [accountable care organizations]?

Jessee: I’ve joked a lot that every consultant in the world is out talking about how to become an ACO. And the first question I always ask is, what is that? And if you ask 10 consultants you get 11 different answers. But we try to get people to distinguish between what I call a ‘statutory’ ACO and a ‘common-law’ ACO. With regard to the statutory one, the rules are yet to be determined. But payers are already entering into shared-savings or bundled-payment agreements with providers [in the non-governmental marketplace]. And that’s where healthcare is going, regardless of federal legislation. And having organizations able to provide quality, safe care in that context is essential. As for the structures, the hospitals all believe they’ll be hospital-centric; and Dr. Fisher of AMGA [Donald W. Fisher, M.D., president and CEO of the American Medical Group Association] believes they’ll be large, multispecialty group-centric organizations. And specialists think they’ll be specialist-centric. The message we want to carry out to our members is that accountable care is where healthcare reform is about. And you will have to provide accountable care—information on cost-effectiveness, safety, etc. And how you organize to do that is going to vary tremendously from community to community. But the commonality will be accountability.

HCI: Some of the findings in some of your recent research, as well as other reports from out in the field, seem to validate a growing gap between “have” and “have-not” medical groups, just as that same gap is widening among different hospitals. Do you have any concerns around that apparent trend?

Jessee: It’s still a distinct possibility that we’ll end up with a two-tiered healthcare system. Medicare and Medicaid were developed to address the needs of the elderly and poor. And increasingly, we’re seeing access being eroded because of cost now. That’s true on the medical group and hospital sides. And I’ve had some discussions with hospitals about ownership, and in many cases, it was because of a request from the physicians. And I ask them, are you sure you bought the right practices? You might have ended up with a bunch of dogs. And no one wants to hear that! I was on the board of a three-hospital system in Denver in the ’90s. And was there just after they had divested of many practices and their HMO and were losing money hand over fist. And when I left the board, we were back up to 100 employed physicians. But we on the board said, let’s figure out where we want to go. It had all been purely reactionary rather than strategic, and I think that scenario is being played out all over again right now.

HCI: There’s the old Chinese proverb, “May you be cursed to live in interesting times.” That certainly seems to apply to the current operating environment and the rapid pace of change in healthcare right now. What do you think the biggest issues will be for medical groups in the next few years?

Jessee: I think the biggest one is going to be trying to figure out how to manage the transition from primarily a volume- and fee-for-service-based system, to one where reimbursement is going to be cost-effectiveness- and quality-based. And the challenge is, it won’t be like a switch will be flipped; it will be gradual, and you’ll have to have some of your payment coming from FFS and some from the new reimbursement types; and that will be hard. And I suspect some of our members won’t like that transition; and they’ll be pursuing earlier retirement.

 


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