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Deloitte Leader Ponders Healthcare’s Post-ACA Landscape

February 13, 2017
by Rajiv Leventhal
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There may not be major changes regarding the future of value-based care, but for now, health system leaders are waiting for the administration to steer them in a direction

I think lots will look the same regarding the ACA’s main elements. The main message is that the feds will be spending less, and states will have a limited ability to increase revenue to cover new programs. We might see states do creative things around predictive health maintenance on their Medicaid population and potentially expanding it beyond that. This means not waiting for people to get so sick that they’re in the ICU, but let’s look at social determinants of health and other things that you like to see in population health to keep people out of the hospital and the doctor’s office. My prediction is that whatever we end up having will look similar to the ACA, but we will spend less money as a country, and more people will be uncovered as a result. And this will get pushback.

We can’t go back to plain old fee-for-service. That train has left that station. We are seeing innovation around telehealth moving the needle, monitoring folks at home and using analytics to identify high-risk people. Those things will continue because there is an entire ecosystem around it. The problem is that in the past there has been no way to pay for this. Now, large employers are getting on board. Here at Deloitte, they now offer all employees Doctor on Demand, so you have a consultation with a doctor on an iPad or iPhone for $25 out-of-pocket. I used this myself, and the whole process, including getting the prescription from [the pharmacy], took me 90 minutes. We are seeing large employers and large insurers move in this direction.

The first reporting period for the Quality Payment Program has kicked off. But as we know the first year is a “get your feet wet” transition period of sorts. Are you hearing anything about this so far in 2017?

I am not hearing anything yet. I don’t think people are doing much, and are just getting their acts together with reporting now. I’d predict that come late February or March I would have a lot more to say, but we are too early into it. Many people are not ready and some are hoping it goes away. Hospital CFOs really enjoyed living in the fee-for-service world; they did well and knew how to manage that world, but when you ask them about the big picture as human beings, they know that those incentives are not right and it’s not sustainable. But with their CFO hats on, those were good times.

So there are those that are waiting for MACRA to be delayed and it will depend on what comes out of the White House and from Price. Similar to ICD-10, you could in theory delay the implementation; there was talk of this before the election. Maybe you drive people to the brink and get them starting to collect the data, and then delay the financial impact to give people a chance to get used to doing it. That was probably unlikely under the previous administration, but under this one it wouldn’t surprise me at all.  

What other trends from this report do you think are important to discuss?

We are hearing that consumer engagement is very important. Healthcare executives are recognizing this is a key factor to success, particularly in consolidation where you have fewer large health systems and more market dominance. So having relationships with patients that make them stick, particularly in a time of narrow networks, is important. We released a study a few months ago that found the better the patient experience, the better the financial margins of the health system.

Another trend is continued consolidation and convergence. On the healthcare delivery side, margins are only going to get worse. You have to execute flawlessly, have scale, and have market dominance. If you look at what happened to Community Health, one of the characteristics of that health system is that they had a rural orientation, didn’t have market dominance anywhere, and that made them vulnerable. The Dignity Health-Catholic Health Initiatives proposed merger is an example of wanting more scale and market dominance. We will continue to see both the horizontal integration of health systems buying health systems and the continued vertical integration of health systems and health plans buying other parts of the healthcare ecosystem.


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