Nimble, Larger Practices Can Thrive Under New Healthcare Delivery Models

Robert Laszewski

Whatever the result of the US presidential election, the era ahead will continue to be one of unprecedented change in healthcare, Robert Laszewski, president of Health Policy and Strategy Associates in Washington, DC, told attendees at the 2016 Large Urology Group Practice Association (LUGPA) Annual Meeting in Chicago.

Laszewski urged urologists to embrace a nimble approach to the practice of medicine. “No one can predict what the winning business models will be, but what we can do is remain flexible and able to adapt,” he said. “The more things change, the better off organizations will be that are built on flexibility.”

Listing a plethora of challenges physicians and others face, Laszewski singled out Obamacare, drug prices, health plan mergers, new care and payment systems, and the collision of traditional medicine and unsustainable costs.

Characterizing Obamacare as “a real mess with fundamental problems, [and] not just in an adjustment period,” Laszewski cautioned that the health insurance exchanges cannot continue as they are. “There is an insurance industry maxim that you need 75% of eligible people to sign up to have a healthy, sustainable pool,” he said. “We have 17%, and they tend to be the sickest.”

The next president needs to reopen and fix the Affordable Care Act, Laszewski said: “This will open up other parts of the system to be changed, too.”

He cited Congressional Budget Office data showing that governmental revenues are flat. “The government can’t spend more on healthcare because there is no more money available,” he said. “Expect a bitter fight for what’s left of the overall government pie.”

Laszewski zeroed in on the concept of defined-benefit payment models, similar to the defined benefit pensions American workers used to receive.

“Obamacare, Medicare, and Medicaid are defined-benefit plans in which the government pledges to always make up to the consumer any shortfall in costs,” he said. “If we move to a Republican model of healthcare, each patient will be given a fixed amount of money, and they will look for plans that cost the least and give the most. This system continues to shift the burden from consumers to providers.”

Regardless of who becomes the next president of the United States, both parties agree on one concept: value-based care. “Neither side really is sure what value-based care is, but they think it will solve a multitude of problems,” Laszewski said. “It’s like a black box [in which] they don’t understand [what happens inside] but let’s be clear: you as providers are the black box.”

Will value-based care work? “It doesn’t matter whether it works, the winning party will go ahead with value-based care,” Laszewski said. “That train has already left the station, even though no one really knows how successful it will be.”

Consolidation throughout the healthcare arena will continue and should be watched closely by all physicians, Laszewski recommended, noting that 4 of the 5 largest insurers (Anthem, Aetna, Humana, and Cigna) are attempting to merge. “United Healthcare, the largest single insurer, didn’t even exist in 1980—that’s how quickly healthcare has changed—and the Justice Department will probably block the other mergers.”

The trend toward hospital mergers is accelerating, too. According to Laszewski, consulting giant Deloitte projects that nearly all US hospitals will consolidate within the next 8 years. “The only way to defend yourself is to be the largest urology practice in your community,” he said. “That way, hospitals and insurance companies will have no choice but to deal with you out of respect for your strength.”

In fact, being in a large practice group will be “an imperative,” Laszewski said. “Growing cost- and quality-reporting requirements make an efficient scale important, but don’t kid yourself about taking on risk. Don’t do more than you think you can manage successfully, realizing that no one really knows how things will turn out.”

Utilization will continue to be important, but it’s not the end-all for savvy practices. “Focus not only on utilization—but prices,” Laszewski suggested. “It’s also vital for you to have alignments with other efficient players.”

Finally, Laszewski urged attendees to avoid despair at today’s uncertainties: “Twenty years from now, healthcare will still be the largest industry in the US. Those physicians who adapt will be successful, will continue to serve patients, and do it in a way that lets them thrive.”

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