PROGRAMS DESIGNED TO LOWER HEALTHCARE COSTS HAVE THE OPPOSITE EFFECT
Remember the Institute for Healthcare Improvement’s Triple Aim? First proposed in 2007, this ambitious initiative was supposed to improve the patient experience, improve population health, and – here comes the best part – reduce costs.
Healthcare has changed dramatically since 2007. The Affordable Care Act sought to reduce costs and improve population health by shifting the financial levers that incentivized expensive interventions and instead incentivizing prevention and wellness.
But have either the Triple Aim or the goals of the ACA been realized?
Unfortunately, no.
Shifting the financial levers involved the introduction of new reimbursement models – programs with an alphabet soup of names like MU, PQRS, QIP, MACRA, MIPS, PCMH, and more. New programs created new levels of complexity, requiring extensive data collection, storage and transmission in order for physicians to participate.
Instead of embracing these new requirements, many physicians simply threw up their hands, threw in the towel, and sold their practices to hospitals and health networks. This took the burden of data collection and reporting off their plates, allowed them to bill higher rates for the same services due to the negotiating muscle of larger networks, and in many cases improved their quality of life by eliminating the stress that comes with entrepreneurship.
At the end of the day, costs didn’t decrease. Instead, in many cases, they increased.
A recent study by Northwestern University’s Kellogg School of Management found that, after an acquisition, average prices for physicians’ services actually increased by 14%.
Medicare Pays More
In some cases, costs increased because Medicare pays higher rates to hospital-employed physicians than it does to independents for the very same services. In a nutshell, Medicare incentivizes employment arrangements for physicians.
What’s the Answer?
What types of incentives would actually lead to lower healthcare spending? Why is it so difficult for us to solve this problem? What are your thoughts? Share them here.