Economics

Demographics and economics will drive health system change

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Health care needs to keep pushing costs down because there won’t be more money coming into the system. And, even as standardization becomes an industry rallying cry, local and regional factors will influence how and when innovations are adopted, leading to uneven rates of change across the country.

Those were among the take-home lessons offered at a recent physician education session looking at areas where the nation’s health system is growing and will be growing.

“I don’t know how health systems do it,” said John Becker, senior vice president of Sg2, a Skokie, Illinois-based health care consultant firm, as he talked about navigating the conflicting incentives of fee-for-service and value-based care.

Political uncertainty is also hampering how well systems and medical groups can prepare for the future as proposed legislation to repeal and replace the Affordable Care Act, if enacted, will most certainly spur a variety of approaches in different states, Becker said.

Strategy for uncertainty

One strategy Becker suggested for dealing with this uncertainty was to plan for various possible scenarios and look for commonalities that would be useful under each one.

The first commonality is the demographic shift that is happening. Becker noted that there were about as many baby boomers as millennials in 2014. But now more baby boomers are aging out of the commercial insurance market and into Medicare, and the increase in the millennial population is coinciding with the rise of health care consumerism.

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Millennials like to shop online. They also like to schedule physician appointments online and, if they can’t do this with their provider, they’ll find a new one, Becker said during the session, held during the 2017 AMA Annual Meeting in Chicago.

He also predicted that, in 10 years, one in six physician visits will be virtual, with evaluation-and-management services fueling this growth.

But millennials aside, the willingness or ability of other consumers to shop for health care services remains a question. Becker cited an October 2015 study that looked at the impact of a self-insured company that moved employees from an insurance plan with free services to a high-deductible plan.

After two years, spending was reduced by about $100 million annually—not because people became better shoppers, but because they chose to forgo care. This included skipping preventive services for diabetes and fewer screenings such as mammographies and diagnostic colonoscopies.

Hospitals seek local dance partners

Sg2 forecasts small growth for inpatient cancer, neuroscience and orthopedic and spine service lines over the next 10 years. The firm’s experts expect to see much more robust growth in the outpatient versions of those service lines, with cardiology, gynecology, med/surg, and pediatric services also seeing growth.

“Outside the hospital is where growth is happening,” Becker said.

Factors such as readmission penalties are also leading hospital systems to work collaboratively with local post-acute-care providers.

When choosing local “dance partners,” Becker advises looking for providers with information technology capabilities who can take on risk, financial and otherwise. He recommends looking for a provider that might be saying: “I want to do something different.”

The realities of workforce shortages and having less money available is driving innovation, while readmission penalties and bundled payments are creating the need for closer partnerships between providers of primary care, hospital and post-acute-care services, Becker said..

While this is leading to more consolidation, it doesn’t always need to.

“You don’t have to own everything,” Becker said.

Read more news coverage of the AMA House of Delegates.

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