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Gut check: Change is coming, and healthcare executives don't necessarily think it's a bad thing

Leaders share what is still needed to provide the best care while safeguarding the health of the sector.

The future of healthcare policy is a bit murky these days. President-elect Donald Trump has pledged to repeal the Affordable Care Act, and the Republican-run U.S. Congress is already fast at work to make that happen.

What's not known, however, is what will change for the thousands of U.S. healthcare businesses that have not only adapted to the ACA but also made millions in investments in areas such as electronic health records, value-based reimbursement and reporting to align with the policies of the outgoing administration.

Healthcare Finance spoke with several executives at healthcare businesses to get their perspectives on not only the changes they expect but also their thoughts on what the healthcare sector actually needs to do to provide the best care while still safeguarding the health of its business model.

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Karen Shaffer-Platt, Vice President of Revenue Cycle and Access, UPMC

"I'm a little agnostic about what the political differences are, and I try not to overreact as to what that regime change is going to mean."

For Karen Shaffer-Platt, UPMC's vice president of revenue cycle and access, the Affordable Care Act is not perfect. While millions of people who previously lacked access are insured now, the industry is still struggling to cope with that influx. The jump in poor-health patients accessing care swelled the risk pools so much that insurers struggled and even pulled out of the market. At the same time, out-of-pocket expense jumped to levels too high for many people to afford, putting hospitals and providers on the hook to recover those losses.

"No one can afford the gold plan this year, so everyone will jump back down to silver or bronze. But that won't cover half their services, so the provider is going to have to do something with free or charity care," said Shaffer-Platt.

In talking to her colleagues nationwide, Shaffer-Platt has found lots of charity care or financial assistance programs that don't extend to insured people, she said. That means decision makers must look at what "the underinsured" means and tie that to an assessment of that population's ability to pay. Moreover, the program is still in its infancy and needs time to normalize, as do those who have new coverage and are just starting to manage chronic illnesses that previously exacerbated risk for payers.

"We have to wait for all those programs to catch up with each other, and then I think this will be a much more manageable program. We have this gap in-between, and everybody's going to have to buckle up and think about it. I think it will require the insurance companies, the government and the providers to say we're all in this."

On technology and science in healthcare:

UPMC sees telehealth emerging as a crucial solution, Shaffer-Platt said, and hopes it will continue.

"I think we'll see a change, where dermatology could be a telehealth venture in most cases, and you don't have to have these subspecialists in every venue or every hospital. You will be able to reach them for consultation and care in a much more digitized fashion, and that should expand care in a way more meaningful manner than the expense of recruiting these doctors to areas they don't want to go and are unable to reach."

She said technology is already transforming radiology; they see clinicians reading X-rays online now. She also said trendy devices such as Fitbit health trackers could do so much more with just a little innovation.

"I'm really intrigued to see how we're going to take a different way of doing medicine and then building business reform and business care plans that match that."

On the other hand, cybersecurity has to become a priority, especially in the wake of several high-profile healthcare hacks in 2016. Though UPMC may have a robust strategy in place, that isn't the case everywhere. But as providers invest more in digital technologies and telehealth, Shaffer-Platt expects there will be more investment in security.

On patient experience:

"I believe that academic medical centers suffer from a little bit of academic arrogance," Shaffer-Platt said. They have headlining physicians, are ranked in top consumer reports and are thought of as destinations for care. While UPMC has never doubted that it provides an extraordinary level of clinical care, Shaffer-Platt said, that kind of view can sometimes mean overlooking the important details of the patient experience.

"Since most people are not scientists and not really judging what great quality care is, they are going off of a trust from what they've read, recommendations and referrals from their doctor. What they can judge is what that experience is like: Are we thoughtful, do we communicate, do we keep them informed, do they understand the journey they are about to go on?"

With the out-of-pocket burden rising, patient experience should be taken as seriously as customer service is taken in the retail industry. This, said Shaffer-Platt, is the biggest change UPMC is working on. For instance, she said incoming patients were always interviewed to make sure their personal information or coverage hadn't changed. While that may have seemed like a best practice from a compliance standpoint, she said for every 100 patients interviewed, 96 hadn't had any of their info change. Some even got offended when they have to be re-interviewed. Finding the 4 percent and not putting everyone through the deli line style of questioning was a must to make patients feel valued and respected.

"A really huge part of the business is getting back to remembering that's a person, not a claim. Get back to remembering what they must be feeling, and remember what business we are in. That's clinical care. That's where we're heading. We're changing the paradigm of how we do business."

Understanding the vast differences in the generations, from traditionalists and baby boomers to generation X'ers and millennials is crucial. They communicate differently and want to connect in completely different ways. While boomers may still want a phone call to remind them of an appointment, millennials are all about texting. One size does not fit all, and Shaffer-Platt said health systems will need a digital solution that looks at the way each generation wants to do business and adapts.

"We are truly the only industry in the world who can say we have the chance to keep our customers from birth to death," she said.

Benjamin Chu, MD, President and Chief Executive Officer, Memorial Hermann Health System

"The migration from volume to value is actually a good one."                 

CEO Benjamin Chu of Memorial Hermann Health System in Texas would love to broaden the scope of what it means to "care" for a patient, going beyond the bounds of a hospital's walls to provide a more comprehensive basis for maintaining and sustaining health.

"I always take the perspective of, 'What could we be doing to enhance the end-to-end patient care experience?'" said Chu. "Not just the specific episode when you're in the hospital, but taking the much longer view."

While Chu supports the change to value-based reimbursement, current policies could definitely be improved, he said.

"One of the things the volume-based payment system does, is it locks us into a certain model. The poor patient is just inundated with separate bills, completely disco-ordinated approaches sometimes. If I had a magic wand, I would figure out a way to make disco-ordination go away. With end-to-end, how do we map it in a way that is efficient and keeps the needs of the patient in mind?" he said.

The adoption of bundled payments is a phenomenon that has been picking up steam in the healthcare industry, and Chu sees it as a potential pathway to achieving that end-to-end approach to care. Before joining Memorial Hermann, he served as group president for Kaiser Permanente's Southern California and Georgia regions, where he directed health plan and hospital operations for 14 hospitals and 237 medical offices. During his time there, he saw the advantage of bundled payments: The dollars weren't tied down to one thing or another, and Chu and his team had the opportunity to look at the complete experience of the system's members.

"You compete with each other on the basis of how we could address the end-to-end experience," said Chu, who sees a future molding bundled payments for different services.

"The bundles are easier to do when they're procedure oriented," he said. "We really should be thinking about what is the total cost of care of a diabetic, and how do we tie that to a reasonable payment stream."

As for what may happen under a Trump administration, Chu echoes many in saying it's too soon to tell. But his state, he said, may benefit because of a few factors.

"Texas did not expand Medicaid and had not really embraced a lot of the expansion changes in the Affordable Care Act," he said. "I actually think the Trump administration may allow a great deal more flexibility. Perhaps, for example, we may have an easier time crafting a Medicaid waiver. And who knows what might happen to Medicaid expansion? It might be in a state-based format."

Overall, Chu is optimistic.

"There is some basis for optimism for Texas. That may not be true everywhere, but for Texas, given the politics and our local feelings about the Affordable Care Act -- we'll see."

Jeff Francis, Chief Financial Officer, Nebraska Methodist Health System

"The key this coming year, or any year, should be around eliminating inefficiencies."

For Jeff Francis, CFO at Nebraska Methodist Health System, the overlap between providing care and managing the operational support to provide care is creating a lot of duplication in healthcare, resulting in wasted spending. So as the industry mulls changes, it would be wise to focus there.

"Better sharing of clinical data between providers and health systems would be an example where redundant or unnecessary tests could take costs out of healthcare," said Francis.

But to truly create a more efficient healthcare sector, providers and payers need to better work together.

"More and more effort is done on pre-authorizations or initial notifications of hospital stays that add resources and costs for both sides," he said. "Denials of claims have grown and take more time on both sides for work that practicing clinicians feel is medically necessary. There is little evidence that additional work improves the quality outcomes."

According to Francis, arbitrary price increases for pharmaceuticals and rising costs for implantable medical devices add to the expenses, which proves even harder to swallow on cases where, he said, little or no improvement occurs in clinical outcomes.

"So, the value of healthcare for the country diminishes."

Mark Norby, Chair of Revenue Cycle, Mayo Clinic

"The fundamentals of the insurance plans must be redone, especially the poor calibration of risk."

Mark Norby, revenue cycle chair at the famed Mayo Clinic, sees more than a few things that need attention if healthcare is truly going to reform itself. But at the top is the insurance ecosystem.

"The insurance premium increases, combined with the very high deductibles, are unaffordable for consumers and unsustainable as a system," said Norby. "Patients are frustrated by restricted access to care, narrow insurance networks and the loss of the important role that academic medical centers play in caring for people with complex medical conditions. We have to put more focus on patients and access."

With Medicare and Medicaid being among the biggest drivers of the federal deficit, Norby said officials should continue to work moving that spending away from fee-for-service. The current administration had pledged to get half of Medicare's payments tied to value by 2018, but it is unclear if the new administration will take up that goal.

"We must continue to the movement toward a value-based healthcare system, rewarding high-quality and efficient patient care," said Norby. "As the country continues to emphasize value, we must make certain that the system is designed to differentiate among various levels of care, especially the care needs of highly complex patients."

Aside from payment models, the industry cannot lose its focus on advancing clinical treatment.

"We have to focus on funding research and educating the next generation of healthcare professionals," he said.

Gary Passama, Retiring President and Chief Executive Officer, NorthBay Healthcare

"Medicare … is a bloated, over-regulated creature created in the 1960s, and it needs to be modernized."

After spending 35 years at the helm of California-based NorthBay Health, Gary Passama plans to retire in March. But as he prepares to step down, Passama offered a few suggestions on how the healthcare sector can be reformed, starting with Medicare.

"I am encouraged that there may be some reform that would lead to those seniors who wish to opt out of standard Medicare being given a voucher to obtain health coverage from the private marketplace," he said. "There are already Medicare Advantage programs, which provide access to certain kinds of private health plans. Providing more options in this regard could promote personal responsibility for one's health while easing the increasing burden Medicare will have on the overall federal budget."

As for the ACA, Passama said the law benefitted NorthBay, even if those gains were short-term. In California, the expansion of its state-run Medicaid program, Medi-Cal, helped get more people covered. But officials always knew that when federal funding ran out near 2020, problems could arise.

Passama also hopes for changes to the Stark Law, a law that regulates physician referrals and whose restrictions have led to a host of anti-kickback lawsuits.

"Even former Representative Fortney Stark has said that the regulations that were developed to implement the law have gone far beyond what he envisioned and have become a problem," he said. "There is a need to make the economic integration of hospitals and physicians easier so that the twin goals of increasing quality and reducing costs of care can be achieved. The Stark law regulations impede this from happening and are counterproductive today."

Scott Ulrich, Administrative Director, Patient Access and Financial Services, Houston Methodist Hospital System

"The burden of savings cannot be only on the backs of physicians and hospital administrators."

According to Houston Methodist's Scott Ulrich, affordable access to care is really the top issue affecting U.S. healthcare, and reforms should target that first.

"Affordability to me is a measure of how much the system requires an individual or family to contribute towards to the costs of care," he said. "If the amount is too high then other priorities such as housing, food and clothing take precedence over insurance coverage, but if the amount paid is artificially low, then premiums don't cover the cost. In the current environment, we see both situations which cause individuals to opt out of coverage or insurance providers to exit the market."

Ulrich said any reform that looks to rein in healthcare spending is going to improve affordability, but it is important that officials do not only burden physicians and hospitals administrators for those savings.

"A comprehensive reform effort would include strategies to limit extraordinary expenditures while avoiding the vitriol caused previously by concepts like 'death squads' or 'care rationing.' A measured and scientific approach to define what is to be considered normal standards of care should be applied," he said.

Affordability is also affected by value, which is why Ulrich hopes efforts to improve care quality will continue.

"Continued work on defining and measuring true outcome quality in relationship to expense can help drive unnecessary cost from the delivery system and provide benchmarks to foster improvements towards affordable quality," he said. "A standard by which to evaluate the effectiveness of preventative care and curative care will help physicians and hospitals provide better information to patients on care options and their cost."

Jeff Ronner, Chief Financial Officer, Shields Healthcare

"To make an educated decision in healthcare is near impossible."             

Jeff Ronner is CFO of Shields Healthcare, which runs MRI and ambulatory surgery centers in Massachusetts. But though the policies of the ACA have led to surges in ambulatory centers, Ronner said the push to keep people out of hospitals isn't that big of a financial boon. That's because many physicians are still referring patients to hospitals for procedures.

"The patient is still going to go where their physician tells them to, so I wouldn't say we're growing in leaps and bounds," he said.

As lawmakers debate reforms, Ronner suggests they take a look at providing patients with more information.

"We need to get to price transparency, but the onus on the payers is practically non-existent," he said. "Commercial insurance companies have such a lack of transparency to patients that patients end up having the hardest time making educated decisions."

Jonathan Nasser, Chief Clinical Transformation Officer, Crystal Run Healthcare

"Less gamesmanship and more transparency are needed with federal benchmarking."

As a large group practice, Crystal Run Healthcare's biggest focus in the coming years will be MACRA, the sweeping bipartisan law that changes how physicians are paid under Medicare.

Like most experts, Chief Clinical Transformation Officer Jonathan Nasser thinks the law will survive any healthcare reform enacted by the new administration. However, when is comes to how advanced payment models are benchmarked, Nasser believes change would be good.

Despite running a Medicare Shared Savings Accountable Care Organization, Crystal Run will report under MACRA's Merit-based Incentive Payment System rather than the APM model, mainly because the downside risk is too much. Crystal Run even looked into joining the Next Generation ACO model but decided against it because of the benchmarks.

"You are given a benchmark but not given any data to validate it. In the end, Next Generation gave us a benchmark that was 10 percent of our costs, which gave us pause."

Nasser said Crystal Run spoke with administrators at the Center for Medicare and Medicaid Innovation Center but was never given any clear data to validate that benchmark.

"They make it so hard to take on downside risk, so MIPS was at least in our wheelhouse, he said.

In addition to making benchmarking more transparent, Nasser suggests that federal value-based programs focus more on incentives on the patient side to spur participation.

"These programs are missing a little bit of patient engagement," he said. "Their benefit is in making Medicare sustainable, but that's not a tangible thing for everyday patients."

Henry Powderly, Beth Jones Sanborn, Jeff Lagasse and Susan Morse contributed to this report.

Twitter: @HC_Finance