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Make Physician Buy-in a Top Priority to Prepare for New Payment Models

05/18/16

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Jim Reilly, Managing Principal, Advisory Solutions

With the April 1 launch of the Centers for Medicare & Medicaid Services’ (CMS) Comprehensive Care for Joint Replacement (CJR) model, participating hospitals are financially accountable for the quality of care delivered to Medicare beneficiaries undergoing hip and knee replacements, from surgery through recovery. With CJR, hospitals are now more incentivized than ever to work collaboratively with physicians and post-acute providers to improve care patient care.

As a health care professional, I fervently believe that the best outcomes, both clinically and financially, occur when organizations focus on the economic engine of health care and create financial alignment with caregivers. In my role, here are some of the most common questions I hear regarding physician alignment in the shift to bundled payments.

Q: How critical is physician alignment to controlling costs and improving patient satisfaction?
A: It is estimated that physicians control up to 80 cents of every dollar spent in the health care industry, so gaining their buy-in when it comes to judicious utilization of resources should be any organization’s top priority. They also directly influence patient outcomes and satisfaction through the services they provide, so key to physician alignment is getting them on the same page with the quality and operational goals of their hospital or health care system.

Q: Is there a formula for gaining physician alignment?
A: There are numerous different models organizations are implementing. I see many health systems employing physicians. However, employment does not equal alignment. If clear expectations are not established for integrated physicians and the compensation plan does not reinforce the vision, health systems will struggle to gain broad-based engagement. If you look at the spectrum of physician alignment models, in addition to employment, health systems can create a co-management relationships, professional services agreements, joint ventures and gainsharing models among others. Again, the key is to be clear about expectations and ensure the financial incentive is in sync with the desired outcome. One of the benefits of CJR is that the program provides a great opportunity for gainsharing because waivers related to how physicians and hospitals may share dollars are provided by the Office of the Inspector General (OIG).

Q: How is the Affordable Care Act helping to drive physician alignment models?
A: The Affordable Care Act, passed in 2010 by the Centers for Medicare & Medicaid Services (CMS), has earmarked $10 billion over the next 10 years to test alternative payment methodologies. These include accountable care organizations (ACOs), patient-centered medical homes and bundled payments, all of which are aimed at improving CMS’s triple aim. Each of these models is attempting to move the US health care system from its current fee-for-service environment to one that is focused upon fee-for-value. The jury is still out on ACOs, with fewer than 50 percent demonstrating the ability to improve (lower) Medicare spend; however, bundled payments are proving to be more promising. They are effective in changing the way health care providers work together. When a single fee or target price is established over an episode of care, care coordination must increase for any meaningful improvement. These models are intended to It impact the bottom line of disparate caregivers in an effort to produce better results. It only makes sense that these models will grow in the industry as fee-for-service is not sustainable.

Q: Is gainsharing an incentive worthy of consideration?
 A: Gainsharing was one of the early physician alignment models provided by CMS (actually, Health Care Financing Administration, back in the day) to hospitals in their bundled payment initiatives and it is definitely making a comeback. This time around gainsharing is robust and very focused on achieving quality thresholds. This makes it more durable. Gainsharing is making inroads at implant price compression and utilization within the acute care episode and can be effective in developing and adhering to an episodic care plan over a 60- or 90- day period. Physicians are critical to influencing spend over an episode and therefore need to be tied in financially. Gainsharing can accomplish that if structured appropriately.

Q: Can incentive models work with physicians who are not employed by a hospital or health care system?
A: Absolutely. Providing a financial incentive will get the attention of private practice physicians and is a motivator to work toward mutually beneficial goals. Most physicians aren’t aware of the hospital’s cost position, much less how to influence it. From their perspective, they want to provide great care, run a successful practice and attract new patients. It’s important to show physicians how working more effectively with hospitals can help their practices thrive.

Q: How can providers determine what will work best in their organization?
A:  It starts with talking to their medical staff about value based care and why it is important. We need to “make the case” with physicians. Next we need to understand their appetite for aligning closer with a health system. Thirdly, understand their goals and drivers. Multiple strategies will need to be vetted to determine how best to align physicians. I don’t think one size fits all when it comes to alignment. 

About the author. Jim Reilly’s career includes more than 20 years’ experience in health care consulting with health systems and physician practices nationwide. His experience includes hospital/physician alignment, bundled payments, strategic planning, new service development, and market growth planning and implementation. He has led more than 300 projects during his consulting career and is a national speaker with organizations such as the American College of Healthcare Executives and the American Medical Group Association on hospital/physician alignment models.

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