From Dr. Tom's Desk

CMS is proposing changing the rules in the Medicare Shared Saving Program (MSSP) for Accountable Care Organizations to accelerate the march towards accepting “downside risk.”

That’s right, under the new rules, ACOs will be encouraged to participate in MSSPs that put them on the hook for losses as well as gains.

Their reasoning?

The MSSP is the most popular of all the ACO programs, so that’s the one being targeted for acceleration into risk.

It’s the most popular because it generates the greatest potential profit with the least risk. Risk assumption will change that calculus. Given the lack of cost control tools that MSSPs provide ACOs and their physicians, taking on such a program would be foolish in the extreme.

Especially when there is much a much better system, with much better tools, under Medicare Advantage.

Simply beating doctors over the head with the fear of loss won’t translate into cost savings; it will translate into an exodus from MSSPs.

This is either poorly thought out policy or it’s part of the ongoing effort we’ve been discussing in these pages to transition chronically ill patients onto Medicare Advantage plans.

Possibly both.

Either way, just say no.

You Should Know

The most recent annual review by the American Hospital Association is making the rounds in the media this past week.

The report, which covers 2016, suggests 1/6 hospitals in the US are either “at risk” for closing or “financially weak.” This, despite waves of mergers and acquisition meant to improve their finances through economies of scale.

The report and the Bloomberg analysis of the data seem completely clueless as to the cause---which is a little surprising considering my partners and I discovered it years ago working our own value-based contracts.

Hospitals are a cost center, not a profit center. They’re vendors in support of the end product of your patient’s health.

Lots of businesses internalize costs by in-sourcing their vendors--supplying their services to the mothership at a loss--with the goal of improving overall profitability.

When you’re delivering healthcare under a fixed budget, hospitals are the biggest threat to your profitability. When the pricing at our local hospital became unfavorable, we built our own.

You don’t have to go that far, but if your system doesn’t have its own hospital you can still approach inpatient services as you would any vendor. Reward their efforts to cut cost and improve service to your patients with increased volume and other partnership.

If you do have your own hospital, quit thinking of it as a profit center---it’s not.

It’s a threat to the profitability of your total-risk contract.

Approach it with that mindset and you’ll do just as well in Medicare Advantage as we did

Maybe better.

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From Dr. Tom's Desk

You Should Know

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