Health Law

Can the Affordable Care Act Bend the Cost Curve and Can Physicians Survive It?

By Greg Piche'

One of the great premises of the Patient Protection and Affordable Care Act (?PPACA?)enacted last March is that it can reach ahead and bend down the rising cost curve of health care in this country.  The necessity of doing so cannot be reasonably debated although the means can.  The cost of health care in the United States is running about 17% of GNP, while it is only 12% in Germany, which on average has a healthier population. This puts us at a major competitive disadvantage with every other major industrial nation. While there will be increased costs in the short term, there is a very considerable cost in doing nothing, the most prominent and likely of the alternatives available. The excision of the ?public option? from the health reform bill was  a boon to insurance companies who successfully opposed its adoption, but it removed a major potential vise to bend the cost curve.

The PPACA which was enacted still faces many practical and difficult obstacles to bending the curve, but it still has some tools.  ?If the Act?s intact we must react? (with apologies to the late Johnnie Cochran). The PPACA should have be referred to as the ?Accountable Care Act.? The idea of accountability is the major framework of the bill for bending the curve.  It requires a major shift in the provider approach to healthcare that do not contain the inherent flaws of the managed care experiments. Fee for service medicine must be contained with an aligned systemic universe in which efficiency and patient outcomes determine compensation.   That is easier said than done. Populations are after all very different aren?t they?  How can one group effectively compete based on the luck of the patient population it draws. 

Well statistically, over a greater volume, there should be a settling of medical needs over the population that are fairly comparable to one another. If a care system can avoid the healthy populations sprint as a basis for competition and play the random cards that are dealt with the assumption that the averages will work out, health systems can begin to assemble base line population health and cost data for a population that will allow them to design a program of incentives, disincentives and accountability that will enable them with modern EMR systems data to eliminate waste in the system and provide care at the most appropriate levels according to the most effective methods to demonstrate substantial savings in costs and improvement in care. This has been defined by the Center For Health Value Innovation as ?Outcomes Based Contracting.?

Outcomes Based Contracting will require a complex contractual structure that rewards success in cost cutting and patient outcomes improvement, while protecting the providers from unexpected and potentially ruinous patient condition outliers. It will require entrepreneurial physicians to rethink the delivery system to provide new paradigms for earning their keep.  Small practices will likely disappear because they will be difficult to support the overhead and the loss of fee for service revenues.  Advancing technology will place a greater emphasis on on-going patient/provider communication and monitoring through digital communication devices.  There is a great deal of angst over the Act, because of the very uncertainty engendered by the stepped implementation of the Act over a number of years.  Change and uncertainty always lead to anxiety.  There will be ways for providers to make money in the future if they get on the train early enough.

Full post as published by Healthcare Law Blog on September 21, 2010 (boomark / email).