For hospital systems, careful bets on patient population help chart course for future

The state’s hospital systems are moving in opposite directions as they strategize how to deal with the final push of Affordable Care Act implementation. And neither strategy is without risk: While some systems could fall behind the reform movement as they wait to see what happens, others may get too far ahead as new models undergo real-world…

“People are placing different bets on how effective health reform is going to be, and ultimately, where the system is going in the next five to 10 years,” said Derek DeLia, an assistant researcher with the Rutgers University Center for State Health Policy.

DeLia said the deciding factor for a system is whether executives believe the law’s payment reform models are how all health care systems will operate in the near future, as well as what population a hospital serves.

Geography plays at least some part. Population management is a key strategy for urban hospitals, as they aim to bring in large numbers of residents who will suddenly be insured under the ACA. Suburban hospitals in more affluent areas have generally marketed expensive services to those populations, and don’t want to let go of that strategy.

For the Princeton HealthCare System, president and CEO Barry Rabner said the answer to the big question is keeping an eye on payment reform while continuing to focus on volume-driven, fee-for-service care.

“The economic well-being of the institution today depends on volume — and not just volume, but the source of payment for the people you’re serving,” Rabner said. “There’s this push to treat patients of higher acuity and provide higher-margin services and to avoid, to the degree you can, the provision of free care. That’s all wrong, that’s all unfortunate, but it’s a major driver in every hospital system.”

Because of Princeton’s patient mix, Rabner said, the Affordable Care Act will take longer to affect his facility than others, which is why he’s hesitant to abandon the traditional model.

“It’s really insurance reform, and it’s fundamentally about providing coverage to millions of people who weren’t covered before,” Rabner said. “Most of the people we provide free care to are undocumented immigrants, and they’re not covered by the changes in the Affordable Care Act, so we don’t think it will affect us that way.”

Rabner said the rate of change is not fast enough, or incentivized enough, for Princeton to make any drastic changes to its operations, as it provides care mostly for a privately insured population.

DeLia also said the strength of incentives for payment reform was not enough for many systems to embrace fully switching to bundled payments, population management or accountable-care organizations while these models were still in trial phases.

At the other end of the spectrum is Barnabas Health, where president and CEO Barry Ostrowsky is “very committed to population management” as a strategy, with or without incentives.