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The First 100 Days Health Care

A panel discussion presented by NJBIZ

“We’re going to repeal it and replace it.”
We haven’t heard a politician repeat the same line about health care over and over since …“If you like the plan you have, you can keep it.”
If only health care in this country were so easy.

Can the ACA just go away?

It’s a simple question with complicated answers. Here are the views of our experts:

Joseph Gorrell
Brach Eichler

The elephant in the room is the federal government. With the Affordable Care Act, many people focus primarily on the insurance mandate, but there are enormous and varied innovations that have been adopted and developed under the Affordable Care Act. (Accountable care organizations), (bundled payment care improvement) plans. It’s very hard for me to believe that those are going to go away. I think we need to focus on how that develops and whether that continues under the act.

Tom Gregorio
New Jersey Innovation Institute

If we were thinking about cherry-picking any aspect, it’s the aspect of population health and fee-for-value. There’s no real way to manage those costs, because you need to try to move to a bundle payment or a population payment based on quality to improve the quality that’s provided to the patient as well as the cost-reduction that could be leveraged. I think that’s a bipartisan issue. I don’t think it’s going away.

My organization depends on change to innovate. What are the problems that need to be fixed and how do we fix that with people and processes. Some of that comes from federal funding and others from things that we develop or solve ourselves for the marketplace. We have a client that’s going almost entirely to a bundle payment structure for their entire health system; that’s a radical change in terms of how you think about putting everything together close to that single mindset that you were talking about in terms of one way to pay and one way to collect. So, I think we’re in good shape that way, with what’s coming from a health care perspective, but there’s still a lot of uncertainty.

Michael Greenwald
Friedman LLP

You see the difficulty in what’s going on. The Congress has been talking for the past six years about repeal and replace, and now that they’ve got the ability to do that, they’re saying they’re going to repeal it, but we’ll delay it for three years and then we’ll figure out what to replace it with in the meantime.

What strikes me is the structural change in the system. I was in Washington recently and was talking to one of the senior attorneys in the IRS. And then I was talking to a physician who manages a practice. They both believe the whole point behind the Affordable Care Act was that they make the system so large and so unworkable that we have to ultimately devolve to a single-payer system. That was the long game to be played. We put this in place, it wouldn’t be perfect, it would need fixing, but it would so radically change the way health care was delivered that the end result would be some form of a single-payer system.

Tim Hodges

I think what’s important to keep in mind with all these ACA initiatives that affect the provider community, such as bundled payments and accountable care organizations, is that it seems to me that everything is based on historical outcomes and historical spend. So there comes an inflexion point, and I don’t think we’re there yet, when you reach maximum efficiency. And then the question becomes, at what point when you’ve realized as much savings as you can versus historical trends, when do you start rationing care? When does it start impacting bedside care?

We have to start asking those questions. We are the most successful society in the universe, my feeling is we should have the best health care. We want it to be the most efficient, but at some point we come to the point that we can’t save anymore or we’re going to impact clinical outcomes. I think, as it relates to the first 100 days, that should be and I think it will be an important consideration in where we are going the next five or 10 years.

Michael Maron
Holy Name Medical Center

It’s unrealistic to think there’s going to be a repeal or a big change. From where I stand, going back to what was before the ACA is really not an option. That’s not a realistic option. The economic fundamentals over the cost of health care both in New Jersey and across the country aren’t going away. It’s gotten way too expensive. It has to change. The Affordable Care Act was the first attempt to do that. I think it will change in some way.

If you really want to save the system, competition is a big, big thing. I’m a big believer of open markets and competition. But there has to be rules and there has to be transparency. And you have to compete on the right metrics. Today, we’re competing on all the wrong metrics, we’re competing on the necessity to have a very expensive computerized system in the office. We’re competing on the accuracy of your coding as opposed to the actual delivery of care and the conversation you are having with the individual. We don’t measure that relationship. Those are the things we have to change. If we don’t change the metrics, and we keep measuring the wrong things and valuing the wrong things, we’re going to get the wrong outcomes. That’s the crux of this transition and what’s going on.

Someone in the new administration has got to step up and start to define what we’re doing moving forward, and not everybody is going to be happy. Trust me, most of my colleagues are going to be furious, because they’ve invested a lot, building these large systems. The payers will be furious. You know you have the right answer when you have the right degree of pushback from all the right sectors. And if you don’t, it’s not balanced the right way, you’ve either gone too much to the provider side, too much to the payer side or too much to the consumer side. Everybody’s got to have skin in the game and if you feel that reverberation from all three sectors, then you know you’re on the right path. We’re not there yet.

Steve Rosenthal
Triton Benefits & HR Solutions

One of the things we’ve seen, the president is looking to cut costs. Republicans and Democrats both agree that health spending accounts are the way to go. The whole thing needs to be fixed. Consumerism is going to be very important. Now if I know something is going to come out of my HSA, maybe I’ll think twice about going to the hospital and go to an urgent care because I want to keep my HSA as funded as possible.

(Donald Trump) is very much in favor of this. And you have both Republicans and Democrats both in favor of this. This looks like it’s the one area both areas are in favor of.

The emergence of private equity

The ACA wasn’t created with private equity in mind. In fact, far from it. But with its implementation,
more private equity money is coming into the system, trying to figure out a way to … well, let’s face it, make money.
Repeal? Replace? Our panelists seemed to feel the money people will be involved no matter what the system.
And that the health of consumers, the goal of the ACA, is not a concern.
Here’s the take of some of our panelists:

Steve Rosenthal
Triton Benefits & HR Solutions

Goldman Sachs just invested a half a billion dollars into a company called Magna Care; they are developing these apps, thinking about the millennial buyer. If my CPT code calls for a CAT scan for $1,200, I can look at my geo fencing and I can go a doctor that’s five minutes away where it’s $800. So you can take the savings of $400, the carrier gets half of it and the consumer gets the other half. That’s how consumerism is starting to get introduced.

There’s a lot of money on Wall Street that’s going in this direction. There’s a new buyer in town, who’s called the millennial. Let’s get as many of them into this pool as possible, because, let’s face it, it’s their premiums that pay for the older claims. Right now, there are too many loopholes in the system.

Michael Greenwald
Friedman LLP

We’re now seeing private equity moving into the physician market. Private equity, which is incredibly profit-driven, is buying up multiple physician groups, even across state lines. So, now they’re looking to build up volume, looking to build up ways to build up innovation, drive cost down, deal with the bundled care. Anytime private equity moves into a market, you know there is excess cash on the table, because that’s where they’re looking to get their return, either by driving down costs or increasing yields.

They are aggregating physician groups in individual specialties as well as cross-specialties, and they are mixing in hospitals. They’re building up in a way to extract whatever excess profit there is in the system, either by reducing costs or finding ways to more efficiently spend the money that’s in the system.

Michael Maron
Holy Name Medical Center

The opportunity today does not exist on the innovation and the cost side. There is no quality improvement, there is no cost improvement (through mergers). What there is, is leverage, to negotiate better rates in a fee-for-service world. If I can get better rates, I can get better return. If I can leverage physician groups, or hospital systems or any segment of the market, I can get better rates.

Greenwald: In the private equity world, that is efficiency.

Maron: But to the people who are seeking those services, it’s not. Here’s what is it doing: It is either inflating or artificially suspending high prices to begin with. And you should be outraged about it; it’s the thing people don’t talk about. If you want to go to value, it’s an equation that equals cost plus quality. Quality is now in its infancy, starting to become transparent. Seven hospitals received top-performing quality awards. Just seven. There’s real issue there. Where is the cost side of the equation being made public so a consumer can understand the true value proposition?

The demise of the small practice

The Affordable Care Act, at its core, was meant to give health insurance coverage — or, better put, health care
— to the millions who were uninsured or in danger of going bankrupt to pay for service.
Has it worked? We’ll let you decide. But, this point is clear: The ACA, with its endless lists of rules and regulations,
has played a part in the surge of consolidation of physician practices in the industry.
We asked our panelists if we are going to continue to see more consolidation in the industry if there are not major changes to the ACA. You may be surprised by some of the answers.

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