By Scott Leggett and Sohrab Gollogly, MD
For all its uncertainty in other areas, the past year in healthcare may well go down as a watershed in the transition to more cost-effective healthcare.
Players big and small moved decisively toward ambulatory surgery centers in 2017, continuing the shift away from higher-cost hospital settings. More of the same is likely ahead in 2018 as the industry prepares for what many see as an inexorable realignment of healthcare relationships and financial incentives.
"Right care, right place, right time, for the right reason, at the right cost," Mizuho Securities analyst Sheryl Skolnick told the Wall Street Journal. "High-cost inpatient facilities are the loser, oftentimes, in that scenario."
The transition could prove pivotal. Insurers and other healthcare payers are increasingly turning their back on hospitals' fee-for-service reimbursement model, and instead are embracing risk-based financial models such as bundled payments. This will allow surgery centers to compete more evenly, on the basis of cost, medical outcomes and patient satisfaction.
"[I]f Medicare Advantage, bundled payments, Medicaid managed care organizations and Medicare accountable care organizations (ACOs) are factored together, alternatives to Medicare fee-for-service (FFS) are predicted to account for 59 percent of AMGA members' revenues by 2019, compared to 53 percent in 2017," Healthcare Informatics Managing Editor Rajiv Leventhal wrote in the magazine's December issue. He predicted greater use of risk-bearing contracts as a key trend gaining steam in 2018.
Count on seeing more focus on surgery centers in the months ahead as health insurers continue to issue new plan designs and rules leading subscribers away from hospitals. The share of Medicare and Medicaid patients enrolled in managed healthcare plans is only increasing, a sign that ever more influence will go to insurance companies, which tend to prefer outpatient care over hospitals because of the cost advantage.
As for federal policy, don't be surprised to see policymakers join the push for more risk-based contracting, bundled payments and all. There figures to be greater political pressure on cost controls as the U.S. population ages — and nothing accomplishes this more efficiently than competition based on costs and outcomes.
Scott Leggett is co-principal, Global 1 and managing director, Convergent SameDay Orthopedic Strategies. With more than two decades working in orthopedics, Leggett’s experience includes founding a network of independent, physician-owned outpatient surgery centers. In addition, he served as the president and board member of the California Ambulatory Surgery Association (CASA). Contact Leggett at info@GlobalOneVentures.com or 760-494-9211.
Sohrab Gollogly, MD is the medical director for Global 1 and on the medical advisory board for Convergent SameDay Orthopedic Strategies. He is a board-certified orthopedic surgeon and fellowship-trained spine surgeon who also performs scientific research and participates in several volunteer surgical organizations. Dr. Gollogly earned his medical degree from the University of Washington School of Medicine and completed an internship and residency in orthopedic surgery at the University of Utah. In 2004, Dr. Gollogly completed a Fellowship in pediatric spine surgery at San Diego Children’s Hospital after a Fellowship in spine surgery at Centre Des Massues in Lyon, France. Dr. Gollogly has appointments at the Community Hospital of Monterey Peninsula and the Monterey Peninsula Surgery Centers.
Global One Ventures (Global 1) is a California-based, licensed third-party administrator (TPA) dedicated to developing and administrating an innovative medical payment and delivery system through its network of providers. With more than 10 years of experience, the focus of G1’s bundled payment structure is to deliver innovative, cost-effective surgical services that result in increased transparency, lowered costs and improved medical outcomes in an outpatient setting. For more information, visit: g1surgery.com.
Convergent SameDay Orthopedic Strategies is a full-service consulting company delivering contracting expertise, clinical education, process infrastructure and coaching in support of successful outpatient joint replacement programs. For more information, visit: convergentortho.com.