As we begin to change the direction of the titanic American healthcare system, there is an interesting paradox emerging between what benefits the population, and what’s good for providers.  After all, hospitals and doctors – the entire “healthcare” system has existed to treat illness and injury, not to maintain or support health. (Even “health maintenance organizations” created by Federal law and rebranded “HMOs” were really all about controlling utilization in a fee-for-service environment.)  One of the pivotal issues in the shift away from fee-for-service, from “volume to value” for providers and payors, is diminishing returns for hospitals and healthcare systems. Assuming risk sharing is effective, and continues to penetrate the payment models, providers will achieve progressively smaller returns on their direct and indirect investments. So called “savings” will taper off as the providers engaged in risk sharing become more effective, and this progress will reduce their rewards.

Vulnerable yet again

The transition from “volume to value” for post-acute care providers is even more tentative and difficult. Without the capital resources of hospitals, SNFs and IRFs for example must choose to participate or not, risking market share, and then hope that their share of the rewards will cover their direct and indirect costs. My fear is that many of them will flounder and may even go out of business, leaving fewer resources where they are needed most. Among the providers participating in the Medicare Bundled Payment for Care Improvement (BPCI) initiatives, SNFs are the largest group. It is unclear for these SNFs what the financial results will be. Some of SNFs have refused to participate out of these vague or other specific financial concerns.

The difficulties of progress require careful planning and protection of our most important assets.

CMS BPCI Initiatives