How to respond and prepare for health care reform, insurance company consolidation, emerging international market for high-end medical procedures, health care cost increases, and many other threats which question the future of our health care delivery systems. Amidst all of this change, I predict a few certainties. Traditional fee-for-services, payments, will not continue. Fee-for-service models will be replaced by payment systems that require greater provider accountability through an increase in shared financial risk. For instance, traditional fee-for-service will be replaced by pay-for-performance; hospital-physician bundling for certain DRG codes; capitation or shared-savings models; and episodic bundling of specific DRG codes, which will include hospitals, physicians, home health agencies, hospice providers and nursing homes.
How will the aforementioned be structured? The answer, accountable care organizations (ACOs). ACOs will have a formal legal structure that will allow them to receive and distribute shared-saving payments and payments for services. ACOs will enter agreements with providers, comply with new reporting requirements, and be obligated to meet quality care, patient satisfaction, utilization, and other standards that will be forthcoming in the regulations. Patients will be assigned to an ACO based on their utilization of primary care services. ACOs will need to develop provider compensation models that will align the incentives of productivity, quality, outcomes and cost reduction.
The time for planning for what lies ahead is now. Organizations that wait will see heath care reform in the rear view mirror which at this point will be too late. From Central Florida through South Florida, I am currently working on numerous health care integration transactions to a level that I have never seen before during my nearly 14 years of practice. Transactions include physician group mergers, hospital acquisitions of medical groups, hospital and physician employment agreement models, among others.
Those who control the ACOs will control the health care dollar. Planning should start now for ACO formations which should include physicians, hospitals, home health agencies, hospice providers, nursing homes, imaging companies, physician therapists, and others. Through partnerships, joint ventures and working together, ACOs can succeed. ACOs dominated by one provider will likely fail.
We look forward to helping our clients navigate and benefit from the wild west of health care in the coming months and years.