I think I will become a neurosurgeon. Tomorrow.
It shouldn’t be too hard, right? I’m a breast cancer surgeon, and that is kind of like being a neurosurgeon, isn’t it? I wear scrubs and know how to tie knots really well. OK, maybe I don’t know much about the brain, and the last time I was on a neurosurgical team was during my internship, but does that matter? Certainly my experience in surgery should easily translate to neurosurgery, right?
Of course not! It is ridiculous to think I could snap my fingers and declare myself a neurosurgeon. But that scenario is much like what we are expecting from hospitals regarding population health. Hospitals have thrived in the fee-for-service environment for decades, and for our younger readers, there was a time when Medicare paid 101 percent of costs. Now how sweet was that? It’s hard to lose in that environment — that is until the money runs out, and that is where we are today. We’ve worried about having no more money, but now we are in a state of no more — no more money. We are tapped out. Broke.
These are really difficult times for hospital executives. The system (and I use this term loosely) is rapidly shifting from a volume-based, fee-for-service business model to a population model that puts providers at financial risk. This means that hospitals have to rethink their core business. Instead of filling hospital beds with patients who need complicated treatments and expensive procedures, hospitals must now try to keep patients out of the hospital and do so with low costs.
Some areas of the country are more accustomed to HMOs and managed care models, but they are in the minority. For the rest of the country, this is disruptive stuff, particularly the part about taking on risk. When you take on risk, you agree to take care of x patients for y dollars. If you can improve quality and reduce costs, you will do fine. On the other hand, if you spend too much caring for people and get bad outcomes, you will be underwater. Both scenarios involve the flow of funds, and I am interested in where the funds will flow.
So the question is: Who gets the dollars? Docs need a livelihood; hospitals have to support an infrastructure.
The docs will see cuts in income, but they will be alright. We can expect a couple of decades of new doctors becoming primary care providers instead of interventional specialists. There will also be more focus on physician extenders because they do a great job with more repetitive, maintenance care than diagnostics and interventions.
The issues with hospitals will not be easy. The average national hospital bed occupancy rate in 2012 was 61 percent. How far will occupancy rates decline when a hospital bed becomes a liability? I hope that hospital strategists are looking out 10 to 20 years as their business changes dramatically. One thought: Smaller facilities could embrace the move to population health by reimagining their mission to short stays, diagnostics, and rehabilitation.
As for me, forget that neurosurgeon idea.
Tommy Prewitt is director, Healthcare Delivery Institute, HORNE LLP.
Image credit: Shutterstock.com