Are You Ready for a Post-Reform World?

Attention on healthcare policy is currently focused on how the new legislation passed by Congress will impact the industry. With increasing calls for recalling the new legislation, many in the industry consider the "sit back and wait" approach a prudent plan. Is taking any action before the details of the legislation are determined unnecessary, risky—or not?

Jill E. Sackman

Achieving comprehensive healthcare reform is a leading priority of the President. Healthcare costs are strangling the country. President Obama has outlined eight principles for healthcare reform, seeking to address not only lack of coverage, but also rising healthcare costs and lagging quality.

What many fail to recognize is that achieving a Congressional consensus is not a prerequisite to instituting far-reaching administrative changes to healthcare. Even if healthcare reform had died in Congress, the department of Health and Human Services (HHS) Secretary Kathleen Sebelius is unlikely to stand by and pilot The Centers for Medicare and Medicaid Service (CMS) into bankruptcy. HHS will continue to take action to achieve fiscal and quality objectives. The outline of where policy is headed is clearly discernable in the grants and pilot programs now being funded.

The ongoing focus of federal funding has been aligned with the administration's avowed intent to achieve better quality and reduce cost through:

• aggressively implementing electronic medical records (EMR);

• conducting comparative clinical effectiveness research (CER) to improve outcomes;

• promoting more patient-centered primary healthcare delivery, particularly for disadvantaged populations; and

• understanding the organizational and infrastructure changes needed to support improving quality and reducing costs.

Health IT programs are focused on ensuring that physicians are meaningful users of EMR —effectively engaging CER and established care paths to improve the quality, safety, and efficiency of healthcare delivery. What many in the industry may not realize is that meaningful use is really a code for making decisions based on CER data that will improve quality and reduce costs.

Despite the current uncertainty, it's reasonable to expect that the legislation will address the unsustainable trajectory of healthcare expenses in the US. Under scrutiny are ways to link physician payment to high-quality care at lower cost, connect payment bonuses to hospitals that improve patient results, and impose penalties on institutions that don't meet the mark. Fee-for-service payment is being openly challenged as bundled payments paid to medical teams and accountable care organizations are explored. There are likely to be rewards to hospitals for efficiency in their spending. Engaging a dramatic change in the formula for medicare reimbursement that links payment to a value index, up to one-half of a hospital's budget may be linked to efficiency of care.

With healthcare delivery focused on bundled payments and value, the industry should be very concerned about the economic and clinical value their products bring. Even if the current bill is recalled or modified substantially, it is realistic to expect that CMS will pick up where Congress left off. If they don't, they face almost certain financial collapse.

Leaders in the healthcare industry must think about the impact of these sweeping changes on their business now, and plan ways to assess risk and strengthen the economic and clinical value of their products in ways that ensure demand and optimal pricing. Are you ready for life in a post–reform world?

Jill E. Sackman, PhD, is a senior consultant and Rita E. Numerof, PhD, is the president at Numerof & Associates, Inc., St. Louis, MO, 314.997.1587, jsackman@nai-consulting.com.