A major contributing factor to the rising costs are the nearly 10,000 people a day who are turning 70 and requiring additional age-related healthcare.
The healthcare revenue model for the last 50 years has been based upon sick patients and procedures performed to these patients to generate revenues. This model is now being replaced at a national level by efforts aimed at keeping patients healthy and driving the revenue stream from patient wellness.
Over the last few years we have witnessed part of this transformation via regulations that materially penalize hospitals for readmission of Medicare patients, bundled payments, new wellness and patient medication compliance-related medical codes, such as yearly wellness checkup and ensuring medication compliance, among others.
In turn, these regulations have given rise to different models of healthcare such as the Accountable Care Organization (ACO) and the Managed Care Organization (MSO), among others. The business model of these “hybrid” organizations is to manage patient healthcare cost while simultaneously improving the quality of care.
Medicare and private insurance companies are investing a significant resources in transitioning from a fee-for-service (FFS) model to one where their main financial incentive is shared medical cost savings.
Over the last few years we have seen the mainstreaming of organization like the ACO/MSO with profit incentives to reduce cost and improve quality. There is little doubt that the long-term strategy is phasing out of the traditional FFS model.
Additional regulatory driven changes in payments to providers are coming as part of the Medicare Access and Summary CHIP Reauthorization Act of 2015 (MACRA). MACRA will significantly and permanently change how providers are paid for providing care. Beyond MACRA, in 2019, the industry is facing material increases in Merit-based Incentive Payment System (MIPS) based on metrics for clinical outcomes; however, the doctor will only receive a higher reimbursement if a certain percentage of patients qualify under the new metrics.
It is widely acknowledged that full of waste and duplication is rampant throughout the healthcare industry. The U.S. Healthcare System has become one of the most complex in the world! We have a system in which numerous parties are either directly and/or indirectly involved in making decisions regarding the care of the patient, yet, there is little communication and coordination of care among these providers. One issue at the forefront of these wasteful expenditures is caused by a very fragmented patient care environment where caregivers are not fully aware of all patient’s history and records or in many cases the other caregivers that the patients may be seeing. The Electronic Health Record industry may help this problem but only if there is common access to the patients’ record and the barriers that now prevent a caregiver from having full access to a patient record are removed.