We’ve told you over and over again on this blog that the Affordable Care Act isn’t just about coverage. It’s also about changing how health care is delivered, moving away from fee-for-service to a more value- and quality-based system. Medicare is aiming to have half of its payments under alternative payment models by 2018.
That means hospitals have to change. But not all of them want to.
Fee-for-service is the preferred business model for many. Why should those hospitals want to go through considerable expense and upheaval to switch to a new system that demands more – and may well pay less?
“The answer is: They wouldn’t,” says Gerard Anderson, director of the Center for Hospital Finance and Management at the Johns Hopkins Bloomberg School of Public Health.
Leonard also notes that testing new payment models in the past “have yielded only modest savings at best.”
Still, some heath system are on board with the change – partly because they are altruistic and know it’s the right thing to do for the economy, Katherine Hayes, the Bipartisan Policy Center’s director of health policy, told Leonard.
“It’s based on the philosophy of the hospital and who the key leaders are,” Hayes said. “There are those who are committed to improving care and lowering costs.”
And as more hospitals do make the shift to new systems, their competitors will have to adapt. “A lot of areas are doing well in fee-for-service care … and aren’t interested in alternative payment models,” said Hayes, noting that when other hospitals in the area are using them, there is pressure to do the same. Those that don’t may have trouble getting key providers to stay in their care network.
Much of the attention so far under the health law is on accountable care organizations (ACOs). “Members are enthusiastic about accountable care organizations and moving toward a more value-based care delivery,” Melissa Jackson, the American Hospital Association’s senior associate director of policy, told Leonard. “The risk-reward balance, however, is sometimes off kilter. Savings are limited, and participation requires a high investment up front.”
Recently, Medicare announced a big push for “bundling” – paying a fee for a whole episode of care for hip and knee replacements. But as Leonard notes, there’s still plenty of skepticism that the new models can lead to big savings.
As Johns Hopkins’ Anderson told her: “There is a lot of confidence, and most of it is not warranted. … There is nobody with significant power [in the health care industry] who wants to control health care costs. Until we have that, we will muddle along in terms of coming up with good ideas, implementing them and getting lukewarm results.”