“For Now, We Look Through A Glass, Darkly” The Future of Healthcare Payment Reform

January 2017

Unprecedented. Unchartered.  These two words are inescapable for anyone following coverage of the incoming Trump administration.  We seem to hear them daily, just as we did during the campaign season.  They are a reminder of the change and uncertainty facing the country and its institutions when President-Elect Trump takes office on January 20th.

In no area is this more evident than in healthcare.  While the new administration has vowed to repeal the Affordable Care Act, it has not provided any clear alternative path or plan.  Tom Price and Seema Verma, the new administration’s selections for Secretary of Health and Human Services and for leading the CMS respectively, are being extensively researched in search of clues about the future.  It seems relatively clear that the president-elect will give Dr. Price and Ms. Verma significant leeway in their ability to define policy.  The healthcare industry is most certainly facing a second major shift in federal policy in less than eight years.

We are all looking through a glass, darkly.  So, how should stakeholders in the healthcare marketplace prepare?  What is the best response?

Constant changes in health policy are inevitable. Rather than investing time speculating about the myriad of possible policy changes and their implications, we believe it is far more valuable to focus on the fundamentals.  The underlying challenges facing the healthcare system remain the same as those the Affordable Care Act was created to address.  The rates of growth in utilization of health care services in the United States are unsustainable.  Access to care remains a huge obstacle for millions of Americans.  And current predictions suggest that the costs of health care will accelerate rapidly over the upcoming years—simultaneously putting health care further out of reach while increasing the national debt.

Overcoming these challenges requires reducing healthcare spending while preserving or improving quality.  That won’t change.   Initiatives that properly assign risk to entities most capable of managing it, penalize utilization decisions that fail to add value, reduce fragmentation, and foster provider alignment will be well positioned to succeed regardless of the direction taken by the new administration.  This means that many of the investments made in response to the Affordable Care Act, if properly designed and intelligently implemented, will continue to create a market advantage.

The fundamental things continue to apply.  Alternative payment models can still be effective at placing responsibility for the best utilization of resources on the entities that are driving healthcare decisions.  When providers carry the financial burden or benefit of their utilization decisions, they will still be much more focused on the value added by each potential care option.  Coordinated care still has tangible benefits for providers that justify their increased commitment of time and effort.  Put another way, MPA’s research for over 15 years has consistently shown that structures like global fees with warranties and bundled payments offer significant cost savings opportunities with strong incentives and rewards for quality improvement.

So no matter where you are on your journey to value-based care—and regardless of what vision of healthcare may come—stay pointed towards reform.  Efforts that address the fundamental challenges facing health care in the U.S. will be rewarded under any system that emerges.

Gregory Pine

Gregory Pine is the CEO of MPA Healthcare Solutions. He oversees strategic and financial planning and establishes priorities for developmental and marketing initiatives. Since assuming this role in January 2004, Mr. Pine has been instrumental in shifting the firm’s focus from individualized developmental and consulting engagements to the creation of innovative products and service packages that meet the needs of a broad spectrum of healthcare organizations.

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