Trends for Physician Practices in 2018

In last year's trends article for Physician's Practice, we highlighted several trends for 2017, including: payers will change the way that physicians are paid, patient expectations will reach an all-time high, hospitals will seek new ways to align, and physicians will face competition from new types of providers. Not only do each of these trends remain true as we approach 2018, but their impact is increasing in magnitude and pace. Two fundamental issues are driving these changes:

•Healthcare remains too expensive.

•Physician practices don't work nearly as well as they should.

For decades, we've known the U.S. healthcare system was too expensive. Yet, spending continues to increase more than 5 percent per year. As a share of GDP, spending on healthcare is expected to increase from 17.8 percent in 2015 to 19.9 percent by 2025. The current, predominately fee-for-service payment model is simply not sustainable. Payers are pushing back at an increasing rate, starting with the true payers-the government, employers, and individuals. These are the true purchasers of healthcare, and they are demanding a higher return on their investments.

As the largest payer, CMS continues to move rapidly towards value-based reimbursement, implementing new physician reimbursement programs such as MACRA. In November, CMS announced the creation of a Medicare Advantage advanced alternative payment model demonstration that will qualify as a MACRA advanced APM in 2018. The move will encourage more physician groups to participate in risk-based Medicare Advantage plans. Changes to the CMS Innovation Center will lessen the role that the agency directly plays in creating new reimbursement models, but the center will look increasingly to providers to innovate new reimbursement models. This creates potential opportunity for groups to have a voice in how they are paid.

Commercial payers, under pressure by employers to slow the rate of cost increases, are also creating new payment models to reduce the emphasis on volume and to reward high-value outcomes, including quality, experience, and efficiency.

Expect payers to continue to shift reimbursement from volume measures to value measures in 2018. Most payer contract renewals will include flat, or declining, FFS rates. Physician practices that have survived on rising FFS rates and considered any value incentives as upside bonuses will find it increasingly difficult to operate or even survive.

The challenge created by shifting reimbursement models serves to merely highlight what most physicians and administrators have known for a long time, most practices really don't work very well. Consider the primary stakeholders of a physician practice, physicians, patients, staff, and in some cases a sponsoring health system. Which of those stakeholders is truly happy with the current state of affairs in most practices? Physician burnout is at an all-time high, patient access and service is low, staff satisfaction is low, and turnover is high, and a hospital's financial losses associated with owned medical groups are already high before significant new levels of risk.

Operational challenges are nothing new to physician practices, but in 2018 the stakes are higher and there will be more dramatic winner and losers. To succeed, or even survive, we need to fundamentally change the way that we organize and operate practices. Physician-centric models that maintain office hours convenient mostly to physicians, limit the type of appointments that may be seen, rely solely on face-to-face visits, and fail to deliver high-value services must be replaced with patient-centric models that offer expanded hours, open access scheduling, a variety of ways for patients to interact with their physicians, and high-value outcomes.

Incremental improvements will not be enough to ensure success. Adding a few more appointment slots to reduce the wait for a new visit from 21 days to 14 days won't do it. Practices need to take a harder look at how they are designed, staffed, and operated- from the patients' perspective- and make transformational changes.

Office visits may be necessary for some services, but for others we should be interacting with patients via phone, email, video chat, and other technology. Practices should be developing advanced care teams that consist of a physician leader, multiple advanced practice providers, clinical support, social workers, pharmacy, and mental health professionals.

Can your primary care practice compete if an advanced medical group-backed by a large equity investment along with 24/7 access, high levels of service, and advanced digital technology-opens a practice in your market? Specialists and hospitals must be aware that these groups can have a major impact on the number and types of patients you see. 

The impact of these advanced care models, flat or declining FFS reimbursement rates, and the increasing financial risk associated with value-based outcomes will continue to increase and challenge the viability of many practices.