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DButzPrez on Group Practice Arrangements
 

DButzPrez on Group Practice Arrangements

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Some basics of physician group practices

Some basics of physician group practices

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  • It is well-known and well-documented that health care costs are largely fixed, meaning that most of the expense of providing care is incurred either up front or as an ongoing fixed cost. This has long been the case.In this study, taken from the Journal of the American Medical Association from 1993 data, the total budget for running a hospital was 84% fixed and just 16% variable.Put differently, the cost of health care is much like the cost of the iPod. It comes largely up front – before patients actually arrive.
  • If we look specifically at inpatient care, we find that the average hospital stay in 2008 involved a total cost to the hospital of $9,100 yet the average charges that showed up in patients’ mail boxes was $29,000.If we look at all patients nationwide rather than just Medicare patients, the markup in 2008 was 219%.
  • To repeat: We need a dramatic narrative explaining how we can have it all. We badly need optimism. We need to explain how this can make everyone better off, and not just some at the expense of others. Managed Care 1.0, the 1990s version of health reform, was openly and incontrovertibly adversarial. Health economists bear much responsibility for this, because they definedmanaged care in these terms. Whacking physicians and whacking patients has been in the very DNA of health care reform. There is a strong residual adversarial strain in current reform efforts, and even an ounce of common sense should be all that is needed to dissuade us from taking this approach going forward.
  • And drilling down into operating units, like others I see the industry shifting from transaction-based care to team-based, relationship-focused, patient-centered care, most likely organized around relatively small medical homes. Indeed, I’ll predict that they will look a lot like what medical homes have become in Ontario. Teams will rule, but they will be small teams. My primitive understanding of organizational behavior is that teams begin to lose their effectiveness once they expand beyond roughly a half-dozen team members. And significantly, the 720 medical homes described here employ 150 physicians, or about six physicians per unit. Reimbursement is through capitation rather than fee-for-service, productivity has risen dramatically due to the common sense notion that work can be delegated so that all human capital is engaged at its highest level of expertise and training. I am excited about all that I read here.
  • My first point is that super-large ACOs are not a good 1-Size Fits All approach to health care reform. Some industry experts are advocating for much larger and more integrated health systems. Yet the underlying issue here is not that health care providers are systematically too small; it is that they are too fragmented. This is an important distinction.
  • There has been a sense until the past few months that ACOs are not yet well-defined. Even those who have taken the lead in designing and implementing ACOs are sure neither of what they are nor whether they will succeed.This is a big problem, and it is where we start.
  • And drilling down into operating units, like others I see the industry shifting from transaction-based care to team-based, relationship-focused, patient-centered care, most likely organized around relatively small medical homes. Indeed, I’ll predict that they will look a lot like what medical homes have become in Ontario. Teams will rule, but they will be small teams. My primitive understanding of organizational behavior is that teams begin to lose their effectiveness once they expand beyond roughly a half-dozen team members. And significantly, the 720 medical homes described here employ 150 physicians, or about six physicians per unit. Reimbursement is through capitation rather than fee-for-service, productivity has risen dramatically due to the common sense notion that work can be delegated so that all human capital is engaged at its highest level of expertise and training. I am excited about all that I read here.
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DButzPrez on Group Practice Arrangements DButzPrez on Group Practice Arrangements Presentation Transcript