Payment Reform Naysayers 'Better Wake Up'

Rene Letourneau, for HealthLeaders Media , April 14, 2014

More than a quarter of healthcare leaders have no faith that the shift to value-based payments is actually coming to their organizations. They're fooling themselves, says the CFO of a New York State healthcare system.


Daniel Rinaldi
Vice President of Finance and CFO at Ellis Medicine

In the HealthLeaders Media Industry Survey 2014: Forging Healthcare's New Financial Foundation, 72% of respondents said they believe the industry will make the switch from volume to value-based reimbursement models.

That leaves 28% of healthcare leaders—a rather sizable chunk—who have no faith that this fundamental shift in how their organizations will be paid is actually coming.

Could they be right?

Absolutely not, says Daniel Rinaldi, vice president of finance and chief financial officer at Ellis Medicine, a 438-bed community and teaching healthcare system based in Schenectady, NY.

Rinaldi says hospital administrators are fooling themselves if they believe they can continue to operate forever in a fee-for-service world.

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"We are seeing a dramatic sea change in our business, and those of us in an institutional setting better wake up," he says. "This is the most significant time of change that I have seen in my 40 years in healthcare."

In preparation for this move away from the fee-for-service framework, Ellis is developing an accountable care organization as part of a transition toward population health management, Rinaldi says.

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2 comments on "Payment Reform Naysayers 'Better Wake Up'"

Steve Lauhoff (4/21/2014 at 3:52 PM)
I once worked with a physician who told me "Those who lead you into crisis are seldom the ones who lead you out of crisis". It seems to me that surveying the existing leadership is merely reflecting the lack of insight they have had before reform was forced upon them. I am dubious of a wholesale reform to value-based payment wherein pay is determined solely by criteria other than quantity. The insurance companies are interested in maintaining margin, not providing some sort of theological shift in the marketplace that thrills the academicians but has little chance of practical implementation. The cold, hard truth is that all healthcare providers, in the face of burgeoning demand, will have to figure out how to maintain profitability on current revenue levels. Efficient operations is the only true path to sustained profitability. And the 72% have had their kick at that can for a while now and not been largely successful. Why do we think they will be able to make this transition successful to a value-based system (considering that the definition of value is subjective)? Fifteen years from now, we are still going to be complaining about how much we spend on healthcare. And value-based care is going to deliver higher cost in the long run as the demise of people is realized not through vascular disease (which value-based care will fix) but through higher cost diseases such as cancer and Alzheimer's/ Dementia. Cost will go down when the Baby Boom generation disappears but not before.

Davis W (4/14/2014 at 4:16 PM)
Thank you for your call of naysayers to speak up. My question for the 'Yeasayers" is what is quality? Who defines quality; an organization; a patient; a disease or a government? Reform is here to stay and needs to take place immensely in this country. Having reform pushed by a government or by a payer who is not a part of the product, but the source of income for the product creates separation. This distance between the patient and the product creates the false economy of healthcare, we have in this country. What keeps the ACO from putting people on a 747 and sending them to Puerto Rico for coronary artery bypass surgery? Is this the quality which the payers are seeking? It certainly could be the price tag. This is what has driven 750,000 Americans in 2007 that left this country to receive such care. In 2011 it was estimated to be 6,000,000 Americans were expected to travel to other countries for less expensive healthcare. ( ) Why would an ACO not do the same? The ACA has done one thing to a lot of persons who did not have healthcare insurance and that one thing was that it exposed them to the high cost of premiums, whether on the gold or the bronze plan with a high deductible. Where do the premiums go? One answer is William McGuire (CEO of United Healthcare), $1.4 billion in one year. (source Wikipedia) Direct Primary (with a Hospital surgery only umbrella coverage or low monthly fee for a healthcare cost sharing plan) is the direction most Americans could not only afford, but it would implement one of the core principles of the "triple aim"; "Access"; all for a small percent of a monthly premium. What if the almighty premium dollar is what is paralyzing a patient from having an illness checked out, because they are afraid to go because of a co-pay, on top of the already overwhelming weight of the premium. In our area, the global payment from the centers for Medicare and Medicaid for a chest x-ray is $30.67 less than a tank of gas. Why should I or anyone else pay a $700 (single mother with 3 children) a month premium to insurance so I can see a doctor with a copay (may not exists in some plans) and then $30.00 for an x-ray? As the veil of profit is etched back by the patient engagement by signing up and seeing what healthcare insurance is all about, then fading back into uncertainty of the uninsured. Quality is a patient's meaningful relationship with the physician. This is what has been missing since pre-1950's as we drove away from an endearing physician-patient relationships to one which has an enmity between the patient and the physicians time.




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