Health System Market Consolidation: Impact on Academic Radiology Departments
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1 Health System Market Consolidation: Impact on Academic Radiology Departments SCARD 2015 October 16, 2015 Carolyn C. Meltzer, MD, FACR William P. Timmie Professor and Chair of Radiology & Imaging Sciences
2 Carolyn C. Meltzer, M.D., Personal/Professional Financial Relationships with Industry within the past year xternal Industry Relationships * quity, stock, or options in biomedical industry companies or publishers** Company Name(s) None Role Board of Directors or officer Image Metrix G-AUR Award Program Unpaid Consultant (travel only) Travel reimbursement Royalties from mory or from external entity None Industry funds to mory for my research None Other State of Tennessee District Atty Medical expert testimony *Consulting, scientific advisory board, industry-sponsored CM, expert witness for company, FDA representative for company, publishing contract, etc. **Does not include stock in publicly-traded companies in retirement funds and other pooled investment accounts managed by others. 2
3 Carolyn C. Meltzer, M.D., Other Relationships including Foundations, Professional Societies, and Governmental Organizations within the past year xternal Relationships Organization Name(s) Role Boards of Directors or Officer Positions (compensated) None Boards of Directors or Officer Positions (uncompensated) Paid Consultation, visiting professorships, honoraria American Society of Neuroradiology Academy of Radiology Research American College of Radiology Association of University Radiologists Georgia Radiological Society SCARD NIH Clinical Center NIH xtramural program Wake Forest Health Center University of Tennessee Health Center xecutive Committee President lect Member, Board of Chancellors Board of Directors Member at Large Board Member Board Member Reviewer Reviewer Reviewer Reviewer Research Funding NIH Co-investigator, Consultant Other 3
4 Over the Next 30 min Learning Objectives: Describe market forces that drive health system market consolidation, including the influence of local factors xamine the impact of mergers and clinically integrated networks on the role of faculty Discuss approaches to sustaining mission balance in academic radiology departments
5 Health Care Reform Focus of PPACA on bending the cost curve Payment reform increasingly on risk-based outcomesfocused models ACO will be model for attributing responsible lives in population health
6 Market Forces: Imaging Provider Consolidation Market Consolidation 22% increase in size of radiology groups over past 3 years mergence of large national radiology companies
7 Trends in Academic Health Centers Getting larger Gain efficiency in light of decreasing sources of revenue Capture greater marketshare Address population health More corporate Control costs (supply chain savings) Control risk (can squash innovation) Greater competition in marketplace volving models Balance of missions unique to each AHC
8 Hospital Consolidation 95 hospital mergers in US in 2014 xpected that 20% of hospitals will seek a merger in next 5 yrs Potential benefits of consolidation: fficiency/cost savings Quality control systematized Form population health network Address employees health (rising cost in this sector) Xu T et al. The Potential Hazards of Hospital Consolidation. JAMA2015
9 Underlying Hospital Woes Hospitals under pressure, particularly those that serve the underserved Hit hard by recession margin drop from avg. 6% in 2007 to avg. 1.8% in 2008 (MedPAC) 2013 uncompensated care costs estimated at $ $84.9 billion (Coughlin et al) mphasis on reducing 30-day readmission rates; these standards do not include impact of socioeconomic factors
10 Hospital Consolidation The Good Merger increases the value of health care by: reducing costs (capital and operations) Bundled purchases Optimizing services at different locations improving outcomes Standardize best practices Consolidation of care greater patient access in the community More sites for advanced services Dafny LS and Lee TH. The Good Merger. NJM May 28, 2015
11 Reality: Hospital Consolidation Competition is associated with improved quality, particularly lower patient mortality Mergers in concentrated markets results in loss of competition and increased health care costs 2012 study of California hospitals over a 17-yr period found hospital mergers associated with increased utilization among patients with heart disease, specifically a 3.7% increase in bypass surgery and angioplasty and a 1.7% to 3.9% increase in inpatient mortality Xu T et al. The Potential Hazards of Hospital Consolidation. JAMA 2015 Hayford TB. The impact of hospital mergers on treatment intensity and health outcomes. Health Serv Res 2012
12 Which Road to Take to Address Health Care Reform? AHC Goals: - attract/retain best faculty - attract best students - offer advanced tertiary clinical service - maintain strong financial state Variable Local Market Forces Merge with another AHC Form academic or Private System integrated health network Joint Ventures or Strategic Alliances with other hospitals Spin off hospital from University
13 Mergers and Joint Ventures Common Parent Model When you have seen one Figure adapted from TRG Healthcare resource guide
14 Mergers and Joint Ventures Purchase by For-Profit Proprietary System Figure adapted from TRG Healthcare resource guide
15 Health Care Consolidation: 15
16 Mergers and Joint Ventures When you have seen one Figure adapted from TRG Healthcare resource guide
17 Non-Merger Alliances Physician/Hospital Alignment Figure adapted from TRG Healthcare resource guide
18 Fracture Lines: Universities and Health Care Systems April 22, 2015
19 Changing nvironment in Healthcare
20 Merger of quals
21 Value Acceleration Program (VAP) Renegotiation of Contracts Revenue Capture Investing in People quipment Consolidation Span of Control
22 quipment Consolidation? MRI CT PT
23 Outlook for AHCs Academic Health Centers face increasing margin pressures across all missions Academic Health Centers Operating Margin by Mission Research ducation Community Service Clinical Total Increased pricing pressure across all payors New NIH salary caps and lower grant success rates No additional funding sources for GM Limited State Funding for Indigent Funding Tighter Margins that Limit Cross Subsidization Source: Chartis Client Analysis.
24 Being True to our Academic Identity Triple Threat Triple Aim R S A R C H D U C A T I O N S R V I C C A R H A L T H C O S T
25 Academic Institutions R S A R C H D U C A T I O N S R V I C R S A R C H D U C A T I O N S R V I C
26 Realigning our Relationships Alignment with hospital system Individualistic to team-based Focused on what the clinician wants to (collaboratively) what the patient needs
27 Radiology Chair of the Future* Focus on managing change, and lots of it (and faculty stress!) Clinically Integrated Network (Accountable Healthcare Organization) Less autonomous, Requires Common Quality more Metrics/Standards aligned with & organizational IT leadership Risk of loss of time/focus on faculty, Community trainees mployed Faculty Private Practice mployed Non- Practice Able to Plan show value faculty across many integrated Clinical Integration service lines (without a lion s share ownership Remain in any independent, one service) SOM Faculty Non-Faculty mployed Balance centralization of services identification, vs embedded billing Adoption or integration systems, etc. subspecialty radiologists with HC clinical and billing platforms Access to HC managed care contracts with separate tax Access to yet to be negotiated HC managed care contracts Adoption or integration with HC clinical platform *The Future is NOW! Community Private Practice No Clinical Integration No platform requirements No access to HC managed care contracts Ability to access HC Clinical Systems for patients for a fee
28 Radiology Chair of the Future* *The Future is NOW! Focus on cost savings (capital, operational) without sacrificing key strategic investments Promote image utilization management Demonstrate leadership in information integration, whenever possible Define who is Faculty mbrace strong communication strategy more fragmentation of faculty/trainees across sites
29 Critical Success Factors Seat at the Table Need a voice in transition Promote collaboration/coordinated care that incorporates imaging Lead in Quality and Optimized Workflow Show value to system That includes innovation
30 Change Our dilemma is that we hate change and love it at the same time; what we really want is for things to remain the same but get better. - Sydney J. Harris (American journalist)
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