BASED ON A WHITE PAPER CONDUCTED FOR: THE PHYSICIANS FOUNDATION

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1 HEALTH REFORM AND THE DECLINE OF PHYSICIAN PRIVATE PRACTICE Presented To BASED ON A WHITE PAPER CONDUCTED FOR: THE PHYSICIANS FOUNDATION 1

2 Signatory Medical Societies: Alaska State Medical Association California Medical Association Connecticut State Medical Society Denton County Medical Society (Texas) El Paso County Medical Society (Colorado) Florida Medical Association Hawaii Medical Association Louisiana Medical Association Medical Association of Georgia Medical Society of New Jersey Medical Society of New York Nebraska Medical Association New Hampshire Medical Society North Carolina Medical Society Northern Virginia Medical Societies South Carolina Medical Association Tennessee Medical Association Texas Medical Association Vermont Medical Society Washington State Medical Association FIVE COMPONENTS 1. Reform provisions affecting doctors 2. A national survey of physicians 3. Physician practice model case histories 4. Analysis: physician workforce implications 5. Analysis: legal implications for physicians 2

3 A FOCUS ON PHYSICIANS. HOW DID WE GO FROM THIS TO THIS? 3

4 AND WHY ARE WE HEADED TO THIS? FROM WHAT HAS CHANGED AND WHAT HAS NOT 4

5 A HAMBURGER IS STILL A meat patty and lettuce on a bun cents 2010.$1 HEALTHCARE: NO LONGER TAKE TWO ASPRIN Close to 200 Board Certified Specialties Over 10,000 prescription drugs Organ Transplants Face Transplants Teleradiology/Telemedicine Non-invasive Techniques Gene Therapy 5

6 million people 2011 HEALTHCARE: FROM BIG million people TO REALLY BIG 6

7 MORE PEOPLE AND OLDER PEOPLE 75 million baby boomers started turning 65 in One every 8 seconds SOMETHING HAS COME BETWEEN US, OUR DOCTORS, AND HEALTHCARE DELIVERY MONEY Virtually limitless demand vs. finite resources $3 TRILLION AND COUNTING A MODEL THAT IS NO LONGER SUSTAINABLE 7

8 IN TWO DAYS, WE SOLVE THE RIDDLE RES IPSA LOQUITUR The Thing Speaks for Itself 16 8

9 THE IMPACT ON DOCTORS What does reform mean to physicians and to their patients? Two types of reform: Formal. PPACA Informal. Market/societal forces WHITE PAPER KEY FINDINGS: This time, no FALSE DAWN 9

10 KEY FINDINGS: The independent, private practice model will be largely (though not uniformly) replaced. Physicians will consolidate, be employed, or align with larger entities KEY FINDINGS: REGIONAL VARIANCE/PREVAILING MODELS ACOs (Medicare & Commercial) Larger, non-aligned groups Larger, aligned groups Medical homes Community Health Centers Concierge practices Smaller, aligned groups Traditional private practice 10

11 OBSTACLES TO FORMING AN ACO Physician staffing/alignment...42% Lack of Capital..38% Lack of integrated IT systems..32% Lack of evidence-based protocols..25% Source: AMN Healthcare 2011 ACO Survey KEY FINDINGS: THE MEDICAL PRACTICE ENVIRONMENT: FURTHER EROSION Through acts of omission and commission, reform is, on balance, a net loss for physicians and will further erode the medical practice environment No payment fix (SGR) Tort reform not addressed Onerous compliance regulations More patient volume Higher patient acuity Problematic cost/quality tracking Increased office expense Status quo (pre-authorization, multiple forms) largely intact 11

12 KEY FINDINGS: REFORM WILL EXACERBATE THE PHYSICIAN SHORTAGE Supply provisions inadequate to meet demand Access issues for Medicaid, Medicare and other patients Primary care/specialist disparities to continue Many physicians will cut back or opt out Physicians will redefine their roles, rethink delivery models DID ANYBODY ASK WHAT PHYSICIANS THINK? SURVEY OF PHYSICIANS AND HEALTH REFORM Thank you for asking 12

13 RESULTS: WHAT WAS YOUR INITIAL REACTION TO PASSAGE OF HEALTH REFORM? 60% 50% 52% 40% 30% 20% 10% 12% 15% 6% 15% 0% Very Positive Somewhat Positive Neutral Somewhat Negative Very Negative RESULTS: HOW DO YOU FEEL NOW ABOUT HEALTH REFORM? 60% 50% 40% 30% 20% 10% 0% 10% I am more positive than I was initially 51% My feelings have not changed 39% I am more negative than I was initially 13

14 RESULTS: DO YOU BELIEVE THE VIEWPOINT OF PHYSICIANS WAS ADEQUATELY RESPRESENTED TO POLICY MAKERS AND THE PUBLIC DURING THE RUN-UP TO PASSAGE OF HEALTH REFORM? 14% Yes 86% No No Yes RESULTS: WHICH BEST DESCRIBES YOUR ATTITUDE TOWARD MEDICAL PRACTICE BEFORE REFORM WAS ENACTED? 40% 35% 30% 25% 20% 15% 10% 5% 0% 14% Very Positive Somewhat Positive 37% 36% Somewhat Negative 13% Very Negative 14

15 RESULTS: WHICH BEST DESCRIBES YOUR MEDICAL PRACTICE NOW THAT REFORM HAS BEEN ENACTED? 35% 30% 29% 33% 32% 25% 20% 15% 10% 6% 5% 0% Very Positive Somewhat Positive Somewhat Negative Very Negative RESULTS: DO YOU BELIEVE REFORM WILL COMPEL YOU TO CLOSE OR SIGNIFICANTLY RESTRICT YOUR PRACTICE TO ANY CATEGORY OF PATIENT? 60% Yes 40% No No Yes 15

16 16% 16% 14% 14% 12% 12% 12% RESULTS: IF YES, PLEASE INDICATE ALL THAT APPLY: CLOSE SIGNIFICANTLY RESTRICT Medicaid. 51%..42% Medicare. 30%. 57% Indigent 43%. 38% Patients covered through exchange 24%. 44% Some HMO/managed care patients 17%. 42% All New patients.. 5%.. 37% Self Pay %.. 24% Privately Insured.. 3%... 18% Other.. 6%... 9% CONSIDER YOUR PRACTICE PLANS OVER THE NEXT THREE YEARS AS REFORM IS PHASING IN. DO YOU PLAN TO: 30% 26% RESULTS: 25% 20% 19% 15% 11% 10% 8% 6% 4% 5% 0% 16

17 IF YOU COULD MAKE A STATEMENT TO POLICY MAKERS AND THE PUBLIC ABOUT HEALTH CARE REFORM AND THE STATE OF THE MEDICAL PROFESSION TODAY, WHAT WOULD YOU SAY? 1,200 written responses The bill is too long and comprehensive to know what is coming. I fear the unknown. SURVEY CONCLUSION Physicians are being systemically disengaged from the practice of medicine The Result: LIMITS ON PATIENT ACCESS 17

18 REFORM AND THE PHYSICIAN WORK FORCE WHO WILL SEE THE 32 MILLION NEWLY INSURED? THE 75 MILLION BABY BOOMERS ACCESSING MEDICARE? THE 50 MILLION NEW ADDITIONS, ? HOW MANY MORE PCs? 32 million newly insured patients X 2 additional patients visits per year = 64 million patient visits divided by 4,000 = 16,000 additional primary care doctors Source: The Lewin Group 18

19 REFORM: CONSPICUOUS FOR WHAT IT DOES NOT DO Does not remove the cap on GME funding Just 889 new residency slots through redistribution RESIDENCY CHOKE POINT Medical School Enrollment: 18,000+ and growing Residency: 25,000 and stagnant In practice: Negative growth by 2016 Source: MGT of America 19

20 THE PHYSICIAN SHORTAGE: RESULT Health Reform throws one bucket of water on the fire and two buckets of gasoline Radiology Ophthalmology Anesthesiology Dermatology MEDICAL STUDENTS ARE TAKING THE ROAD TO SUCCESS 20

21 THE PROBLEM: MEDICAL STUDENTS ARE GOOD AT MATH Average income, Primary Care, with Medicare increases, vs. Specialists Family Practice: $178, % increase... $182,450 Internal Medicine: $205, % - 10% increase.. $215,250 - $225,500 Pediatrics: $183, % increase.. $183,000 Anesthesiology.. $335,000 Radiology..... $402,000 Cardiology (inv.).. $532,000 Dermatology... $331,000 Orthopedic Surgery... $521,000 Urology.. $453,000 Source: Merritt Hawkins 2011 Revenue of Physician Recruiting Incentives PROGRESS IS BEING MADE, BUT.. Primary physicians make 55% of what specialists make. 21

22 PHYSICIAN MALDISTRIBUTION TO CONTINUE 6,200 Health Professional Shortages Areas (HPSAs) 67% in rural areas 65 million Americans $1.5 billion over 5 years ( ) to National Health Service Corps for Loan Forgiveness 38% of MERRITT HAWKINS SEARCH ASSIGNMENTS FEATURE LOAN FORGIVENESS ED CROWDING WILL PERSIST ER visits grew 7% in Massachusetts from 2005 to 2007 PATIENTS ARE SEEKING CONVENIENT CARE RATHER THAN EMERGENCY CARE Source: CDC Emergency Department Visitors and Visits: Who Visited the ER in 2007, The Boston Globe 22

23 AGING WILL DRIVE UTILIZATION By 2030, the entire country will be as old, on average, as Florida is now. Source: U.S. Census Bureau AND THE ELDERLY WILL DRIVE POLITICS 40 million people in AARP Largest organization in the U.S., after the Catholic church 18% of U.S. population will be baby boomers by

24 WE HAVE SEEN THIS MOVIE BEFORE A TEST CASE: MASSACHUSETTS RESULT: SOURCE: *UPI, July 27, 2007 ** New York Times, April 4,

25 REFORMED MASSACHUSETTS 40% of family physicians in Massachusetts no longer accept new patients, up from 30% in Almost 60% of general internists have stopped taking new patients, up from 49% in 2007 Yet Massachusetts has 130 primary care physicians per 100,000 population, first highest in the country (the national rate is 90 per 100,000 pop.) Source: Massachusetts Medical Society Average Patient Appointment Wait Times ACCESS TO CARE WILL BE LIMITED Boston Philadelphia Los Angeles Houston Washington, D.C. San Diego Minneapolis 50 days 27 days 24 days 23 days 23 days 20 days 20 days Source: Merritt Hawkins 2009 Survey of Patient Appointment Wait Times 25

26 MEDICAID / MEDICARE PATIENTS WILL DEPEND ON SAFETY NET PROVIDERS 16+ million new Medicaid enrollees Temporary bump in physician fees WILL YOU CLOSE OR SIGNIFICANTLY RESTRICT PATIENT ACCESS TO ANY CATEGORY OF PATIENT? Medicaid.93% Medicare.87% Source: Physician Foundation 2010 Survey of Physicians and Health Reform WHO WILL SEE PATIENTS? Medicare reimbursement may fall below Medicaid levels by Medicare/Medicaid now covers 110 million people. Source: TU Health Care Maze, Richard Reece, M.D. 26

27 DOCTORS WILL VOTE WITH THEIR FEET No changes to practice... 26% Retire, cut-back, work part-time, close practice, seek non-clinical role, seek non medical job, work locum tenens, concierge, etc.. 74% They already have WILL DOCTORS REALLY CHOOSE TO LIMIT ACCESS? Hours worked per week: Equals 36,000 fewer FTEs Fewer hours strongly correlated to lower reimbursement Source: JAMA study cited in HealthLeaders, Feb 25,

28 A MESSAGE FROM AMA PRESIDENT, CECIL B. WILSON, M.D. AMA anticipates a deficiency of 125,000 physicians by will be the year of shrinking access WHAT S EMERGING? A NEW WORKFORCE PARADIGM THE CONE OF COMPLEXITY Medical specialists Primary care physicians Pharmacists (Pharm D) Advanced practice Nurses/PAs Nurse specialists Therapists LPNs Nurses aides 28

29 4 GENERATIONS OF DOCTORS Traditionalist 1945 and before Baby Boomers Gen X Gen Y Present TOMORROW S DOCTOR WILL REDEFINE THEIR ROLES Concede the less complex patients to PAs and NPs Let pharmacists help directly manage patients with chronic conditions CAVEAT: Only 37% of PAs and 67% NPs practice primary care. 29

30 THEY WILL EXPAND THEIR HOURS Practices that can arrange for patients to see a doctor or nurse after hours Netherlands 95% New Zealand 90% United Kingdom 87% Australia 81% Germany 78% Canada 47% United States 40% Source: 2006 Commonwealth Fund International Policy Survey of Primary Care Physicians OR, THEY WILL WORK PART-TIME 21% of all doctors now work part-time Hospitals and Groups must accommodate the rise of the part-time physician Source: American Medical Group Practice Association 30

31 THEY WILL EMBRACE TELEMEDICINE April, 2010, Park Nicollet rolls out online diagnosis/12 month pilot program Online diagnosis of minor problems (cold, flu, acne, bladder infections/allergies) $25 per visit PAs provide diagnosis 17 clinics for walk-in care THEY WILL BE PAID FOR EXTRACURRICULARS Telemedicine s Telephone calls Doctors will be compensated outside of the traditional billable appointment. 31

32 THEY WILL EMBRACE SAME DAY OR OPEN ACCESS SCHEDULING 15 minute rather than 10 minute appointments. Higher patient satisfaction scores THEY WILL OFFER SHARED MEDICAL APPOINTMENTS (SMAs)/ GROUP APPOINTMENTS 6 to 15 patients 90 minutes Physicals Well-child check-ups Pre-natal care Chronic illness management There is sufficient data to support the effectiveness of group visits in improving patient and physician satisfaction, quality of care, quality of life and in decreasing emergency department and specialist visits. Source: Journal of the American Board of Family Medicine 32

33 THEY WILL ALIGN WITH HOSPITALS Alignment for CEO s: Doctors who keep readmissions low, don t order too many tests 65 THEY WILL ALIGN WITH HOSPITALS Alignment for Doctors: Hospitals that let them practice medicine as they know how 66 33

34 THEY WILL ACCEPT VALUE BASED COMPENSATION Most physicians surveyed by Price Waterhouse said half their compensation should be a fixed salary. The other half should be quality, cost and production based. Source: PWC From Courtship to Marriage: A Two-Part Series on Physician-hospital alignment THE PHYSICIAN ORGANIZATION OF TOMORROW. Could well be you! Only 15% of doctors belong to the AMA 34

35 PHYSICIANS: A PRACTICE PARADIGM SHIFT: Hospital employment 56% of Merritt Hawkins searches feature employment Not just Primary Care, All specialties Only 25% of doctors could correctly identify the term cash flow Total Physician vs. Truly Independent Projected Change, (000s) % 43% 49% 57% Source: Accenture Analysis. MGMA American Medical Association 35

36 PHYSICIANS: A PRACTICE PARADIGM SHIFT: Larger groups economies of scale, strength in numbers Concierge.no more third party payors Part-time lifestyle rules Locum tenens.have Stethoscope, Will Travel Cherry picking.no Medicaid, Medicare or other low payors STANDARDIZATION Eminence Based Medicine Making the same mistakes with increasing confidence over an impressive number of years ~BMJ, Vol. 1 Sept 2001 Evidence Based Medicine Rapidly integrating individual clinical expertise with the best available external clinical evidence from systematic research. 36

37 A TECNHOLOGY SHIFT Mobile app triage Virtual visits Mobile electronics health records In-home implantable devices AND BY THE WAY. ICD 10 & HIPAA 5010 are coming 37

38 THE DOCTOR OF TOMORROW WILL. RETIRE! I m mad as hell and I m not going to take it any more HHS estimates 1/3 of today s practicing physicians (268,000 out of 815,000) will retire within the next 10 years. STAFFING PLANS MUST INCORPORATE ALL TYPES OF PHYSICIANS Employed.(over 50% of all doctors) Independent Full-time Part-time Concierge On-site Remote (telemedicine) Locum tenens Male Female International 38

39 WHERE IS MEDICAL PRACTICE HEADING? FIVE CASE HISTORIES SHOW vs. TELL 5 CASES HISTORIES A Medical Home 2 ACOs Concierge Practice or flat fee Community Health Centers Hospital Aligned Practice 39

40 THE BURDEN OF COMPLIANCE THE BURDEN OF COMPLIANCE $350 million to enforce fraud Medicare payments suspended during investigations of credible allegations of fraud HHS to define credible allegations More latitude to whistleblowers Overpayment must be repaid in 60 days Intent no longer a factor Specialty hospitals limited Encourages states to write their own Stark laws Relationships must be disclosed ALL PRACTICES NEED A COMPLIANCE PLAN 40

41 EVERYBODY HAS A PLAN, UNTIL THEY ARE PUNCHED IN THE FACE -Mike Tyson FOLLOW US Join our social community: Twitter: LinkedIn: Facebook: Text like merritthawkins to Candidate Corner Blog: Ask the Experts Blog: 41

42 If you would like a complimentary copy of the Merritt Hawkins White Paper, please contact Kurt Mosley at: Kurt.Mosley@amnhealthcare.com HEALTH REFORM AND THE DECLINE OF PHYSICIAN PRIVATE PRACTICE Presented To 42