BUSINESS

  CODING STRATEGY

CHANGE IS COMING

ARE YOU PREPARED FOR THE NEXT PHASE OF HEALTHCARE REFORM?

THE LAST eight months have provided us with many challenges since the implementation of health care reform. And one of the biggest challenges still yet to come is the concept of outcome-based care and the practice-level economics surrounding it.

Like many industries before it, healthcare reform will bring traditional business metrics and production efficiencies to the healthcare marketplace. The automotive industry began with hand-building a car, followed by the basic assembly line. Then, the efficiency experts came in and asked, “How can we do this faster, with higher quality, and for less money?” We saw a similar transformation in the computer industry. We, as consumers, want it faster, better, and for less money – and health care is no different. Welcome to the next phase of healthcare reform.

The powers that be want health care to be standardized, commoditized and offered at a lower rate. They can put a nice name on it (outcome-based care), but in the end, it is pushing the individual practitioner to deliver higher quality outcomes, at higher volumes, for less money. And if you don’t, you may be politely asked to not participate as a provider within that plan. That plan, by the way, will most likely be an ACO (Accountable Care Organization), which is tasked with delivering within its network, highly efficient, high-quality care, with financial incentives to bring the cost down.

Here’s what you can do to prepare for this change.

CALCULATE YOUR COSTS

You must be proactive in your practices to make sure that you know what it costs to provide the care that you do, not only in terms of chair cost per hour, but now you will have to know our cost per episode of care for each disease state that you diagnose and treat. An episode of care would represent the annual number of office visits, special ophthalmic procedures, and/or surgical procedures with or without durable medical supplies that a particular diagnosis would require for an appropriate high-quality outcome.

For example, let’s look at primary open angle glaucoma, mild stage. I can now define, with the assistance of the ICD-10, a particular disease state with a high level of specificity, and thus, its associated cost of care. If your clinical care protocol has determined that the average patient requires two office visits, one OCT, one fundus photo, and one visual field throughout the course of one year, as a provider, you should know exactly what it costs to provide that annual episode of care based upon your individual chair costs.

So, if your chair cost is $100/hour, and each office visit takes 15 minutes of doctor time ($25/each x 2), and it costs $XX to produce a fundus photo, $XX to produce an OCT and $XX to produce a visual field, plus 45 minutes of total staff time at $20/hour ($15), you can easily calculate cost per episode of care. Let’s say that number is somewhere in the area of $185.

You would also need to know this number for each and every diagnostic group that you are providing care for, so when an ACO director invites you to provide care for their network and offers you $275/patient/year to manage primary open angle glaucoma, mild stage, you will know whether or not you can be profitable. Keep in mind that the ACO is not out for your best interest. It is tasked with delivering the highest quality care (outcomes), in the most efficient manner possible, for the lowest cost.

START TODAY

By 2018, CMS expects that 85% of all payments will be based upon outcome-based care. That means that there is less than three years to prepare yourself and your practice for this new modality. It is imperative that you start today so you can be able to direct this change in eyecare delivery to your best advantage.

Health care reform is all about data, big data, and using that data to drive the cost and utilization of health care down. The best defense is a well-thought-out strategy, a well-executed tactical plan to understand the system, and to make well-educated business decisions based upon facts, and not fear. OM

JOHN RUMPAKIS, O.D., M.B.A. is founder, president and CEO of Practice Resource Management, Inc., a consulting, appraisal and management firm for healthcare professionals. Email him at John@PRMI.com, or visit tinyurl.com/OMcomment to comment on this article.