Transition to value-based reimbursement tops Insigniam’s list of factors altering healthcare landscape

Management consulting firm Insigniam recently identified “10 Disruptive Forces in Healthcare”. Several of these development create significant implications for clinical laboratories and anatomic pathology groups that are navigating today’s rapidly-changing healthcare landscape.

ACA and Aging Population Reshaping Healthcare

“I have been doing healthcare for 33 years at this point. And there has been more change in the last three [years] than at any time, and it’s by a long shot,” declared Donald Casey, Jr., Chief Executive Officer of the Medical Segment of Cardinal Health in Ohio. He was quoted by Insigniam Quarterly.

donald casey

Donald Casey, Jr., Chief Executive Officer of the Medical Segment of Ohio-based Cardinal Health, has firsthand experience responding to the fundamental changes taking place in healthcare today. Casey points to the Affordable Care Act (ACA) and an aging population as the two drivers behind what is a fundamental reshaping of American healthcare. (Photo copyright: Cardinal Health.)

 

Insigniam’s report lists the Top 10 disruptive forces in healthcare as:

1) The transition from fee-for-service to value-based reimbursement.
2) Shifting volumes and lower reimbursements
3) The transition to population health management
4) Shifting demographics
5) Increasing government regulation
6) Health information technology (HIT) advances
7) Expanded use of big data and digital health tools
8) Coming shortages of providers
9) Patients who are informed and involved in their own healthcare decision-making
10) Shrinking availability of financial resources

The list was authored by Shideh Sedgh Bina, who is a founding partner of Insigniam. The disruptive forces list originally appeared in the Insigniam Quarterly and was republished by Becker’s Hospital Review.

Payment Reform No. 1 Disruptor for Labs and Pathology Groups

While fee-for-service reimbursement for laboratory tests underpins today’s financial model for lab test services, healthcare is quickly moving toward value-based reimbursement. Thus, it is no surprise that Insigniam has deemed this transition to be the No.1 disruptive force in healthcare.

As healthcare moves from fee-for-service to value-based care, providers and health systems will need to provide more affordable, higher quality care at lower reimbursement rates.

In today’s fee-for-service payment system, a clinical laboratory that increases its specimen volume can benefit from economies of scale and realize a lower average cost-per-test. Lower costs can translate into a larger net profit margin given the fixed price of the reimbursement for lab tests.

But as medical labs see the proportion of fee-for-service payments for their lab test claims shrink, they will need a strategy that fits an evolving healthcare environment. Under the new reimbursement model, laboratories and pathology groups will need to demonstrate their value to hospitals, physicians, and payers.

Pathologists Could Become ‘Rock Stars’ of Big Data Analytics

A second disruptive force—the move toward healthcare big data and increased use of digital health tools, such as personalized medicine and telemedicine—also will provide opportunities for pathologists. Since more than 70% of the typical patient’s permanent medical record consists of medical laboratory test data, pathologists and clinical laboratory scientists have a stake in the healthcare big data trend.

The rapid decline in the cost of next-generation DNA sequencing is causing a “third wave” of genomic medicine focusing on post-symptomatic genotyping for individualized and optimized disease management.

As big data takes center stage, Mark S. Boguski, MD, PhD, Founder and Chief Medical Officer at Precision Medicine Network, Inc. in Boston, and Fellow, College of American Pathologists (CAP), points out that pathologists are positioned to become the “rock stars” of big data analytics.

“This is where genomics is likely to bring the most direct and sustained impact on healthcare for several reasons,” Boguski wrote in an editorial published in Future Medicine. “Genomics technologies enable disease diagnosis of sufficient precision to drive both cost-effective [patient] management and better patient outcomes. Thus, they are an essential part of the prescription for disruptive healthcare reform.”

bogusky

Pathologists are positioned to become the “rock stars” of big data analytics, said Mark S. Boguski, MD, PhD, Founder and Chief Medical Officer at Precision Medicine Network, Inc. in Boston, and Fellow, College of American Pathologists (CAP). For pathologists and clinical laboratory administrators, that means that big computer power will become increasingly important for all medical laboratories. (Photo copyright: Medicine20Congress.com.)

Clinical laboratories also will face competition from the digital technology that is invading the clinical laboratory industry in the form of smartphone devices and apps that perform diagnostic lab tests. These new digital health tools are intended to appeal to consumers who demand a higher level of engagement in their own health management.

Finally, patients are becoming better informed and more involved in their healthcare, a trend that will be boosted by the shift from providers providing care to managing their patients’ health. Closer communication between pathologists, healthcare providers, and patients, will become the norm as patients and providers collaborate more closely to ensure recommended care plans get followed. This will be particularly true when patients transition to post-acute care settings.

Insigniam’s list of disruptive forces will require clinical laboratories and pathology groups to become more patient-friendly. Measuring patient satisfaction and identifying  ways to serve patients that meet and exceed their expectations will be an important goal for laboratories in a patient-centric, value-based reimbursement model. Price and quality transparency will be essential.

In an interview published as part of PwC’s 2015 US CEO Survey, Joel Allison, FACHE, Chief Executive Officer of Baylor Scott & White Health in Dallas, Texas, describes the transformation taking place in healthcare as a “marathon, not a sprint,” though he acknowledges that change is taking place at the fastest rate he has ever seen.

“It’s up to us as providers to create that innovation, create those new ways of delivering care, and truly reform healthcare in this country so that all people, all people, have access to high quality care,” Allison stated in an interview for D Healthcare Daily.

—Andrea Downing Peck

Related Information:

10 Disruptive Forces in Healthcare

Ten Disruptive Forces in Healthcare

Baylor Scott & White CEO Illuminates Changes to the Healthcare Workforce

PwC CEO Interviews: Joel Allison

Pathologists and the Third Wave of Medical Genomics

Pathologists May Be Healthcare’s Rock Stars of Big Data in Genomic Medicine’s ‘Third Wave’

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