The cost savings that are meant to be one of the eventual benefits of the Affordable Care Act have not yet begun to appear, though improvements in care have begun to materialize, according to one expert.
Speaking at a SourceMedia conference titled 2014 Tax Strategies for Financial Advisors, Michael McLafferty, a partner and a leader in the Health Care Services Group of Top 100 Firm EisnerAmper, noted that many of the new payment approaches that are part of the ACA all have “outstanding goals in terms of improving the quality of patient care, while at the same time reducing costs.”
“The good news is that quality of care has improved with the new products being tested,” he said, “but the challenge of reducing costs while improving care has not really taken off. Relatively few organizations have been able to reduce costs while improving care.”
Part of the problem is that doctors and health care providers are unwilling to run risks with the new approaches, given the possibility of high levels of liability. “Tort reform would help,” McLafferty said. “It’s sitting out there and no one is addressing it, but all these models for reducing costs won’t have much affect -- some, but not much. There’s opportunity for efficiency and costs reductions, but significant reduction probably won’t happen until we have tort reform.”
Changes in pricing and structure
At the same time, McLafferty pointed out that overall health care costs have moderated somewhat recently, after years of double-digit increases.
“During the Great Recession and since then, costs have increased between 3 and 6 percent,” he said. “A lot of that has to do with the fact that a lot of patients haven’t gone to the doctor unless they had to. If it wasn’t an emergency, they didn’t go.”
In the face of that, health care providers are searching for efficiencies and protection, with doctors and other health care providers selling off their practices to larger health systems. “One of the things people don’t realize is that behind the scenes, health care has become much more about large organizations,” he said.
As an example of the sort of changes that are driving providers to seek safety in the arms of larger systems, McLafferty noted that overpayment audits by insurance companies will become much more serious. Whereas audit requests for amounts over $10,000 for a three-to-five physician practice used to be considered extreme, audit requests for that size practice now start at $500,000, he said.
Even as providers combine, they are shying away from a new structure created by the ACA -- the “accountable care organization,” where groups of providers officially come together to provide coordinated care for Medicare patients. Only 17 percent of hospital chief executives are interested in exploring the ACO structure.
“They’re very costly to kick off, and no one’s really sure how the savings will be realized,” McLafferty said. “They’re that new and that untested. The odds of an organization making an investment in a new model that no one has any historical data on are small. Once they get up and running, though, you will see improvements in quality of care -- because they’re not just organized with the hospital, but with doctors, home care services, surgery centers, imaging centers and all the other providers in the community.”