ADVISORY e-ALERT     March 29, 2010
Advisory Law Group, a Professional Corporation
So, Obamacare passed.
While there's a time and a place to discuss political reactions, this is neither.
My viewpoint comes from a different angle:  We might as well see Obamacare, in true lemonade from lemons fashion, as a clarion call for physician groups to refocus (assuming you've ever focused at all) your business strategy.  For hospital based groups in particular, this means (re)focusing your strategy in respect of both payor and hospital dollars.
In all likelihood, Obamacare will bring more patients, for more ailments, and for more procedures into the system.  And, importantly, those patients will have poorer, not richer, reimbursement attached.

To illustrate, according to data released by the National Association of Public Hospitals and Health Systems, or the "NAPH" as they like to be called, the trade group of, in their words, "America's most important safety net hospitals and health systems," since the recession began, their members have treated 23 percent more uninsured patients, and have provided 10 percent more uncompensated care to low-income populations.
NAPH member health systems also provide primary and specialty care physician services -- approximately 37 million non-emergency outpatient visits each year, 45 percent for primary care and 55 percent for specialty care. 

A significant number of those "safety net" patients will join the number of Medicaid and no-pay patients already coming in contact with your practice, both office based and hospital based, as they are melded into the new government controlled system.  Especially for hospital based groups, those patients will crowd out better reimbursed patients . . . to the extent that they exist.  With coverage mandates imposed upon "private" insurers and the inevitable result of providing reimbursement for so many with what will ultimately be limited program funds, there will be tremendous downward pressure on all physician fees. 
Unless you're prepared to work more, for less, you'd better start envisioning a better future than Washington has planned (and I do mean planned) for you.  And you'd better develop a strategy to reach it.
There are multiple potential strategies to deal with the likely impact.  I'd like to focus on two that can, and must, begin to be developed and implemented soon:  Engage now, in strategies to increase the baseline of current commercial payor reimbursement and, for hospital based groups, to increase the amount of hospital stipend support.
Note that the fact that charity care has grown and that Obamacare will soon cause a surge in demand without preserving, or increasing, the present level of reimbursement, are not persuasive arguments, in and of themselves, in connection with your strategy in respect of payors and facilities.  They are, however, elements in a much larger strategic approach.
There is an uncertain timeline to the window of opportunity in respect of each of these strategies. 
As to payors, current reimbursement levels must be increased prior to there existing too much economic pressure, or regulatory control, to permit favorable renegotiation.  Don't say that that this is not possible:  To paraphrase Henry Ford and my experience on behalf of clients, if you say you can get an increase in reimbursement rates, or if you say that you can't, you're right. 

As to hospitals and hospital based groups, hospitals may be crying broke, but it's impossible to run their facilities without you.

The choice is clear:  Either you engage in these strategies or you'll engage in the race to the bottom.
See, there is "choice" in Obamacare after all.
For help in developing and implementing your strategy, contact me now. 


Like Your Exclusive Anesthesia Pact? Learn To Defend It, published in the March 2010 issue of Anesthesiology News.
Keck School of Medicine - April 2, 2010.  Managed Care and Exclusive Contracts.
Group Retreat - April 20, 2010.
For information on having Mark Weiss address your group, contact


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