As physicians continue to re-evaluate their career strategies, clinical laboratories must closely monitor changes to test ordering from formerly self-employed doctors
For the first time, more doctors are employed by health networks than are in private practice. That’s according to a recent report from the American Medical Association (AMA). In a press release, the AMA describes the event as “the continuation of a long-term trend that has slowly shifted the distribution of physicians away from ownership of private practices.”
This trend impacts independent clinical
laboratories and anatomic
pathology groups because hospital-based physicians have reasons to order
tests from in-house medical
laboratories. Thus, a reduction in independent self-employed doctors could also
mean reductions in test orders from those physicians.
To make its conclusions, the AMA drew on six years’ worth of
Physician
Practice Benchmark Survey data, gathered from 2012-2018. In its published Policy
Research Perspectives report, the AMA describes the findings as “one of the
more dramatic changes over this six-year span.”
Independence versus Employment
According to the new release, employed physicians made up
47.4% of all patient care doctors in 2018—an increase of 6% since 2012. Meanwhile,
self-employed doctors represented 45.9% of physicians in patient care—down 7% (from
53.2%) since 2012.
“Due to this swing, for the first time in 2018, there were
fewer physician owners than employed physicians,” the AMA researchers wrote in their
report.
The AMA has conducted its benchmark surveys every other year
since 2012. They are nationally representative surveys of doctors to record
employment status, practice size, specialties, and ownership.
“Change continues in the delivery of healthcare and physicians are responding by re-evaluating their practice arrangements. Physicians must assess many factors and carefully determine settings they find professionally rewarding when considering independence or employment,” said Barbara L. McAneny, MD, FASCO, MACP (above), in the AMA news release. McAneny is a board-certified medical oncologist/hematologist, President of the American Medical Association, and CEO/co-founder of New Mexico Cancer Center. (Photo copyright: HMP.)
Who Employs Doctors?
Physicians can be employed by other doctors in
physician-owned practices, by hospitals directly, and by hospital-owned medical
practices.
Most, however, work for other doctors, reported Fierce Healthcare. In a summary of
the latest AMA survey data, Fierce noted that:
54% of doctors are owners, employees, or contractors
in practices owned by physicians—compared to 60% in 2012;
8% of doctors work directly for a hospital—up
from 5.6% in 2012;
26.7% of doctors are employed by hospital-owned
practices—up from 23.4% in 2012; and
34.7% of doctors work for a hospital or a
practice partly owned by a hospital in 2018—up from 29% in 2012.
The AMA partly attributed the increase in employed physicians
to age: 70% of doctors under the age of 40 reported as employees in 2018,
compared to 38.2% of doctors 55 and over who reported as employed.
Family Practice Physicians
Most Likely to Become Employed by Hospitals
Other intriguing data points include the percentages of practice
ownership among medical specialties.
Pathology was not broken out. However, the AMA’s report did state
that, “surgical subspecialties had the highest share of owners (64.5%) followed
by obstetrics/gynecology (53.8%) and internal medicine subspecialties (51.7%).
“Emergency medicine had the lowest share of owners (26.2%)
and the highest share of independent contractors (27.3%). Family practice was
the specialty with the highest share of employed physicians (57.4%),” the
report concluded.
The AMA
researchers also noted that the number of doctors seeking employment in
healthcare networks may be decreasing. “The trend away from physician-owned
practices and toward working directly for a hospital or for a hospital-owned
practice appears to be slowing—more than half of that shift occurred in the first
two years of [the benchmark survey] period [2012 to 2018].”
The AMA also noted that the success or failure of accountable
care organizations (ACOs) could have an effect on hospital acquisition of
private practices. “Should evolving models of care not deliver on their theoretical
savings or improvements, that might put a break on consolidation,” the researchers
wrote.
It’s critical that clinical laboratories continue to improve
the quality and efficiency of outreach services to retain and grow medical
laboratory testing business that increasingly may come from health networks
versus physician-owned private medical practices.
November workshop to teach Clinical Lab 2.0 to forward-thinkers among clinical laboratories, IVD manufacturers, and lab IT vendors offered many examples where clinical laboratory diagnostics can add value and improve patient outcomes
DATELINE: ALBUQUERQUE, New Mexico—Here in this mile-high city, a special Project Santa Fe Workshop devoted to teaching the principles of Clinical Lab 2.0 attracted an impressive roster of innovators and forward-thinkers in clinical laboratory medicine. In attendance were leaders from a select number of the nation’s first-rank health systems and hospitals, along with executives from In Vitro diagnostics (IVD) manufacturers, lab IT companies, other lab service companies, attendees from the Centers for Disease Control and Prevention, and from institutions in Canada, Germany, Israel, India, and the UK.
Their common goal was to learn more about the emerging clinical and business model for medical laboratories known as “Clinical Lab 2.0.” A key objective of the workshop was to help those lab leaders in attendance develop strategic action plans for their own lab organizations, so as to take advantage of the insights coming from the vast information streams generated by their clinical laboratories. These services would be in support the evolving needs of health systems, hospitals physicians, and health insurers to more effectively provide integrated patient-centered clinical care.
Medical Laboratories Can Use Clinical Lab 2.0 as a Path to Adding Value
Clinical Lab 2.0 is the clinical and business model of the future for medical laboratories, assert the developers of this concept. “Clinical Lab 2.0 describes the attributes needed by all medical laboratories that want to succeed in a healthcare system organized to provide precision medicine, keep people out of hospitals, and where providers—including labs—are reimbursed based on the value they provide,” stated Khosrow Shotorbani, CEO of TriCore Reference Laboratories, one of the organizers of the Project Santa Fe Clinical Lab 2.0 Workshop.
“Clinical Lab 2.0 is the path medical labs will need to follow if they are to continue providing relevant lab testing services and generate the reimbursement necessary for them to maintain a high level of clinical excellence and financial stability going forward,” he added. “This is the next generation of medical laboratory organization and operation.”
Lab 1.0 Was Lab Clinical/Business Model for 50 Years
For more than 50 years, Clinical Lab 1.0 was the model for labs,” noted James Crawford, MD, PhD, Executive Director and Senior Vice President of Laboratory Services at Northwell Health Laboratories and an organizer of the Project Santa Fe Clinical Lab 2.0 Workshop. “Lab 1.0 is transactional, focusing on generating high quality analytical data on specimens received, but without assembling these data into integrative clinical care programs. In the simplest sense, Clinical Lab 1.0 focused on generating ever-greater numbers of specimens to drive down average cost-per-test, while maximizing revenue in a fee-for-service system.
This chart shows the attributes of Clinical Lab 1.0 and compares those to the attributes of Clinical Lab 2.0. Lab 1.0 is transactional and based on increasing test volume to lower costs and maximize fee-for-service revenue. Clinical Lab 2.0 is integrative in ways that add value to lab testing services. (Graphic copyright Project Santa Fe.)
“But fee-for-service payment is going away,” he said. “Increasingly, clinical laboratories will be paid based on the value they provide. This payment can be in the form of bundled reimbursement, as a per-member-per-month payment, or as a share of the budgeted payment made to a health system, an accountable care organization (ACO), or a multispecialty provider network. As these alternative forms of provider payment become dominant, to earn a fair share of reimbursement, all medical laboratories will need a clinical strategy to deliver lab testing services that measurably contribute to improved patient outcomes while reducing the overall cost of care. This requires looking at medical laboratories’ contribution to effective delivery of the full dollar of the healthcare spend, not just the three-cents-on-the-dollar representing laboratory testing.”
Innovators in Clinical Laboratory Industry Identify New Ways to Add Value
There are already a handful of innovative clinical laboratory organizations that have clinical experience in moving past the Lab 1.0 paradigm of reporting an accurate test result within the accepted turnaround time. Leaders within these labs are collaborating with physicians and frontline care givers specifically to help them better utilize lab tests in ways that directly improve the speed and accuracy of the overall diagnostic sequence, as well as achieving therapeutic optimization as rapidly as possible. These collaborations are tracking the improvement in patient outcomes while demonstrating how better use of lab tests can lower the total cost per episode of care.
During the Clinical Lab 2.0 workshop, case studies were presented demonstrating how clinical laboratory leaders are taking the first steps to practice Clinical Lab 2.0 so as to achieve added value with medical laboratory tests. The case studies included:
· A project at Henry Ford Health to collaborate with physicians to more appropriately utilize lab tests and build consensus in support of a new lab test formulary.
· A multi-hospital initiative at Northwell Health to collaborate with physicians and nurses in the use of creating testing to make earlier, more accurate diagnoses of acute kidney injury during inpatient admissions, and better guide decisions to treat.
· A partnership involving TriCore Reference Laboratory and certain health insurers in New Mexico where the laboratory—using lab test data (some generated by emergency room testing) and other clinical data—alerts the insurers to women who are pregnant, thus allowing the insurers to provide timely guidance to the women’s care teams with the goal of improving prenatal care.
The Project Santa Fe Clinical Lab 2.0 Workshop convened on November 13-14 in Albuquerque, N.M. A broad spectrum of innovative professionals from the five Project Santa Fe member laboratories (above) were there to teach the lessons learned from their first successful efforts to collaborate with physicians and create added value from medical laboratory diagnostics. Other attendees included progressive lab leaders from several of the nation’s most prominent health systems, along with thought leaders from the IVD, lab software, and lab association sectors. (Photo copyright Project Santa Fe.)
Project Santa Fe Workshop: A Well-Attended Lab ‘Think Tank’
Participants attending the Clinical Lab 2.0 workshop included hospital lab administrators, pathologists, and clinical laboratory industry executives. The importance of this workshop is reflected in the educational grants and financial support provided by leading in vitro diagnostics manufacturers, lab IT companies, and other lab industry vendors. The lab industry vendors included:
Described as a think-tank venture, the organizers are committed to implementing projects that demonstrate how lab tests can be used in ways that add value, and then publish the resulting projects, along with data about improved patient outcomes and reductions in healthcare costs, in peer-reviewed journals. Multi-institutional studies will be required to validate the findings and outcomes from the added-value clinical collaborations initiated at the different medical laboratory organizations participating in Project Santa Fe.
Another primary goal is to share the lessons learned from these innovative projects with other like-minded pathologists, lab administrators, and lab managers. In May, Project Santa Fe organizers led a one-day workshop to teach Clinical Lab 2.0 at the Executive War College on Laboratory and Pathology Management. The workshop in Albuquerque on November 13-14 was the second learning opportunity available to medical laboratory professionals. A November 2018 workshop is planned.
Aetna expects 75% to 80% of its medical spending will be value-based by 2020
Many pathologists and medical laboratory executives may be surprised to learn how quickly private health insurers are moving away from fee-for-service payment arrangements. According to Forbes, the nation’s largest health insurance companies now associate nearly 50% of reimbursements they make to value-based insurance initiatives.
This is a sign that value-based managed care contracting continues to gain momentum. And that interest remains strong in this form of reimbursement, which associates payment-for-care to quality and rewards efficient providers.
UnitedHealth Group (NYSE:UNH) and Aetna (NYSE:AET) are the fastest adopters of value-based payment models, with Anthem (NYSE:ANTM) close behind, the Forbes article noted.
Moreover, UnitedHealth and Aetna intend to increase their percentage of value-based contracts. For example, Aetna, which now ties 45% of its reimbursements to value, says its goal is to have 75% to 80% of its medical spending in value-based relationships by 2020, HealthcareFinance News pointed out.
These compelling data should motivate pathology groups and medical laboratory leaders to adopt strategies for value-based contracting. That’s because payment schemes based on clinical laboratory performance will likely grow quickly, as compared to traditional fee-for-service reimbursement models, which are being phased out.
Aetna: Lowering Acute Admits
Aetna and other insurance companies are rewarding in-network hospitals, medical laboratories, and physicians who help them keep their customers healthy.
“One way we measure our success is by how well we are able to keep our members out of the hospital and in their homes and communities,” stated Mark Bertolini, Aetna’s Chairman and Chief Executive Officer, in the Healthcare Finance News article.
“I think value-based contracting is going to continue to be encouraged by even the current [federal] administration as a way of getting a handle on healthcare costs,” he continued. In fact, Aetna lowered acute admissions by 4% in 2016 and reduced readmission rates by 27%, reported Healthcare Finance News.
UnitedHealth: Outpatient Care a Focal Point
Meanwhile, UnitedHealth Group spends $52 billion (or about 45%) of a $115 billion annual budget on value-based initiatives, Forbes noted.
As surgical cases (such as total joint replacements) continue their migration to ambulatory surgery center sites, UnitedHealth Group expects this merger to offer value to patients, payers, and physicians, a statement pointed out.
“We’ve been able to drive down on a per capita basis inpatient, and inside that we’ve focused a lot in those early years around the conversion of inpatient to outpatient. And I think this is sort of the continued evolution as we focus more on the side of service to how do we get that outpatient into the ambulatory setting,” said Dan Schumacher, UnitedHealthcare Chief Financial Officer, in the Healthcare Finance News story.
The graphic above is from a slide presentation given by Eleanor Herriman, MD, MBA, Chief Medical Informatics Officer with Viewics, a provider of big-data management solutions for hospitals and clinical laboratories. Because of healthcare’s drive toward value-based payment models, clinical labs must focus on “operational efficiencies” and “testing utilization management,” and be prepared to “demonstrate value of testing to payers and health organizations,” Herriman’s presentation notes. (Image copyright: Viewics, Inc.)
Also, in 2016, OptumRx (pharmacy benefit management) announced partnerships with Walgreens and CVS Pharmacy. The joint pharmacy care agreements are intended to improve patient outcomes, connect platforms for health data leverage, and address costs of care, UnitedHealth Group stated in dual press releases (Walgreens and CVS) announcing the strategic partnerships.
Anthem: Planning for 50% Value-Based Care by Next Year
For its part, Anthem now has 43% of its operating budget focused on shared savings programs. Furthermore, the company reportedly has a plan to associate at least 50% of its budget with value-based care by 2018.
“When you combine this with our pay for performance programs, we will have well over half our spend in collaborative arrangements over the next five years,” Jill Becher, Anthem Staff Vice President of Communications, told Forbes.
Clinical Laboratories Need Value-Based Strategy
The rise of value-based care should motivate clinical laboratory leaders to create and implement novel and responsive strategies as soon as possible. Without a focus on value, labs could be denied entry into provider networks.
Clinical laboratory executives and pathology practice administrators should take note of the fact that some large healthcare insurers already have nearly half of their reimbursement under value-based contracts, with plans to grow their investment in value-based relationships in the future.
Already facing the challenges of narrowing healthcare networks, it is imperative that lab leaders also get their lab team to focus on value (and not just volume). It can be expected that, as health insurers look to partner with labs in different regions and communities, they will want medical laboratories that are creative in developing high-value diagnostic testing services.
The trend toward alternative payment systems continues as CMS announces the Comprehensive Primary Care Plus (CPC+) model
Efforts by Medicare officials to move providers away from fee-for-service payments and onto other models of reimbursement continue to move forward. This is one of several goals for a new primary care program that Medicare is about to launch in coming months.
Pathologists and clinical laboratory managers can expect that CMS will accelerate the shift from fee-for-service reimbursements to bundled payment models
It is still not widely recognized among clinical laboratory managers and pathologists that Medicare program officials are serious about moving forward to replace fee-for-service provider payment with value-based payment methods. In fact, many medical lab professionals may not have heard the news from earlier this year that one-third of Medicare payments are now value-based.
