KPMG Report on Health System Change

Is American health care really changing dramatically?  Consultants like to think so and regularly put out reports giving their perspective on the change.  The latest is from KPMG, detailing their views on the importance of the shift to value-based purchasing.   (KPMG Report)    While KPMG sees the system moving in this direction, it says many health care companies believe their existing business model is sustainable, creating a disconnect with the future reimbursement focus on value.  The number of initiatives, new regulations and the spending and uncertainty accompanying all these new initiatives creates great stress for organizations, especially for longer-term planning.  KPMG conducted a survey of leaders in health systems, health plans and product companies like drug or device firms to ascertain their views.

In addition to the status quo, respondents described three other possible future scenarios:  a move toward all-payer rate setting to control costs of health care services; steady but slow integration of care through ACOs or similar methods; or more rapid integration into these new delivery mechanisms.  KPMG believes the firms it surveys may not have business models that will be successful in the evolving world.  KPMG apparently sees the move to value-based purchasing as real and providers and product suppliers as relatively unprepared for it.  Health plan and health system leaders think steady integration is most likely, but would prefer the rapid integration scenario.  Drug company executives have more mixed feelings.  Providers are planning and hoping that they can break even on future Medicare rates, but will need large cost cuts just to do that.  But the “value” being purchased is not well-defined or shown to actually improve health and given provider leverage, it is unlikely that new payment methods will lower overall costs, factors which KPMG seems to ignore.