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PWC on the Reform Law’s Fifth Anniversary

By March 20, 2015Commentary

It has apparently been five years since the Administration and its allies in Congress used every underhanded trick they could find to get the so-called health reform law passed.  While it hasn’t lived up to any grandiose promises proponents made to get it passed, it hasn’t (yet) created the disaster opponents feared.  One thing for sure is that it has added hundreds of billions in public spending, including tens of billions for administration, with no relief in sight.  The Health Research Institute at PriceWaterhouseCooper has issued a report giving its perspective on five key trends stemming from the law.   (PWC Report)   The HRI’s five trends include a shift in reimbursement methods that put more risk onto providers, including bundled and episode payments, pay for performance, shared savings approaches and full capitation.  Providers need tools and management expertise to be able to manage this additional risk effectively.   Another trend is a supposed re-emphasis on primary care and implementing new primary care approaches, like the medical home and accountable care organizations.  The third is the arrival of new entrants, according to the researchers there are at least 90 new companies offering innovative approaches to consumers.  Fourth is a shift in health insurance marketing from employers to retail models of direct-to-consumer, largely due to the exchange business.  Finally, states have a newly enlarged role through decisions regarding whether and how to expansion Medicaid and how to implement insurance exchanges.  Each of these trends is causing the major industry participants–providers, health systems, health insurers, drug and device companies–to evaluate how they do business in response to changes.  PWC has a recommended set of strategic steps for these participants.  It is always worth trying to understand the major forces affecting any business and to anticipate the effect of changes in those forces.  But it is also easy into being fooled by surface changes.  Health care is always going to primarily be about the delivery of health care services and products to patients.  The people who are actually involved in that delivery are always going to demand as much revenue and profit as they can for the delivery of those services.  That is the pressure on cost that is so hard to control.  And the diagnosis and treatment of people’s health needs is not yet, and may never be, an exact science, which drives variation in quality.  So whether the reform law or other factors and forces are creating “trends” or changes, what really matters is what is happening with quality and cost outcomes.  There it is not clear to me that there is any real improvement, certainly not from the reform law.

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