Good Volume…Bad Volume?

GBMC HealthCare gets paid for the work that we do in serving patients in a number of ways. Physicians submit bills for their “professional” fees when they see a patient in the office, do a procedure, care for a patient in the hospital, or provide a consultation on a patient being managed by another physician.  The hospital and Gilchrist Hospice Care have always submitted bills to insurance companies, Medicare, Medicaid and individuals for services provided.  GBMC has always taken in more money if we see more patients. This is the so-called “fee-for-service” system.

The danger in fee-for-service is that people will provide unnecessary services due to the lure of making more money. In healthcare, there are very few examples of people knowingly providing unnecessary services (otherwise known as fraud.) In healthcare, most “unnecessary services” are delivered with good intentions with those providing the care believing that they are necessary. In the fee-for-service world, executives (like me) have no or little incentive to scrutinize whether care is truly necessary according to the evidence or if the patient could have been served as well in a more efficient, less costly setting. We executives have primarily been judged by the financial bottom line. Since we got more revenue for more services, we have been happy with full Emergency Departments and numbers of procedures over budget. I have often thought that it was sad that we would get upset if the Emergency Department was not packed. We were incentivized to make it full. But if your loved one was one of those waiting in the packed Emergency Department, you were wishing that the visit could have been prevented.

A New Direction

Well, this is now all changing. Maryland’s new contract with the Centers for Medicare and Medicaid Services (CMS), the so-called “new waiver,” sets us in a new direction. Since the State now needs to keep increases in hospital spending under the rate of increase of Maryland’s economy, projected to be 3.58 percent annually over the next 10 years, our hospital will be paid a fixed amount of money per year. If we bill more services, the hospital will not be paid more money unless the population grows significantly or something significant happens in the market, like a hospital closes and we must serve their patients. Gilchrist Hospice Care will still be paid for every individual service and our physicians will continue to be reimbursed fee-for-service.

Is this change in the payment system a good thing? I think it is because it begins to align incentives to keep people healthy and to create systems that serve their needs efficiently. Care coordination will now be critical. If we can serve someone more efficiently in their home or in the patient-centered medical home, then that is what we must do.

But now, our people are asking me, “Do we want to grow our programs? Because if we do, we may not be able to afford it.” My answer is simple: we want every person in our community who needs hospital care to get it at GBMC. Our vision is to be the healthcare system where everyone, every time gets the care we would want for our own loved one. This new payment system is better aligned with that vision. It gives us more room to do things that have not been paid for in the past, like coordinating care.

I have no illusion that this will be easy, but I have complete faith in our ability to do it. A major issue is that with physicians still paid fee-for-service, the major players’ incentives are not totally aligned. I am on a Health Services Cost Review Commission (HSCRC) committee that is studying how to bring physician payment in alignment with the new waiver. We will work on new solutions to solve this dilemma. The other obvious concern is that people will game the system and stop providing needed services; if the danger in fee-for-service is unnecessary care, in fixed revenue systems the danger is that patients won’t be able to get care that is necessary. We will not let this happen. We will stay focused on our vision and our 4 Aims: Better health and better care with less waste and more joy for those providing the care.

I want to thank all of my colleagues at GBMC HealthCare for all of your hard work as we enter this new phase in our transition to a more patient-centered and value-driven healthcare system in our State.