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What We’re Watching: January 8th, 2019

ANOTHER DAY ANOTHER MOVE

2018 was a groundbreaking year with retailers, insurers and others placing bets on changing healthcare. Case in point – just before the year’s end Walmart announced the expansion of its “Centers of Excellence Program” and also stated that it is working to create high-value networks of providers for its employees to access specialized care. In an interview on what to expect in 2019 with Bloomberg Radio, Premier CEO Susan DeVore reiterated that employers are getting a lot more engaged in going directly to provider networks with a large footprint.

What we’re saying: These moves have set 2019 up for some new healthcare paradigms, where the bets made in 2018 start to get collected. For health systems, this means increased competition from unlikely suspects like retail giants and payers. It also means working with them before it’s too late by sharing financial risk for care that doesn’t measure up. We’re seeing employers and other entities contracting directly with multi-state, regional health systems to take control of the premium. In 2019, these competitive forces will unleash real, broad-based change. It will be about which organizations can adapt and which will get left behind. Watch this interview with Susan on Yahoo! Finance, tune in to her speech at JP Morgan.

IT’S NOT IF, IT’S WHEN

CMS payment programs are proving they work. A January NEJM study found that the mandatory CJR bundled payment program achieved a 3% reduction in spending for hip and knee replacements over a 2 year period. Just before that study published, CMS announced strong Next Generation ACO Results with 32 of the 44 participants earning shared savings, saving Medicare $129M.

What we’re saying: These models have been saving money for the government and improving care at the same time. And HHS is going to continue to push providers into bonus/penalty programs that pay a flat rate, with bonuses going to those with the best outcomes and financial penalties to those at the bottom. For healthcare providers, we expect 2019 will be the year of no more “IFs” – the question will be WHEN they’re going to start taking the leap toward assuming risk in bonus/penalty models that start in 2020. Premier works with several Next Generation ACOs and CJR participants on these programs to help them design and implement successful bonus/penalty programs.

THE IMPACT OF OVERDOSES ON HOSPITALS

A Premier analysis released last week found that total care for patients who experienced an opioid overdose resulted in $1.94B in annual hospital costs across 647 healthcare facilities nationwide. Extrapolating the cost trends Premier identified in its analysis, the total added costs to the U.S. healthcare system are estimated to amount to $11.3B annually, or 1% of all hospital expenditures.

What we’re saying: Opioid addiction has been a public health problem for some time, but we’ve yet to show exactly how hospitals – the entities that treat most of these patients – are financially impacted. On top of losing family members and friends to this epidemic, it’s costing consumers and taxpayers as well as hospitals. There is an urgent need to provide health systems and emergency caregivers with frontline solutions that they can use to stem the tide of opioid addiction in our communities. Premier shared individual comparative analyses with hospitals in the report.

IN CASE YOU MISSED IT

What We’re Watching is a weekly blog focused on the current events Premier is following and their relevance to the work of Premier and its members.

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