The 2016 presidential election has sent media pundits into high gear, forecasting, in often hyperbolic language, how the regime change to the Trump administration will affect every corner of America and its global relationships. At the center of those discussions are questions about healthcare delivery.
The Health Management Academy
As general counsel and executive director of The Health Management Academy, Nathan Bays represents a think tank for large integrated healthcare systems nationwide, with average net patient revenue of $4.8 billion. Bays shared his insights for an audience of health care management professionals, including providers, developers, facility designers, engineers and project managers during the sixth annual Kraus-Anderson Healthcare Group Seminar held Dec. 13 in St. Paul. The AIA-accredited program was produced by Kraus-Anderson University.
Camille Helou, CHC, MSCM, VP and director of KA’s Healthcare Group, prefaced Bays’ remarks with some context. The relentless growth in U.S. healthcare spending reached $3.2 trillion in 2015, comprising 17.8 percent of the GDP. Projections through 2025 forecast healthcare spending growth of 5.5 percent annually, reaching 20.1 percent of the GDP in 2025—an acceleration that exceeds forecast inflation growth by 1.3 percent annually.
Bays began by pointing out that the election hinged on the fact that a large percentage of voters disliked both major candidates; and those who did so, overwhelmingly voted for Trump. That, coupled with lack of an enthusiastic mandate among the Republicans in control of Congress, suggests some opportunities for actual bipartisan progress on shared goals, Bays said.
Trump’s picks for Health and Human Services (HHS) administrator, Tom Price; and Center for Medicare and Medicaid Services (CMS) administrator, Seema Verma, are a good starting point for prognosticating where policy is headed.
ACA Defunding Imminent
Meanwhile, it doesn’t take a crystal ball to know that the Affordable Care Act (ACA) is toast. However, the headlines screaming repeal aren’t giving the full story, Bays suggested. Rather, the process of defunding the ACA and budget reconciliation will likely occur early in the new year, with implementation of its replacement taking place in two to three years. Defunding and reconciliation can only affect the areas touched by the federal budget; such as individual and employer mandates; reinsurance and readjustment programs; health insurance exchange subsidies; and Medicaid expansion. A host of components such as the Center for Medicare and Medicaid Innovation (CMMI), Medicare Shared Savings Program (MSSP), and Accountable Care programs cannot be eliminated under the defunding process.
Another likely target for the Republican congress is Medicaid reform. Under the current model, commercially insured patients are revenue sources for healthcare facilities. Medicare patients are a break-even; and Medicaid patients are a loss-leader, generating only about 70 cents on the dollar of what employer-insured patient coverage provides.
The ACA also included a moratorium on new physician-owned hospitals, a provision that will probably disappear.
That said, the call to “Repeal and Replace” ACA is misleading, Bay contends. Given the deep division that exists within the Republican party, actual replacement will be very difficult. While it is true that when the Executive and Legislative branches of government are unified, big things happen—such as the ACA—Bays suspects that healthcare may or may not be the recipient of the Big Thing in the Trump administration.
Trump’s HHS administrator pick, Tom Price, may foreshadow the conflict that could lie ahead for reform. A physician with a very pro-physician stance, Price is an outspoken critic of the CMMI for giving hospitals control over bundled payments for hip/knee replacements. Yet CMMI has bipartisan support in Congress.
Also uncertain is the future of Advance Payment Models (APM’s). Pay for performance also has bipartisan support. So while the mechanics of the programs will look different, with more control for physicians and less for hospitals, the trend toward value-based payment models is likely to continue, Bays said.
Winners and Losers
Who are the likely winners and losers under Trump’s care?
Winners include the medical device industry, and physicians; while losers are potentially hospital facilities, especially inpatient facilities; and pharmaceutical benefit managers. Too early to call are post-acute care providers and health plans. One likely big winner: The pharmaceutical industry. Prior to the elections, anticipating a Clinton win, their organization trade had doubled its lobbying and PR budget for 2017, girding up for a Dem-controlled Senate.
“Probably nobody woke up happier on Nov. 9 than the pharmaceutical industry,” Bays said.
The Health Management Academy’s most recent quarterly survey of health care executives, held pre-election, indicates that 36 percent say operational issues remain their top concern, followed by payment model changes.
Fee for service still dominates the industry at about 80 percent—mostly through government payer, and most of that through Medicare. However, the slow creep toward value payment models continues.
MACRA: More Impact on Physicians than ACA
Government is looking for ways to pay for healthcare differently; as indicated by the CMS’s new MACRA, a Delivery System Reform that promises to have more impact on physicians than the ACA itself. MACRA, which passed with strong bipartisan support in 2015, creates two forms of reimbursement: MIPS, predominantly for fee for service; and APM risk-bearing models which add bonus incentives and remove some of the bureaucracy of the MIPS directive, further encouraging more doctors to take up value-based models. MACRA is here to stay, Bays said.
What are the implications of Trump for health care facilities development? Indicators suggest more outpatient focus as government policy, commercial payers and value-based payment models all drive lower-cost sites of care. M&A activity is also expected to remain strong; and Long-Term care/Post-Acute care will continue to feel the pressure of reduced government reimbursement.
While the headlines are screaming about healthcare, policy reform remains a mightily complex endeavor, with no quick fixes. As always, it pays to read the fine print.