Study: Mergers mean changing physician roles

Continued mergers and acquisitions, a greater demand for outcomes measures, and a greater need for management training for physicians are among the trends identified in a Deloitte & Touche report that looks at coming health care trends in the next decade.

"We’re seeing a lot of physicians going to graduate school to learn business skills" because of the complexities associated with practicing in today’s environment, says Marci Thomas, director of risk management and control services for Deloitte & Touche’s Atlanta office and co-author of a study titled Redesigning Health Care for the Millennium. Physicians need that education to better evaluate contracts from managed care organization and potential partners — a skill that is more important than ever given the rapid pace of consolidation in the health care industry.

The Deloitte & Touche report lists the following trends they see as having the greatest impact on health care during the next 10 years:

1. Continued growth of managed care. Even though the managed care industry has faced some criticism through federal and state laws that mandate minimum hospital stays for certain conditions, the drive to cut costs among the employer community is directing the drive to managed care. However, employers now are forcing managed care organizations to provide more data to help them select health plans based on quality rather than just cost — which means health plans in turn are demanding this of physicians who contract with them, Thomas says.

2. Increased government involvement through state laws placing more requirements on MCOs, as well as a growing number of state legislatures moving Medicare and Medicaid consumers into HMOs. Significant reforms also are in store for the Medicare system, as well as reforms that address the problems of the uninsured.

3. Further cost reductions are expected, though Thomas says she believes physician practices have been squeezed about as much as they can be. Future economies of scale, the report states, will come from mergers among health care organizations and from the adoption of practice guidelines among physicians and hospitals that participate in a managed care organization’s network.

4. Consolidation will continue to proliferate among physician practices, integrated delivery systems, and payers. This makes it more important than ever for physicians to know the business side of their practice and to evaluate contracts with potential partners carefully, Thomas asserts. "Physicians and hospitals are frightened they will be left out of the food chain, so some of them sign anything because they think they have to," she says. "They should evaluate not just the proposed cap rate [or purchase price], but all of the provisions. They could be signing their life away and agreeing to horrible provisions." (See story, p. 112.)

5. Consumer involvement will increase through access to information via the Internet and demand for preventive care and alternatives to traditional medical care. One sign of this increased consumer impact is the demand for broader physician networks. As a result, health plans are moving away from the group-model strategy of a narrow physician network to broader IPA-type networks that give consumers geographic diversity and greater physician choice.

6. New roles for physicians will abound as stagnating incomes are leading them to look for capital partners or even to careers with health care organizations.

7. The demand for outcomes measures will continue, although no one consensus has emerged on the best method to use. As a result, many practices will develop their own measurement systems to improve their operational performance. The Deloitte & Touche report says the government will ultimately define specific outcomes and quality measures.

8. Information technology will be more important than ever to track patients and populations through the continuum of care. Health care organizations will patchwork their systems together until better-integrated solutions are found, the report predicts.

To receive a copy of the report, contact Deloitte & Touche at (404) 220-1738.