Bob Matthews

January 18, 2018

The Real Strategic Challenges to Groups Today – Part 1

Medisync Blog

The most important strategic decisions that medical group and health system leaders face today are about value.

At the heart of the issue are two essential, interlocking strategic questions:

  1. Should we put resources into value at this time or not?
  2. If so, how many resources and towards what purpose? In other words, what would we spend money, time and other resources doing and how much money or resources should we spend?

The following two blogs address these questions, in turn.


Leaders of medical groups and health systems face a constant dilemma today: “How much focus and resources should we put into expanding our fee business and how much into value?”

In a few markets there isn’t much of choice; major employers are pushing providers to value and those who aren’t ready to play lose market share.

Think metropolitan Seattle: Boeing and Microsoft have both eliminated a significant number of medical groups and health systems from all or some of their benefit options. They did this in an effort to get better quality and lower cost. As a group or health system, you want to be one of the chosen few.

If you think that is going to happen in your market, then preparing for value seems pretty obvious, even urgent. But how many employers or insurers are that aggressive? How many are likely to become so in the next 3 to 5 years?

For a while it looked as though Medicare and Medicaid were going to be the biggest forces for changing payments in the US. Over 470 groups and systems started Medicare ACOs. Most took the “no downside risk” option and, accordingly, did not put many dollars or other resources into their ACO value effort.

MACRA, we were told, is all about switching government payments from volume to value based. However, since the Trump administration assumed office there has been a noticeable chill in value programs. Two thirds of physicians were relieved of MACRA obligations and the bundles program was terminated.

There are discussions about “voluntary” programs but those typically don’t make sense. As we have argued in other writings, the shift towards value only makes sense to medical groups and health systems IF there are significant potential reward dollars for success. (Of course, this would likely result in significant negative revenue consequences for poor performance.)

The impetus to be a high performing organization makes sense if successful groups or systems are rewarded for their performance. Otherwise, the fruit that would result from all the work and costs that groups bear to improve will go to insurers. Further, groups will not be compensated sufficiently to overcome the negative effects of our seventeen year history of fees that lag the cost of overhead inflation.

So, if CMS and your local employers are pulling their foot off the value gas pedal (or, not pushing down on it), perhaps this is a time to go “fee based all the way,” at least for the present.

If you are in a market where local employers are willing or determined to make a move towards a better value purchase, then doing value is obvious.

If you are in a market where the employers are not clearly ready to act or shift towards value, then the decision becomes a bit fuzzier. In this circumstance, the question cannot easily be answered unless you consider the question of “how” you would spend your resources.

← Back to Insights Library The Real Strategic Challenges To Groups Today – Part 2 →

Leave A Comment

Thinking differently about healthcare?

Join Us!

We’re happy to discuss any issues, answer any questions, or just talk about what is happening in healthcare today.