© Springer International Publishing Switzerland 2016
Lewis A. Hassell, Michael L. Talbert and Jane Pine Wood (eds.)Pathology Practice Management10.1007/978-3-319-22954-6_66. Current Major Trends and Considerations for the Future
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Department of Pathology, University of Oklahoma Health Sciences Center, 940 Stanton L. Young Blvd., BMSB 451, 73104 Oklahoma City, OK, USA
Keywords
Value-based purchasingAccountable care organizationProductivityPathology rolesMerit-Based Incentive Payment System (MIPS)NIHClinically integrated organization (CIO)Physician Quality Reporting System (PQRS)Medicare, Medicare Access, and CHIP Reauthorization Act of 2015Information technologyPopulation healthCase: Proving Our Value
Dr. Gina Pizotti took her second deep breath as she finished reviewing Midwestern Pathology Associates’ (MPA) most recent monthly financials. Anatomic pathology monthly revenue had fallen by US$5000 compared to 1 year ago. Losing the local dermatology practice’s biopsies to a national lab had created a deficit that was hard to fill. Payments for other anatomic services were at best flat, and there seemed to be limited prospects for additional new business. A total of US$60,000 a year—that was US$10,000/pathologist—was a tough revenue shortfall when everyone was working so hard.
The medical directorship contract would be up for renegotiation in 8 months. The hospital claimed to be struggling to stay in the black, and Dr. Pizotti had heard that some of the other clinical medical director contracts had simply been eliminated. As president of MPA, Dr. Pizotti felt responsible for keeping incomes at least level.
Discussion: This is not a unique scenario and illustrates the challenge for many pathology practices. Part B revenue has become harder to grow, and payment per service has not been rising significantly. Many practices are looking at new approaches to being paid. With hospital margins under pressure in many settings, simply expecting the hospital to increase directorship payments is typically not viable. Many pathologists are looking at possible gainsharing models where pathologist-led initiatives at cost reductions or other positive outcomes could be directly compensated. Some pathology groups are simply documenting such interventions in anticipation of future contract negotiations with the idea of showing value and either negotiating increasing payments or avoiding potential cuts. In the MPA example, perhaps the blood bank director had implemented a new blood product utilization review system that saved US$50,000 over the past year, or perhaps a new molecular platform in microbiology reduced broad-spectrum antibiotic usage and reduced the length of stay in patients with certain infections. Capturing such “clinical vignettes” and quantitating their impact could be invaluable at contract discussion time, especially if the gains were, in total, quite significant. And, for those interventions for which gains were sustained over time, the gains would be like an annuity and accrued year after year. Of course, as in many other areas of life, the question is often, “what have you done for me lately,” so this approach would be an ongoing process, much like documenting process improvement .
Much of the challenge of leading the financial aspects of a pathology practice lies in adapting to national and local trends. While we currently seem to be in a time of very rapid change in pathology as well as the rest of medicine, the change is occurring unevenly across the country, and responses have varied region to region. Looking out over the next several years, multiple trends must be considered:
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The rise of value-based purchasing/pay for performance and the expansion of quality incentive programs such as the Physician Quality Reporting System (PQRS) with transition to the Merit-Based Incentive Payment System (MIPS) in 2019
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The growth of accountable care organizations (ACO) , bundled payments, and similar new arrangements of providers
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Continued downward pressure on payments for pathology and laboratory services
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Challenges in the workforce—numbers, training, and adaptability
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Potential influence of technologic disrupters, for example, insourcing with digital pathology, in vivo microscopy, enhanced biomarkers for primary diagnosis and monitoring, and increasing point-of-care testing options
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For academic pathologists, continued uncertainty in funding for graduate medical education (GME) and research
Two of the more interesting trends are the growth of value-based purchasing/pay for performance and ACOs , trends that are partly driven by the Affordable Care Act (Patient Protection and Affordable Care Act, a.k.a., Obamacare) but which have also been embraced by private insurers with numerous “demonstrations” and experiments in different markets. With value-based purchasing, the payor, for example Medicare or a private insurance company, will vary payment for a service or services based on some factor in addition to justification of medical necessity. For example, for a few years, pathologists enjoyed the possibility of a small percentage increase in their overall payments from Medicare for successful participation in PQRS , which is now a penalty for failure to participate. Similarly, hospitals may have a small payment variation based on certain measures for common conditions such as congestive heart failure and diabetes or patient satisfaction scores. Currently, most pay for performance is based on process measures, but it is expected that, with time, the focus will shift to true outcome measures such as risk-adjusted mortality or other measures of health, and efficiency measures, such as adjusted length of stay. For pathologists, that may pose a distinct challenge. PQRS is now based on specific pathologist actions in defined service scenarios using intermediate process measures. How we pathologists will demonstrate an effect on patient outcomes is unclear, though it would seem that laboratories that have embraced a Lean culture and are reaping the process improvement results may have evidence of efficiency improvements they can share with their institutions. Practice leaders should therefore closely follow this trend and ponder how their professional efforts affect the continuum of care and outcomes for both outpatients and inpatients.
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