March 11th, 2009
Avalere research demonstrates business model point
Some new research done by Avalere Health reinforces a point I made yesterday about health IT and business models.
Avalere’s work was highlighted in the daily Healthcare Marketplace service put out by Kaiser Permanente.
Basically Avalere ran the numbers and found the health IT money being offered in the Obama Stimulus is not enough to push existing doctor offices to convert to electronic records.
The plan provides a carrot, in the form of stimulus payments, for doctors to turn their offices into EHR repositories, and a stick, in the form of lower Medicare payments, for those doctors who choose not to comply.
Avalere figures a small office would lose money following the plan. The loss, about $70,000, amounts to a suggestion they “take the stick” and maybe get out of the Medicare and Medicaid business — something many practices are already doing.
This assumes, of course, a steady state universe. It assumes the current fee-for-service model survives for another five years.
With the rush of insurance plans toward something like a fee-for-patient model, whether they call it Medical Home or an HMO or Ishkabibble, and with the government moving toward the same model, this is a rather big assumption to make.
Another word for such an assumption is false.
Half of all general practitioners have said they plan to get out of the business already, citing paperwork costs. Many already refuse Medicare or Medicaid patients. The current business model is on its last legs.
The problem I see with the Obama health care plan is they have not said this. It’s more politically acceptable to lie and say “you can keep your health plan, you can keep your doctor,” then let insurers take the hit for changing to a Medical Home and the doctor sail with his golf bags into the sunset.
This may make political sense. If the insurers won’t admit they’re changing the business model there’s no reason for the Administration to say the same. But it looks to me like a big game of chicken, in which a steady state can be assumed, and reports like this one from Avalere make sense.
Someone needs to talk straight with the American people. The present fee-for-service business model of medical practice is doomed. It is unsustainable. Call it Medical Home, call it coaching, call it the new Medicare, but medicine is moving to a per-patient wellness business model, one in which good health IT is essential.
Dana Blankenhorn has been a business journalist since 1978, and has covered technology since 1982. He launched the Interactive Age Daily, the first daily coverage of the Internet to launch with a magazine, in September 1994. See his full profile and disclosure of his industry affiliations.
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