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In the News: March 15–22

Hospitals Continue Acquiring Physician Practices at Rapid Pace

Recent Physicians Advocacy Institute and Avalere Health research found that hospitals are acquiring physician groups at a record pace across the country; between July 2015 and July 2016, hospitals acquired nearly 5,000 physician practices, an 11% uptick, with the number of hospital-owned physicians growing from 95,000 in 2012 to 155,000 in 2016. Implications of this reorganization include increased costs for Medicare, as hospital employees tend to perform procedures at more expensive sites instead of offices.

This trend highlights the competitive disadvantage for independent physicians and physician groups, who will have to consider strategic approaches to remain independent. Sg2 believes that health systems should consider the benefits and challenges of employment models and assess market dynamics as physicians consider different alignment options. To learn more on this alignment model, read the Sg2 report, Physician Alignment Guide: Employment.


Precision Medicine Partnership Shows Potential Impact

A recent Harvard Business Review article highlights Geisinger Health System’s success with a DNA-sequencing project that could identify patient populations at risk for early onset, inherited cancer and cardiac events. In partnership with sequencing laboratory Regeneron, the MyCode precision health program is responsible for sequencing functional parts of the estimated 20,000 genes in more than 90,000 patients.

The impact of this program is evident in cases of early tumor identification and customized prescription medication regimens. Geisinger estimates that at least 3% of its patient population carries gene variants, creating a need for more anticipatory and innovative care delivery methods.

Understanding how to best integrate precision medicine into the care continuum will promote better disease prevention, diagnosis and treatment. As the health care industry becomes more adept at technologic advancements, opportunities for strategic partnerships will continue to drive care redesign. To learn more about precision medicine applications and partnerships, read the Sg2 Expert Insight, Precision Medicine: Cut Risk With Strategic Alliances.


All-Payer Hospital Model Met Cost-Reduction Performance Targets

The Maryland Department of Health recently released third-year results for the state’s All-Payer Hospital Model—an agreement between the State of Maryland and CMS to hold hospitals accountable for the total cost of hospital care by shifting all hospitals to a value-based, global-budget payment system.

Between 2014 and 2016, the model met cost-reduction performance requirements, with Medicare hospital expenditure cumulative savings at $586 million and Medicare total cost of care cumulative savings at $461 million. The model also reduced potentially preventable conditions by 44% and is on track to meet readmissions reduction targets by year 5.

Chronic disease accounts for an outsized portion of health care utilization and costs. Sg2 believes chronic disease management is a core competency that all health systems need to develop to manage costs under value-based payment models. To learn more about understanding, segmenting and managing the chronic care population, read the Sg2 report, Developing a Market-Driven Chronic Care Strategy.

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As of February 11, 2016, Vizient, Inc. has completed its purchase of MedAssets Sg2 and spend and clinical resource management segments from Pamplona Capital Management, LLC. MedAssets revenue cycle business will continue to operate as a wholly-owned subsidiary of Pamplona Capital Management LLP.

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