In our previous post, we discussed the conversation at the recent “Health and Healthcare in America: the Challenges of Living Through Reform” seminar, hosted by ACG National Capital. We specifically covered the conversations that centered around the Affordable Care Act’s (ACA) key components, as well as the rise of the Electronic Health Record (EHR) and how they will affect healthcare in America.
However, these weren’t the only topics that were discussed at this extremely important seminar. One of the other topics discussed was the ICD-9 and ICD-10 conversion program, which, according to Bill Oldham, the Senior Vice President at ManTech International Corporation, “completely changes the definition of how you price things.”
Mr. Oldham referred to how most large health organizations and networks have around 20-35 percent of their staff dedicated to billing, and that “we’re now going to take all their manuals for how they charge for things and just throw them out and start over.”
He continues by stating that “ICD-10 makes that even harder because, if we think of federal contracting, we went from having 3 lines in your statement of work to about 30 lines in your statement of work and all sorts of different definitions. That’s the difference between ICD-9 and 10; It’s inordinately more complex.”
Mr. Oldham also referred to the EHR, claiming that it’s only a small portion of a large, integrated system. He explained that that hospital systems need to be integrated and linked to one another in order to get a complete picture of a patient during a longitudinal period.
This rise in demand for integrated hospital systems has definitely done a lot to energize the healthcare field, especially when it comes to data analytics startups. He believes that “It’s going to be an exciting industry for a long time to come if you think about the scale of all that we’ve described; you’re taking a multi-trillion dollar industry and completely changing the way it pays for itself, completely changing the way it looks at its data, and moving electronically for the first time.”
The health insurance exchanges (HIEs) have also been a hot topic since the ACA’s inception, and Dmitry Krasnik, Director in Healthcare Group at Houlihan Lokey, gave the attendees some insight into the policy and how it works.
HIEs are one of the major components of the ACA, and states essentially have 3 options in terms of how they pursue health insurance: they can design their own state exchange, work in a federal partnership, or can use the federal exchange.
As far as where the states currently stand, “14 states have elected to design their own exchange, 26 have opted out and are going to go with the federal government exchange, and the rest are pursuing a partnership between the federal government and the state. Preliminary indications are that the exchanges will be online, but choices are expected to be limited in the beginning, and pricing seems to be driving the decision-making.”
When asked if there were any unintended consequences that might arise from the ACA, Doctor Edward Miller, former Dean of the Medical Faculty and Former Chief Executive Officer of Johns Hopkins Medicine, had a couple of points to make: “If you get 32 million who walk in next week, there’s no way we can handle that. Drips and drabs we can handle. We’ll see more physician extenders, urgent care centers, doc-in-a-box, more types of providers, a lot more fraud as well. We have a lot of fraud in Medicare already.”
When it comes to creating new business opportunities in the private sector, the panel seemed pretty enthusiastic.
Dmitri Krasnik believes that from a new business model perspective, “we’re seeing a lot of companies evolve in terms of interoperability.” Mr. Krasnik reinforced Bill Oldham’s notion that systems within hospitals don’t communicate with each other, so “what we’re seeing is companies coming in as middleware systems that take disparate hospital systems and pull the data so it can be used for analytics and quality models.”
He believes that from a markets valuation standpoint, markets are fairly robust for these companies, and that innovative tech companies are in a position to get favorable multiples.
Dr. Miller believes that we’ll continue to see consolidation of hospital systems. Private practitioners are increasingly working with hospitals to make sure they have a flow of patients. Also, Medicare seems to understand that fee for service is a bad idea, and is now trying to take care of a population of people while making it financially viable.
Nelson Mullins partner and Frequent Speaker on healthcare issues David Main talked about the “explosion” of new startups for new applications. He claims that while some of these apps are not that new in terms of concept, they improve what other systems are doing, particularly when it comes to patient satisfaction.
Ultimately, the panel agreed that although the ACA does create some challenges short term for healthcare providers and payers, it has the long term potential to increase access to care, while also creating new business opportunities.