Recommendations for the group

bonksACA and how it affects your portion of the industry. Specifically those functioning in the hospital environments (M&A, Bonds, etc). Heard M&A is going crazy right now.

Financial impact of shifts in the payment and delivery models (Managed Care, Health Homes, Accountable Care Organizations). Anyone feeling the squeeze?

Sorry for the delay, I haven't been on here much recently. Great topic idea; this might be a little disjointed but here's what I know from my limited experience and I would love to have others chime in as well.

Being at a payer, ACA related issues are driving almost everything we do on a daily basis currently. Whether it's making sure we are implementing mandated benefits correctly, maintaining agent relations and market communications in light of ACA changes, staying tuned in to policy updates that validate or change operating assumptions, maintaining hospital relations and developing new payment models, developing and implementing new ACA compliant product portfolios, assessing internal systems readiness to handle ACA related changes, etc. This type of work will continue in some fashion until 2014 when healthcare reform as a whole goes into place. Then we will work to make sure everything was implemented correctly and make any changes needed.

We also are preparing for a greater percentage of our business to be made up from the individual market rather than group business due to tax subsidies for small employers and other pieces of ACA. This drives a change from being mostly a B2B business to incorporating more and more B2C facets to stay competitive. Your experience purchasing a flight on Expedia might be similar to purchasing your health insurance through an exchange. Also if you are unhappy with your insurance plan's customer service or other feature, you'll switch to a competitor just like you would switch to another bank if your checking account fees increased.

I'm no banker, but from what I've seen, M&A for providers has been hot for a while and will continue that way for some time. This goes to your second question about financial impact of shifts in payment and delivery models. Medicare reimbursement cuts and the move away from fee for service places greater risk on providers. Whether consolidation actually works is another thing, as it is highly dependent upon post-merger integration efforts, but as an executive it's easier to do what everyone else is doing now and then worry about the results rather than being the last little kid picked for the dodgeball game.

I'm actually not against consolidation for providers because it should allow them to leverage greater economies of scale but in my opinion the pros and cons depend more on the individual market. If you're in a market that only has a few very large health systems then the negotiating power for reimbursement rates is in the hands of providers. Increased reimbursement leads to increased premiums with payers passing on the cost. However you can look at it the other way too and see that if there are many smaller providers and only a few major payers then the providers may have a harder time keeping their doors open or upgrading technology. The payer mix is also a large factor in deciding to merge for a provider. If most of your revenue is based on medicare and medicaid rather than commercial business then it may be worth it to consider merging with another facility to leverage the larger size and diversify your payer mix.

Under new payment models, a provider will receive a fixed amount for a treatment, let's say for a busted knee. If the facility is able to fix the knee with less xrays and through a relatively inexpensive surgical option, then the facility gained a higher margin on treating that busted knee than if they kept the patient in the ER an extra few hours, ordered more tests, etc. But, if the treatment doesn't work well and the patient needs more follow up treatment, the facility doesn't get paid anymore than they already did. Also, from what I understand the reimbursement varies based on just how effective the outcome of the treatment was. Different treatments would have different reimbursement levels and the outcome (not sure if this has been decided or if it is still being worked out) would be measured depending upon the baseline level the patient was at before treatment. For example, if a patient has a chronic illness then the opportunity for improvement might be $1,000 versus $30 for treating a common cold (to prevent cherry picking healthy patients). Patient satisfaction scores also are factored in for reimbursement rates, among other things.

You'll start seeing a greater focus on consumer directed healthcare as well as greater integration between payers and providers as they allocate risk differently with all of the changes. The Kaiser Permanente model will grow, I believe. Sutter Health, for example, is launching their own HMO to get back into the business after selling their plan years ago. Managed Care offers a way to control costs and bring in additional revenue for an organization.