Primary Care Threat to Hospitals

Primary Care is a Threat to Hospitals... More specifically, Non-Fee-for-Service Primary Care in the form on Onsite Clinics, Near-Site Clinics and Direct Primary Care for People on Employer-Sponsored Health Plans.
Employer-sponsored health insurance pays hospitals 254% of what Medicare pays, i.e. employer-sponsored health insurance is a 'cash cow' for hospitals.
Non-Fee-for-Service Primary Care decreases hospitalizations by 22% and ER visits by 11% (as demonstrated by Dr. Brent James from Intermountain Health).
Accordingly, lowering hospitalizations and ER visits for patients with employer-sponsored health insurance represents a serious financial loss to hospitals.
How much of a financial loss?
The answer can be calculated using the following statistics:
800 patient panel size per primary care provider
5% annual hospitalization rate for people on employer-sponsored health insurance
22% annual ER visit rate for people on employer-sponsored health insurance
$27,932 average allowed amount per hospitalization for patients on employer-sponsored health insurance
$2,453 average allowed amount per ER visit for patients on employer-sponsored health insurance
Result:
Each primary care provider reduces hospital revenue by approximately $298,000 per year through decreased hospitalizations and decreased ER visits.
Direct Primary Care Overview Video HERE: • Direct Primary Care Ov...
Ideal Health Plan Using Onsite/Near Site Clinic Video HERE: • Roadmap to High Perfor...
Sources:
www.cdc.gov/nc....
www.kff.org/he...
www.healthsyst...
www.healthsyst...
www.usinflatio....
www.kff.org/he...
www.healthsyst...
www.cdc.gov/nc...
www.rand.org/n....
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[@drrouzbeh]

Thanks Dr. Bricker. Excellent insights as always. It’s mind blowing that we have incentive systems that are designed to make the system less efficient and cost effective AND make the population sicker. We need to rethink how to align the incentives so hospital systems also win when people are healthier and demand on the system is lower…

[@ahealthcarez]

#Agreed. Thank you for watching.

[@drmoczygemba]

Its called the medical loss ratio in the ACA

[@AbebaYohaness]

Hello i am phermacy tecnaiain and health care so intrested

[@radicalhealthcareguy]

Thank you Dr. Bricker. Can you point out the source that references 5% hospitalization?

[@ahealthcarez]

Sources in video description. Thank you for watching.

[@BodyBalanceBlueprint-qh2im]

It helped a lot

[@Acer2K45]

From a clinical perspective, this sounds great - lower ER admissions and hospitalizations. But obviously from a financial perspective, it is terrible for revenues (although reviewing how much profit they're actually making regarding service margin is another factor). How do you think we can get these incentives better aligned in the future?

[@ahealthcarez]

Hospitals need to run their own health plans/Medicare Advantage plans, receive premium and take risk.

[@danielmcclintock9623]

Is that what HMO’s / Kaiser Permanante does?

[@bradtomlin6621]

So how is that affected if the hospital system owns the majority of PCP’s in an ACO?

[@ahealthcarez]

Good question. The ACO would not apply to the patients with commercial insurance… just as Medicare. Question would be… who are the PCPs the commercial patients are seeing. The hospital PCPs will just bill them fee for service and refer to specialists, boosting their revenue and increasing healthcare costs.

[@CALifelongLearner]

Thank you for another excellent video! I agree that non-FFS models are great for decreasing healthcare expenses, especially for employers. I am curious about the difference in health care costs incurred by an employer if they have an employee with a serious medical condition (ie, cancer) that requires expensive, specialized care that exceeds good primary care. Would it still be more cost effective for the employer to offer that employee a non-FFS health benefit or a conventional employer-sponsored plan with a commercial payer? Would the commercial payer increase premium costs for an employee like this?

[@ahealthcarez]

For complex specialty care like oncology, direct contracting with a particular hospital system and oncology physicians is what some employers are doing (e.g. Walmart with Mayo Clinic).

[@Brightmdapps]

Can you do similar analysis for fee for service oriented primary care practices that are unaffiliated with multispecialty health systems? E.g., a standalone internal medicine or family medicine practice.

[@ahealthcarez]

Thank you for your suggestion.

[@christophermoriarty7843]

Do you think this pressure will cause hospitals to switch their primary care payment structure away from fee for service?

[@ahealthcarez]

One can always hope. Thank you for watching.

[@robert-rv8lo]

I'm not sure I follow how primary care loses money for hospitals. If I go to my PCP, and they refer me to a gastroenterologist for a colonoscopy, doesn't that increase money to the hospital that performs the colonoscopy? Unless the plan is an HMO plan where the hospital/clinic is owned by the insurance company, the PCP has little if any financial incentive to not refer me for the procedure.

[@ahealthcarez]

They would refer you to an independent ASC or endoscopy center with a gastroenterologist who is not affiliated with the hospital… less expensive for the patient out-of-pocket That is the incentive. Thank you for watching.

[@robert-rv8lo]

@@ahealthcarez ah yeah usually if my doctor refers me I just tell them where I think they should refer me to, since I know which places already have me in their chart.