Watson has noticed a common theme among struggling hospitals: they are having trouble transitioning away from a traditional hospital-centered, physician-centric care delivery culture. Physicians, administrators and hospital staff have traditionally depended on the volume of patients entering the doors of the hospital - now that's changing.
Over the last couple of years, payers and their method of compensating physicians and hospitals, and the impact of local and regional regulations, has dramatically changed the way hospitals are reimbursed for patients who enter the hospital. Payers have not yet fully changed how they reimburse hospitals, forcing hospitals and health systems to straddle two care delivery worlds.
Hospitals rationalize their lack of change by claiming if they operate in anticipation of what is coming in the future, they will be giving away revenue they can rightfully collect now, since the payers haven’t moved fully to a new system of reimbursement. Differences in local and regional regulations adds another level of complexity due to how much they vary from region to region.
These variations can greatly impact how a hospital system operates. "For example, working in New York, versus in North Carolina or Boston can be deifferent because the state regulations and other constraints change delivery and reimbursements," Watson said.
This lack of consistency between state regulations and payer reimbursement combines to keep health systems from successfully transforming from a physician-centric model to a value-based consumer model. "They know changes are coming, and coming rapidly," Watson added. "Yet the status quo in reimbursements and the current model incentivizes a hospital or IDN to stay in the old model as long as possible to maximize revenue."