PPACA: Be Careful What You Wish For

The Patient Protection and Affordable Care Act (PPACA) frenzy is in full swing as healthcare organizations grapple with what 2014 – and now 2015 – will have in store for them.

What I think often gets lost on political pundits, straight journalists and industry professionals is that the PPACA is ultimately an insurance law designed to:

§  Drive down costs;

§  Create greater ease of access to care for patients;

§  Bring accountability to the money that’s being spent by the government for care by the provider and the consumer.

Audits of the healthcare insurance industry have found that it is not unusual for over 35% of their funds to be spent on administrative costs. One provision of the PPACA mandates that private organizations devote 85% of their premiums to actual care for the patient, with only 15% being allowed for administrative costs. And that’s only one example…there are many more that get even more complicated.

One only needs to look at the California market to get an idea of how the PPACA will operate. Thanks to efficiency initiatives from companies like Kaiser Permanente and Intermountain, we now know it is possible to achieve that 85-15 split.

One of the challenges to driving down costs is the massive influence of large hospital systems that have diversified to offer comprehensive services, rather than strictly in-patient care of the very sick.

The result has been for hospitals to command their local market.

The caveat to that is, if one were to assume that care is identical from one doctor to another, then the cost to deliver that care, in a hospital system, is five to ten times more expensive. Any organization, or a practice, which is associated to a hospital system is expected to bill more than an independent doctor’s office.

It is my position that there is a need for the independent doctor to have a voice in the delivery of care to their patients, without such influences as a hospital system dictating how. If the doctor’s expertise is equal between a hospital or a private practice, then the cost of quality care is lower at the doctor’s office – without taking anything away from patient needs. The fact that hospitals provide more services under one roof doesn’t guarantee that the care they deliver is better, or that it meets the three objectives of the PPACA.

In my next blog I will write about Independent Practice Associations and the vital role they will play in the next two years.

Ester Horowitz 
Healthcare in Compliance 
witsowitz@verizon.net 
877-990-6828

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