Thursday, August 22, 2013

Transitioning from Fee-For-Service to Fee-For-Value....a lot can happen in five years

Some believe that the transition from fee-for-service (FFS) to fee-for value (FFV) payment is still at least five years away….but a lot can happen in five years.  Consider how 2013 Philadelphia Phillies disappointing season came to be or Albert Pujols who'll be collecting game checks from the disabled list for the remain of the season.

Five years ago, the Philadelphia Phillies were one of the most dominant teams in MLB and on their way to winning the World Series….a little over a week ago they fired Charlie Manual, the manager that lead the team to that dominance.  In the midst of their success, they traded prospects for established veterans and signed their core players to long-term expensive deals in an effort to keep the group intact and win now by mortgaging the future.   Fast forward to today…..who could have predicted they’d become a team of oft-injured aging veterans with a depleted farm system and a culture of apathy possessing still just that one World Series ring from 2008 to mark this group’s era of success….a lot can happen in five years. 

There are plenty of opinions around when the transition from FFS to FFV will actually occur.  Is it two years, is it five?  As you’d imagine, those holding on tightest are the organizations that benefit the most from the current state.  Without forward thinking leadership with long-term vision they’ll hold onto today’s structure and the existing reimbursement models as long as possible and who can fault them.  However change is coming and some of it will be unpredictable.  Will they be ready?
In 2011, while Albert Pujols did not produce MVP seasons like in 2008 and 2009 (he was the unanimous choice) he still batted .300 was at the top of numerous offensive categories and put on a post-season performance that was epic.  He batted .350 and .478 in the first two rounds of the playoffs and joined Babe Ruth and Reggie Jackson as the only players in baseball history to hit three home runs in a World Series game at the time, becoming the first player in series history to have hits in four consecutive innings, and tied records for most hits and most RBIs in a World Series game.  That offseason he left the Cardinals as a free agent signing a huge contract with the Angels.  He struggled mightily to start 2012 and after a sub-par performance this year will now miss the remainder of the 2013 season.  The Anaheim Angels still owe him $212 million from 2014-21….a lot can happen in two years. 

Two years goes by in the blink of an eye, never mind five, ask those who’ve been around for a while.  It’s important to understand that whether you trying to build your physician network, restructure your organization to manage population health, or simply position yourself for success in a FFV world (whatever that ultimately means) that work needs to happen now. 

What has worked for us in the past is just that… the past…..and if we try too hard to hold on to today we risk leveraging our future.  The Phillies went “all in” with their efforts to keep that 2008 window open for as long as possible and they fell short of the ultimate goal.  They tried, which is great, but was it worth the risk because for the foreseeable future the organization will struggle.  Don’t drink the Kool-Aid Phillies’ fans….the window is closed.   

The Angels on the hand maybe didn’t go all in but they sure made a significant investment that after a mere two years would hardly be viewed as successful.  If Albert Pujols fails to perform at level that at least resembles his former self, how much will that investment impact the Angels going forward?

In healthcare, we have annual business development planning sessions, hire consultants to develop elaborate strategic plans, make numerous capital investments (human capital and otherwise) geared towards preparing for the future.  While the timeline may be up for debate, most would agree that this “FFV thing” is coming and significant changes are on the horizon.  The moral of this story is don’t hold onto today for too long and don’t leverage the future too much…… our long-term success will be determined by the decisions we make about where to invest today.

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