Frank J. Lexa, MD, MBA, FACR · • Aetna/Humana -37 billion merger- stopped due to Federal ruling • Anthem/Cigna- 54 billion- DOJ suit to stop acquisition of Cigna. Turned into

Copyright 2017, Frank J. Lexa, M.D

Frank J. Lexa, MD, MBA, FACR

Professor and Vice Chair for Clinical Affairs and Operations, Department of Medical Imaging,

the University of Arizona-Tucson

Chief Medical Officer, The Radiology Leadership Institute and Chair, Practice Leaders

Commission, the American College of Radiology


Disclosures

• Dr. Lexa has no relationships with ACCME defined commercial interests.


Acknowledgments

• Member of the Scenario and Wicked Problems Action Group- ACR

• Members and staff of the Future Trends Committee-ACR

• Friends, family and Wharton colleagues who have helped supply and refine the strategic work that I do


Goals for This Session

• Briefing on the most important factors that will transform and (perhaps) destroy elements of US radiology

• Take a look at the horizon- what we know, what we think might happen

• Discuss what you should be doing now to prepare for a future that is very different than the one you thought that you would be living in


Shocks and Awe

1. Insufficient government support

2. Attempts to address value in health care systems

3. International Perspectives and Globalization

4. Shifting from Value to Volume in the USA

5. Devaluation of Radiology

6. Radiologist employment by hospitals & corporations in a consolidating world

7. Labor Issues

8. Disorganized Radiology


#1 Insufficient government support

• Many nations have cut back on support for radiology capital costs- imaging equipment, IT infrastructure- most of the EU has decreased (2013 compared with 2009)-especially- Greece, Italia, Portugal

• Reduced salary support

• Reductions in educational and training support

• Increased rationing of care, particularly expensive elements


Population changes that affect radiology:

Percentage of population that is paying for health care

costs for the whole society

Percentage of population with high health needs

Demographic effects


Western US: Decline in Reimbursement


Private Sector Mirrors and Side effects

• High deductibles- both volume reductions and reduced reimbursement

• Narrow networks and steerage

• Rationing within value based incentive plans


#2 Attempts to address value inhealth care systems


If value means outcomes/cost then some nations have problems


How do we measure value:Caveat-Do outcomes=value?

Gun violence

Recreational drugs

Smoking

Unsafe sex

Helmet laws, etc.


#3 International Perspectives and Globalization

• International comparisons on service, quality

and salary

• Heightened expectations from ROW

• Unfavorable cost comparisons

• Rationing

• Direct deflationary pressure


Global Pricing Comparisons

http://www.healthbase.com/


#4 Shifting from Value to Volume in the US

“FFS is the dominant physician payment method in the

United States,[1] it raises costs, discourages the

efficiencies of integrated care,….”

- 1 Robert A. Berenson & Eugene C. Rich (June 2010). "US approaches

to physician payment: the deconstruction of primary care". Journal of

General Internal Medicine 25 (6): 613–618

.

http://en.wikipedia.org/wiki/Fee-for-service


CMS- Mission Accomplished

HHS has set a goal of tying 30 percent of traditional, or fee-for-

service, Medicare payments to quality or value through alternative

payment models, such as Accountable Care Organizations (ACOs)

or bundled payment arrangements by the end of 2016, and tying 50

percent of payments to these models by the end of 2018. HHS also

set a goal of tying 85 percent of all traditional Medicare payments

to quality or value by 2016 and 90 percent by 2018 through

programs such as the Hospital Value Based Purchasing and the

Hospital Readmissions Reduction Programs. This is the first time

in the history of the Medicare program that HHS has set explicit

goals for alternative payment models and value-based payments.

News Release, HHS, Jan 26, 2015, www.hhs.gov/news


Value: Payment plans, organizations and informal contracts

• PQRS now MACRA/MIPS

• ACO- Medicare Shared Savings Model-Federal

• ACO-Pioneer Model

• Private sector ACOs,

• CCOs, CPCI

• Bundling Contract and other forms of at risk contracting


Real value creation vs. simplistic notions of radiology value

• Old PQRS system

• New MIPS system


Measuring Hospital Value?

The are over 1000 hospitals in the US that

currently market themselves as being “Top 100”-1

1-The Digital Doctor- Robert Wachter page 40

There are only 5,686 hospitals in the US


Do Health Care Expenditures Create Value?

Copyright: Frank J. Lexa, M.D., MBA, 2012

“There is no correlation between the heightened

spending and the health of the country’s citizens.”

- Lei Haihao, deputy director general of

the Beijing Health Bureau

Burkitt L. “China Calls for Health System Overhaul.” WSJ. July 25, 2012:A10.


The McNamara Fallacy1. Measure whatever can be easily measured

2. Disregard whatever cannot be measured easily

3. Presume that whatever cannot be measured easily is not important

4. Presume that whatever cannot be measured easily does not exist

• Perverse blindness to economic reality-fjlCoined by sociologist Daniel Yankelovitch, cited at http://chronotopeblog.com/2015/04/04/the-mcnamara-

fallacy-and-the-problem-with-numbers-in-education/ accessed on 3-23-2016

http://chronotopeblog.com/2015/04/04/the-mcnamara-fallacy-and-the-problem-with-numbers-in-education/


Challenge #5 Devaluation of Radiology


Throwing Down the Gauntlet

We suggest that Medicare immediately expand the current program

nationwide. As soon as possible, Medicare should extend competitive

bidding to medical devices, laboratory tests, radiologic diagnostic

services, and all other commodities.12 Medicare's competitively bid

prices would then be extended to all federal health programs.13 To

oversee the process, we recommend that Medicare establish a panel

of business and academic experts. Finally, we recommend that

exchanges — marketplaces for insurance starting in 2014 — conduct

competitive bidding for these items on behalf of private payers and

state employee plans. N Engl J Med 2012; 367:949-954September 6,

2012DOI: 10.1056/NEJMsb1205901

Authors on next slide


Labor- Changing relationships of primary and specialty MD’s


Devaluation of specialists(and radiologists in particular)


#6-Radiologist employment by hospitals

& corporations in a consolidating world

• Will corporate employment change the nature of radiology

• Will independent practice of radiology survive-the Australia story

• What motivates corporations? What motivates venture capitalists and private equity investors?• The story of a neuroradiologist in the world of VC


Hippocrates vs. Corporate cultureDeclaration of Geneva, WMA

• At the time of being admitted as a member of the medical profession:

• I solemnly pledge to consecrate my life to the service of humanity;

• I will give to my teachers the respect and gratitude that is their due;

• I will practise my profession with conscience and dignity;

• The health of my patient will be my first consideration;….


Private Equity and Venture Capital

Top three drivers of behavior in private equity investment firms

Return on investment




Hospital Consolidation-

Mergers and “non mergers”

• 2015 and 2016 saw continued M and A activity on the hospital

side along with concomitant activity in “non mergers”-

• Affiliations and partnerships

• (lower level of scrutiny from FTC)

• Strategic drivers:

• Growth

• Cost reduction

• Population health and other value based care participation



Mergers



Mergers

https://www.nurses.com/doc/hospital-merger-acquisition-according-kaufman-analysis-0001



Mergers

https://aharesourcecenter.wordpress.com/category/health-care/hospitals/mergers-and-

acquisitions/


Payer Consolidation attempts

in 2016 and outcomes

• Aetna/Humana -37 billion merger- stopped due to Federal

ruling

• Anthem/Cigna- 54 billion- DOJ suit to stop acquisition of

Cigna. Turned into a hostile takeover by Anthem. Ended in

2017

• Centene/HealthNet- 6.3 billion dollar merger. Large medicaid

mco.


Matters of SizeFrom Radiology Business, Radiology 100 lists


Matters of SizeFrom Radiology Business, Radiology 100 lists

More impressive to look at reduction in the small ones


Matters of Size

What is a Dunbar number and why does it matter?


Value, service and

size in medicine


#7 Labor issues

2015 results

Chen, J and M Heller, “How Competitive in the Match for Radiology Residency?

Present view and historical perspective”, JACR 11(5) p 501-6, 2014


#7 Labor issues

2015 results




#7 Labor issues

1- Are there enough radiologists in the labor pool now

2- Do radiologists want to provide the types of services that hospitals want in 2016- call coverage, specialty coverage, etc.

3- Do enough medical students want to become radiologists and are they the right people?

4- Shortage in US of US medical school graduates interested in diagnostic radiology in past few years




>2X Studies Between 1999-2010

McDonald RJ et al. Acad Radiol 2015


6X Images Per Exam from 1999-2010



~10X Images Interpreted Between 1999-2010



Burnout is not the same as unhappiness, but that is part of it

• Unhappiness is highly individual, subjective and ultimately an existential issue. Not always addressable by changing the work environment. Best that you can do is provide a work environment that allows people to be happy and not one that makes a reasonable person unhappy at work and in bad cases beyond

• Gunderman RB and D Moneva “Unhappiness and the Radiologist” JACR 13(5) p 582-584, May 2016


Unhappiness is a big issue for us. Likert scale by specialty:

Peckham, Carol Physician Burnout: It Just Keeps Getting Worse. Medscape. Jan 26, 2015, accessed on May 9, 2016 at

http://www.medscape.com/viewarticle/838437_2

Gunderman RB and D Moneva “Unhappiness and the Radiologist” JACR 13(5) p 582-584, May 2016


Burnout is prevalent in US medicine including radiology:

Peckham, Carol Physician Burnout: It Just Keeps Getting Worse. Medscape. Jan 26, 2015, accessed on May 9, 2016 at

http://www.medscape.com/viewarticle/838437_2


Misperception: focus on lagging (late) indicators of burnout

• Dysfunction at work:

• Poor performance

• Malpractice

• Overt anger- yelling, throwing, verbal and physical abuse

• Inappropriate behavior


High Burn-Out in Neuroradiologists Overall

Compared with five years ago, have you

experienced

J.Y. Chen and F.J. Lexa Baseline Survey of the Neuroradiology Work Environment in the United States with Reported

Trends in Clinical Work, Nonclinical Work, Perceptions of Trainees, and Burnout Metric American Journal of

Neuroradiology July 2017, 38 (7) 1284-1291; DOI: https://doi.org/10.3174/ajnr.A5215

http://www.ajnr.org/content/38/7/1284


Serious Practice and Specialty Issues Are Developing through Cut-Backs of Sustaining Activities

Over the last few years, how often do you have to cut back on the following

things because your clinical duties leave you inadequate time?

0%10%20%30%40%50%60%70%80%90%

100%

Always

Frequently

Sometimes

Rarely

Never

J.Y. Chen and F.J. Lexa Baseline Survey of the Neuroradiology Work Environment in the United States with Reported

Trends in Clinical Work, Nonclinical Work, Perceptions of Trainees, and Burnout Metric American Journal of

Neuroradiology July 2017, 38 (7) 1284-1291; DOI: https://doi.org/10.3174/ajnr.A5215

http://www.ajnr.org/content/38/7/1284


#8 Disorganized Radiology

➢More than 50 organizations in the US alone send representation to

the Intersociety meeting each year

➢Overlapping missions, costs, meetings, journals etc.

➢Both academic and private practices are reducing both money for

supporting these organization and money and time for attending their

meetings

➢Most will be weakened and some will be lost

Unsustainable Number of Organizations

In Radiology


Thanks!

Documents

Frank J. Lexa, MD, MBA, FACR · • Aetna/Humana -37 billion merger- stopped due to Federal ruling • Anthem/Cigna- 54 billion- DOJ suit to stop acquisition of Cigna. Turned into