Health Reform is Driving Hospitals and Physicians Together, But They Must Overcome Trust and IT Issues, Find PwC Surveys

NEW YORK, Dec. 7, 2010 /PRNewswire/ -- Health reform will require hospitals and physicians to engage in more intense levels of collaboration and information sharing. However, PwC surveys found both groups have issues to overcome with each other. For example, one in five physicians doesn't trust hospitals, and six in 10 hospitals think it will be difficult to get health information from community physicians to provide more effective, efficient care.

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To help hospitals and physicians overcome barriers to working together, PwC's Health Research Institute has released two reports. From Courtship to Marriage is the first of a two-part PwC report that explores why health reform is driving hospitals and physicians closer together, and what they need to form a more perfect union.  In Designing the health IT backbone for ACOs, PwC explores the collaboration of hospitals and physicians within accountable care organizations and their need for technology infrastructure to better share information.

Hospital-Physician Alignment

The relationship between hospitals and physicians was strained after hospitals bought then sold hundreds of physician practices in the 1990s, after which many physicians opened competing outpatient surgery and imaging centers and specialty hospitals.  PwC found that health reform is reversing the trend, and many physicians now say it's better to align with hospitals than to compete with them.  From Courtship to Marriage includes findings of a PwC survey of more than 1,000 physicians across the country, which found that more doctors are aligning with hospitals for financial security and to participate in new payment arrangements. PwC's research found:

• Nearly three-fourths (71 percent) of physicians surveyed already have aligned financially with hospitals through employment, joint ventures or directorships, and 58 percent said they want to move toward an even closer financial relationship with hospitals.  Nearly one-quarter (24 percent) said they already work primarily in hospital practice settings.
• Among specialties, cardiology is the most interested in being employed by hospitals and orthopedics is least interested.  Two-thirds (63 percent) of cardiology specialists – compared to 48 percent of primary care physicians and 45 percent of all other specialists said they are interested in being employed by hospitals.  The cardiology specialty has been among the most lucrative of all physician specialties, but it has experienced the deepest cuts in Medicare payments.  Physicians interviewed by PwC expressed fear that this is a precursor for further future cuts in other specialties.
• When asked why they want to align with hospitals, physicians cited relief from growing financial and administrative burdens and fear of income loss in anticipation of reimbursement cuts. Sixty-three percent of physicians are looking to align with hospitals for better work-life balance; 56 percent want to increase their incomes; and another 40 percent are looking for a more consistent income stream.
• When asked why they think hospitals are motivated to align with them, 68 percent of physicians said they believe that, first and foremost, hospitals are looking to consolidate market power to negotiate reimbursement rates with payers.  But 64 percent believe hospitals need to improve patient outcomes and 56 percent think hospitals want to align with physicians to enhance coordination of patient care.  
• More than half (54 percent) of physicians believe that hospitals and physicians will become more closely aligned over the next five years as more hospitals participate in accountable care organizations.

"Old incentives that rewarded hospitals and physicians for the volume of sick patients treated are being replaced with new incentives to improve health outcomes and keep people well," said Kelly Barnes, US Health Industries leader, PwC.  "Better quality will finally pay off, but hospitals and physicians need to work together.  Hospitals are looking to provide physicians with appropriate incentives and develop their trust by sharing information, working together on infrastructure and collaborating in governance so that both sides have skin in the game."

Information Sharing in Accountable Care Organizations

In a companion report entitled, Designing the health IT backbone for ACOs, PwC's Health Research Institute explores the need for a technology infrastructure to support information-sharing in accountable care organizations (ACOs).  It is the second in a series of reports on the IT implications of health reform, and includes findings of a survey of more than 300 executives and administrators from hospitals, physician groups and other large provider organizations.  

Patient information is often lost in the handoffs among preventative, primary, acute and chronic care providers. However, accountable care organizations can't afford to let that happen as they manage patients' health across the entire continuum of care.  An ACO network can include hospitals, physicians and other organizations aligned by incentives to share the risks and rewards of keeping patients healthier longer and delivering better, more efficient care. According to PwC, the success of an accountable care organization will hinge on its ability to exchange individual information across different organizations as well as look for patterns, clues and connections that can make disease management more predictive and preventative.

PwC's research found that many of the IT requirements of information sharing in an ACO center on achieving, at least, stage 2 of "meaningful use" requirements for receipt of federal stimulus funding.  "Meaningful use" requirements are driving hospitals and other health providers to use health information exchanges, and organizations already belonging to these exchanges are well positioned to participate in accountable care organizations.  PwC's research found the following:

• Twenty-one percent of healthcare providers are already participating in some type of health information exchange, and another 31 percent plan to participate within the next year.
• While only 6 percent of health organizations are currently participating in a functional ACO, another 13 percent said they would do so within the next year.
• Providers already participating in a health information exchange are more than twice as likely to participate in ACOs as those not in a health information exchange.    Nearly one-fifth (21 percent) of HIE participants said they are participate in an ACO now or will be in the next six months, compared to only 8 percent of non-HIE participants.  
• Half of organizations that are participating or planning to participate in an ACO expect to address the IT requirements needed to share information through existing or newly built private networks rather than through local or regional health information exchanges or partnership with integrated delivery networks or payers.

PwC found that most hospitals have primarily had internal discussions with their own medical staffs about participation in accountable care organizations, and have only recently begun discussions with community physicians and other providers. They anticipate difficulty in getting the information needed from outside their organizations. Sixty percent of hospital executives surveyed said they expect they will have the greatest difficulty getting information from community physicians in an ACO, yet only one-third of hospitals started discussions with them regarding ACO participation.

A full copy of PwC's reports From courtship to marriage: Why health reform is driving physicians and hospitals closer together is available for download at www.pwc.com/us/ACOalignment.   A copy of the report Designing a health IT backbone for ACOs: Hospitals look to meaningful use and health information exchanges to guide them is available at www.pwc.com/us/ACOHIT. This is the first in a three-part series on accountable care organizations.  Subsequent reports will focus on clinical informatics and business intelligence in ACOs and on the financial/administrative requirements of ACOs.

Methodology

For the study on hospital-physician alignment, PwC commissioned in the summer 2010 an online survey of more than 1,000 physicians across the country, balanced by age, gender, practice type and specialty.  In addition, PwC Health Research Institute conducted 15 in-depth interviews with thought leaders and executives representing healthcare providers, payers and professional associations.    For Designing a health IT backbone for ACOs, PwC commissioned in the fall 2010 an online survey of more than 300 healthcare executives and administrations and conducted nine in-depth interviews with thought leaders and executives in the healthcare provider arena.

About PwC's Health Research Institute (HRI)

PwC's Health Research Institute (www.pwc.com/hri) is an unparalleled resource for health industry expertise. By providing cutting-edge intelligence, perspective and analysis on issues impacting the health industry, HRI assists executive decision-makers and stakeholders worldwide in navigating their most pressing business challenges. PwC is one of the only firms with a dedicated global healthcare research unit, capitalizing on fact-based research and collaborative exchange among our network of professionals with day-to-day experience in the health industries.

About PwC's Health Industries Group

PwC's Health Industries Group (www.pwc.com/healthindustries) is a leading advisor to public and private organizations across the health industry, including payers, providers, academic institutions, health sciences, biotech/medical devices, pharmaceutical companies, employers and new non-traditional market participants in the dynamic healthcare space. PricewaterhouseCoopers has a network of more than 4,000 professionals worldwide and 1,200 professionals in the U.S. dedicated to the health industries.

PwC's Health Industries' clients include 40 of the top 100 hospitals in the U.S. and 16 of the 18 best hospitals as ranked by US News & World Report; all 20 of the world's major pharmaceutical companies; all of the top 20 commercial payers in the U.S.; municipal, state and federal government agencies and many of the world's preeminent medical foundations and associations. Follow PwC Health Industries at http://twitter.com/PwCHealth.

About the PwC Network

PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information.

© 2010 PwC. All rights reserved. "PwC" and "PwC US" refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

SOURCE PwC