The health care industry has been in a state of flux for decades, as the rising cost and complexity of delivery services exerts pressure on providers, payers and patients alike.
But 2019 promises to be a year of some particularly dramatic changes in the local market, where new payment models are gaining traction and the battle for insured patients is heating up.
The changes are already visible in a very physical sense. Just off Interstate 10 near Siegen Lane is Ochsner’s new medical complex. The $110 million facility just opened, and includes a 155,000-square-foot medical office building and clinic, and a 30,000-square-foot, 11-bed “microhospital” that will be able to perform general, ENT, orthopedic, gynecology and urology surgeries.
Just two miles away, also prominent from I-10, is Our Lady of the Lake Regional Medical Center’s new Children’s Hospital, a $230 million facility with 80 inpatient beds and more than 350,000 square feet of patient care space that is under construction. When the state-of-the-art facility is completed in October, OLOL’s parent organization—Franciscan Missionaries of Lady Health System—will be the largest provider of pediatric services in the state.
Though Baton Rouge is adding hospital beds at a time when the number of inpatient beds nationwide has decreased some 30% since 2017, the increase will not be as great as it may seem. OLOL already has 80 beds at its existing Children’s Hospital on the Essen Lane campus. So while its new facility is much bigger than the present one—and could eventually house as many as 210 beds—it won’t immediately be adding much new inpatient capacity to the market.
Still, Baton Rouge was already a competitive —and, according to some health care analysts, overbedded—market to begin with. As Ochsner moves from the suburban periphery of the Capital Region into the heart of the health district with a major investment, the competition will only intensify.
Besides the physical changes coming to the market will be much more significant shifts in networks and alliances, as the four major providers—OLOL, Baton Rouge General, Ochsner and Woman’s Hospital—vie for a share of the insured patient population at a time when the health care payer model is quickly shifting from fee-for-service to a value- or outcome-based system.
Hospitals have been moving in this direction for several years. The pace at which they’re adopting it will quicken in 2019, as insurance companies and employers demand lower prices and new federal regulations force greater transparency in hospital pricing. Here are some of the other trends to watch for this year:
• New partnerships. Effective this year, Walmart and Sam’s Club employees in south Louisiana, including the Baton Rouge area, will be getting their healthcare benefits through the Ochsner Accountable Care Plan. An ACO is an umbrella entity that includes doctors and hospitals, contracting with health insurers to improve quality, lower costs and keep any money saved from year to year based on the arrangement with the health plan. If the providers in the ACO can’t improve care and lower expenses, they could lose out on shared savings depending on how it is structured. ACO plans like Ochsner’s are lower cost in part because choices are limited to the providers in the ACO’s networks. Look for more such deals to emerge among major employers in 2019.
• Less is more. Similar to ACO plans are “narrow networks,” value-based plans that limit the providers in a group but offer premiums and deductibles that are up to 20% lower than those offered in other group plans. Though these plans, like Blue Cross and Blue Shield of Louisiana’s Community Blue, have been slow to catch on, they’re becoming more popular, as employers realize the savings they represent. Would you join a network if you couldn’t go to your doctor at OLOL, Woman’s or Ochsner? It’s a question you or your employer could have to answer in 2019.
• Providers will be held more accountable on pricing. A new law went into effect Jan. 1 requiring hospitals to post their procedure prices online. Though critics say price lists can be misleading because they don’t take into account what a patient’s insurer will pay, the law is harbinger of what’s to come: more scrutiny over what providers are charging and why there’s so much variability between them.
• More technology. One of the ways narrow networks and ACO plans are able to keep prices down is by better managing patient health and wellness on the front end and technology is going to play an increasingly major role in this. As more patients join these networks, you’ll see a greater reliance on wearable technology—think Fitbit—that empowers patients to manage their own care by reminding them to take their blood pressure medicine, say, or monitor their glucose level.
• Monopoly by acquisition. Blue Cross and Blue Shield of Louisiana is expected early this year to finalize a deal first announced last fall to acquire Vantage Health Plan in Monroe, which, along with BCBS, was the only Louisiana insurer on the individual exchange under the Affordable Care Act. Besides growing BCBS and giving it greater economies of scale in Louisiana, the deal will give the company a monopoly on the exchange, which was a money loser for most insurers but actually proved to be profitable last year for BCBS.
Health district to get new leader, not much else
The Baton Rouge Health District will appoint a new leader in 2019, replacing outgoing executive director Suzy Sonnier (pictured). But what remains unclear in the new year is whether any other significant developments will unfold as it relates to the district’s 2015 master plan, which called for a new LSU medical school and a diabetes and obesity center. Little has been said about those plans over the past two years, so don’t expect much on that front, although you will see infrastructure developments and hear talk of continued collaboration.