Canadian Healthcare Funding

The U.S. Supreme Court is set to rule yet again on the Affordable Care Act in June. Their large ruling thus far declared Obamacare legal because it is a tax. This next ruling regarding the legality of federal subsidies is also poised to send shockwaves throughout the country. Discussions about healthcare reform in the United States often contain references to Canada, but many of those references are inaccurate. The intent here is not to discuss healthcare reform in the U.S. nor other healthcare systems (socialized or otherwise). Rather, this is a clarification on what occurs in Canada. This will be a brief (short and to the point like all my posts) three-part summation. Last week we took a brief look at the Canadian physicians. Next, let’s take a look at how healthcare in Canada is funded.

In 1966, Canada enacted their single payer system (akin to Medicare in the U.S.) and in 1984, the Canada Health Act passed. The government funding accounts for about 70% of national healthcare expenditures, with the remaining 30% being covered by private insurance (usually supplemental-type insurance). Some items that generally are not covered by the government include:

  • Dental care
  • Eyeglasses
  • Prescription drugs (Canada is reportedly the only country with a universal healthcare system that does not cover prescription medication.)
  • Assisted living and caregivers
  • Hearing aids

There are other healthcare services that are also not fully covered by the government because they are not deemed “essential”.   Some examples include infertility treatments, cosmetic surgery, and some forms of elective surgery. All of these items I have just listed can be paid out-of-pocket or through private insurers. It is important to note that each province in Canada does have the ability to partially cover some of these expenses. Because of this, there are considerable differences across the country with respect to what services are covered in some fashion.

Family doctors receive a fee per visit. This fee is negotiated annually between the province and the medical society. Physicians are not allowed to charge a user fee to patients for services which are covered by the government.

The percentage of GNP in Canada used on medical care is approximately 4% less than in the United States. In 2000, the World Health Organization ranked the Canadian healthcare system 30th in the world and ranked the United States 37th. There is much talk in Canada these days about the future of its healthcare system as they are currently experiencing a funding gap of approximately $537 billion. Much of the dialog is made up of what one would expect: reform, increase taxes, further reduce services, or all of the above.

Next Monday is our final chapter in this three-part series and we will take a brief look into the structure of the healthcare system.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

Canadian Physicians

The U.S. Supreme Court is set to rule yet again on the Affordable Care Act in June. Their large ruling thus far declared Obamacare legal because it is a tax. This next ruling regarding the legality of federal subsidies is also poised to send shockwaves throughout the country. Discussions about healthcare reform in the United States often contain references to Canada, but many of those references are inaccurate. The intent here is not to discuss healthcare reform in the U.S. nor other healthcare systems (socialized or otherwise). Rather, this is a clarification on what occurs in Canada. This will be a brief (short and to the point like all my posts) three-part summation. First, let’s take a look at the physicians.

Numbers

The number of physicians in Canada is at an all-time high with more than 75,000 currently in practice. This equates to approximately 215 physicians per 100,000 people, which is up 4% from the prior year. In fact, the number of physicians per capita has increased for the past 6 years. I think it is important to also note that 15.3% (5.3 million people) of the population are of age 65 years or older.

Structure

Many Canadian physicians are not government employees, but rather are self-employed. Since Canada has a publicly funded healthcare system, patients are entitled to “essential” health services at no charge and may choose the physician they wish to see. Just as in the United States, the self-employed physicians set their own work hours and choose their desired location. They also are responsible for paying their own practice expenses such as staff salaries, office rent, operational expenses, etc.

Reimbursement

Canadian physicians bill the government for services rendered in taking care of patients. Although the Canadian system is often classified as socialized medicine, it actually consists of many private practice physicians billing the government for reimbursement. The reimbursement, indeed, comes from a publicly-funded structure. On average, patients over the age of 65 spend approximately $5,400 annually in out-of-pocket expenses.

Next Monday we will take a brief look into the system funding and patient fees.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.

Concierge Medicine vs. Direct Primary Care

The shortage of physicians was already an issue in the United States … and then came the Affordable Care Act, which exacerbated the problem immensely.  In fact, the Association of American Medical Colleges now estimates that there will be a shortage of 91,500 doctors by 2020.

This added demand for healthcare means physicians will simply have less and less time to spend with patients.  Moreover the increase in paperwork and administrative burdens placed on physicians over the past few years has many physicians questioning their career choice.

Consequently, more and more physicians are looking at concierge models.  There are several things to consider before making a change from a traditional practice model.  As you begin to weigh this consideration, keep in mind that there are three primary routes: concierge, direct primary care, and hybrids.

Concierge

There are many varieties of concierge medicine, but the traditional form is where the patient pays a monthly fee or annual fee that gives them direct access to the physician.  The practice profits not only from this fee but also bills insurance companies for visits.

One benefit of this approach to the provider is having a small, preset number of patients to care for, which allows for a more personal interaction with patients.  From the financial side, practices may collect money from two streams and thus not be as concerned with fighting insurance companies as they would in a traditional medical practice.

One key drawback is that if the provider is still accepting Medicare (or commercial payers with nondiscrimination clauses in their contracts), then the provider is subject to those government regulations for payment (e.g. meaningful use).

Direct Primary Care

With the direct-primary-care model, many providers do not take insurance at all, but rather rely solely on the monthly/annual fee from patients.

As with the concierge model, providers benefit from being able to keep their practice small and tailored to how many patients they wish to see.

As far as pros and cons, they are fairly reversed from the concierge model.  A key benefit from not taking insurance is that the practice is not subject to Medicare regulations.  The practice also does not have to concern itself with contracting and credentialing with insurance companies, nor worry over denials, pre-certification, collecting co-pays, etc.

A drawback, however, is that there is only one source of revenue: from the patient.  Consequently, the practice must be diligent with its financial planning to ensure the patient fees are enough to support the practice operations.

Hybrid

The last model is a hybrid of a traditional practice and the concierge model.  Essentially, providers with a hybrid model have a number of patients in the practice in the traditional sense and a smaller set of patients that are under the concierge model.

A practical reason to go with this approach is that it allows you to determine if eventually going entirely off of a traditional practice model is right for you.  Physicians also like this model because they are able to retain many of their established patients (under the insurance payment side) without have to hand them off to another practice.

A key downside, however, is that this model takes a lot of operational planning and scheduling finesse because, simply put, patients paying a fee for concierge medicine expect to be at the front of the line.  This does not have to be an internal juggling act, but rather does take significant planning and staff training.  Another downside is that the practice still has a significant number of traditional patients, and thus it is subject to some of the insurance rules and regulations mentioned earlier, as well as the continued headaches of billing and collection.

If you are considering taking your practice in one of these directions, there are many things to consider.  New providers or providers new to an area may consider a concierge or direct-primary-care model, whereas providers with existing practices who are contemplating a change may want to start slowly by implementing a hybrid model.

Hiring a consultant to help guide you in the right direction will be money well spent, especially given that such a change in your practice means changing your financial operations and marketing.

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Contact ABISA, a consultancy specializing in solo and small group practice management.  Visit us at ABISALLC.com.

Medical Device Integration

Medical device integration is the process of taking critical patient data from electronic medical devices and integrating the data into an electronic medical record (EMR). Such integration reduces inaccuracies which normally occur during data transfer. Additionally, medical device integration benefits medical providers since they receive more frequent updates while they are away from their patients, thus increasing operational efficiencies.

The West Health Institute just released the results of a survey on medical device integration. The survey (conducted by Harris Poll) polled nurses with a title of RN or higher and with an education of BSN or higher. Here are some highlights of the survey’s findings:

90% of U.S. hospitals use 6 or more types of devices that could be integrated with EMRs, but only 1/3 actually integrate medical devices with their EMR

89% stated they access EMRs during their shifts

67% of respondents interact with medical devices at the patient’s bedside

41% reported spending 3 hours or more per shift working with medical devices

91% stated they would spend more time hands-on with patients if they could spend less time dealing with devices

50% reported having witnessed a medical error due to lack of device coordination

93% of respondents strongly agree that medical devices should be able to seamlessly share data with one another automatically

48% of nurses surveyed estimate that as many as 1 in 4 medical errors and adverse events might be prevented in a system where all hospital devices seamlessly shared information in an automatic, coordinated and connected manner.

The survey also reported that for the hospitals that do invest in medical device integration, the average number of devices that are integrated in those hospitals is 3 or less.

The survey can be found here.

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Contact ABISA, a consultancy specializing in solo and small group practice management. Visit us at ABISALLC.com.