A Two-Tier Medical System

Most likely there will be at least two-tiers to our healthcare system:

Tier I will be the base system of care available.

For chronic diseases, patients will be driven into integrated delivery systems run either by hospitals or large provider groups.
There will not be enough physicians to service all the patients nor will there be enough money to service all the needs or to attract more doctors into the system. Care may need to be rationed.
This system will be dominated by the traditional medical model.
Doctors will be compensated via third party reimbursement models, most of which will be part of a “bundled” payment based on clinical outcomes.
Most doctors in this system will be employed by large healthcare organizations. Physician compensation will be driven down, however there will be opportunities for entrepreneurial doctors to own and operate these systems. To be successful, the system will need to take risk and prove it can produce clinical outcomes.
Tier II will be the optional healthcare system where patients seek more personalized, multi-dimensional care.

Included in this system will be traditional medical doctors and alternative practitioners.
The system will be more preventative oriented rather than “repair-oriented”, directing people toward lifestyle change and treatment strategies that will contribute to optimal levels of health.
The system will include traditional and non-traditional care, including devices and therapies that involve laser, electrical, and energy medicine.
Tier II will be a cash based system where providers will compete with each other and with other retail outlets for the private healthcare dollar.
To be successful, providers will need to capture most of the healthcare dollar they generate rather than spreading it among hospitals, vendors and pharma companies
This “Two Tier System” is already in effect in a less defined way. In the last five years, there were more visits to alternative practitioners than in the traditional medical system. Consumers are paying more out of their pocket for healthcare every year. Corporate America has gotten into the game of “Retail Medicine” with Walgreens and CVS providing nurse practitioner services. Many patients are floating between multiple practitioners based on their particular healthcare need.

What does not exist today, however, on a mass basis, are the vertically integrated healthcare delivery systems. These will become much more prevalent over the next couple of years. Many large hospital systems have already begun to position themselves by acquiring physician practices and employing providers. This will occur on an increasing basis.

Which Tier will be the best fit for you as a physician? That depends on your personality, goals and desire for entrepreneurialism. One thing for sure; each physician will need to decide in which tier they will practice. To be a Tier I service provider, you will need to take an aggressive approach to re-position your practice to appeal to the cash consumer. Becoming a Tier II provider will require less change however the rewards are likely to be less as well. You can expect that most providers will be approached to join up with some form of vertically integrated system. How or if you will get paid is yet to be seen. All providers need to get ready, watch and interpret how the landscape changes, and make their move.

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1 Comment
#1 by Chris Carraway, DC on November 24th, 2010

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The landscape is changing for sure. It is time to work toward reinventing all or part of our practices. This article does a fine job of bringing in to focus some of the likely changes that we are going to see in the not so distant future.

I have long thought as a doctor of chiropractic that there should be one big chiropractic office in each town. All the chiropractors in that town, work in that office. Using the same staff and phone lines and xray machine. Get the picture. Huge savings and more profit. Offer 24 hour service in some cases for docs who are into that.

Re-organize, re-invent, re-tool and help more patients and your bottom line.