O&P and Healthcare: Where Are They Heading?
September 2004 Issue
"Forecasting the future of healthcare and health policy is an imperfect science," health experts Robert J. Blendon and Catherine DesRoches noted in Issues in Science & Technology Online, Summer 2003. As we peer into the murky mists of healthcare issues a year later, this may be an understatement.
Blendon, who is a professor of health policy and political analysis at Harvard University's School of Public Health and John F. Kennedy School of Government, and DesRoches, who is a senior research associate at the Harvard School Of Public Health, list what they regard as the major challenges in US healthcare, which, of course, affect the orthotics and prosthetics profession as well:
- Rising healthcare costs: "We predicted in 1986 that healthcare spending would reach 14 percent of the nation's gross domestic product [GDP] by 2000. In 2001, it reached 14.1 percent of GDP, and it is expected to be 17.7 percent by 2012," said Blendon and DesRoches. They noted, that although managed care did restrain cost growth for a few years, the performance of individual health plans suggests that this will not be a major vehicle for future cost containment. They expect to see both business and government asking the public to pay more out-of-pocket for health insurance and care.
- Growing numbers of elderly people: "During the next decade, the proportion of US citizens who are age 75 or older will grow from 17 million to 19 million," Blendon and DesRoches estimated. Death rates are steadily decreasing; life expectancy is increasing, they pointed out. "&reduced state budgets, Medicare trust fund projections, employer reductions in retiree health benefits, and slow growth in the private long-term care insurance market suggest that the nation's older elderly will experience tiering in healthcare and shortages in some services."
- Lifestyle-related health issues, such as smoking and obesity: "&we may see businesses and government becoming increasingly involved in trying to change behaviors, in order to keep healthcare costs down," said Blendon and DesRoches. One avenue of accomplishing this might be introducing new insurance products that provide a carrot-and-stick approach: for instance, discounts for health club memberships and increased costs for smokers.
However, to Blendon and DesRoches, these are not the overriding problems. "Based on the experiences of the past decade, the biggest challenge facing the US healthcare system&is the continued failure of decision-makers to reach a consensus on how to address the major healthcare problems facing the country. Several factors contribute to this failure: declining levels of civic participation; a high level of public distrust in the federal government; growing partisanship; a hardening of ideologies; and highly organized, powerful special-interest groups."
"If this impasse could be broken during the next decade, the United States could see solutions to many of these problems," they continued. "Without such action, the trends we report on here are likely to be the factors that shape the nation's healthcare system in the next decade and beyond."
The orthotics and prosthetics field is a small but vital part of the healthcare picture to those who need its services. What trends do O&P professionals and businessmen see?
Technology and Research
O&P is rapidly heading toward computerized
technology both in the areas of digitizing patients' residual limbs
and their alignment, believes Kevin Carroll, CP,
FAAOP, vice president of prosthetics, Hanger Prosthetics
& Orthotics. Carroll foresees more use of central fabrication
and increasing use of computerized alignment equipment. "In the
future, pressure-sensing technologies will predict potential for
skin breakdown before it happens and make adjustments accordingly."
Carroll also believes that in five to ten years almost all orthotic
and prosthetic devices will contain some form of microprocessor
that will detect body movement and receive information directly
from the user.
"Other than CAD/CAM and some component advancement, there have not been a tremendous number of technological advancements in O&P, especially in orthotics," said Jim Andreassen, president, OPGA, Waterloo, Iowa. However, Andreassen sees the Stance Control Orthotic Knee Joint as a positive move forward. "I have seen them on patients, and they have literally changed lives. That's very exciting," he said. "Unfortunately, we will have to wait on reimbursement from Medicare before they will be widely accepted. I also see advancements in socket design with the M.A.S.® socket."
"The continuing improvement in CAD/CAM technologies, including orthotics, is significant," said Cathie Griffith, president and CEO of the PrimeCare Orthotics & Prosthetics Network, Cordova, Tennessee. "And there's improvement in plastics. People also should keep an eye on where technology in microprocessor knees is going."
John Latsko, partner in the health law department of Schottenstein, Zox & Dunn, Columbus, Ohio, feels that any new technology that emerges must be "affordable and benefit the masses." He represents healthcare providers, suppliers, and manufacturers, including clients in the O&P field, in the areas of billing, compliance, managed care, transactions, and strategic planning.
Latsko pointed out an analogy with pharmaceutical companies, which do not spend large sums to develop drugs to treat rare diseases unless there are incentives to do so. "For better or worse, they are in the business to make money, and they don't make money on excellent drugs which benefit only a few people and which payers don't include in their formularies due to their high cost.
"The emphasis is on cost-effectiveness, so the new technologies must be able to show they can reduce costs either directly or through quality-of-life analysis," he continued. He looks to more and better central fabrication as a means to cutting labor costs. "The larger payers are already putting caps on reimbursement for O&P. Out-of-pocket payments will never make up the difference."
Regarding research, Latsko said, "The demand for new and improved devices and rehabilitation programs will grow with the changing demographics." But he adds this caveat: "Only cost-effective devices and rehab programs will survive financially."
Tying in with this, Latsko sees a strong need to produce research on patient clinical and performance outcome studies. "There must be empirical evidence to convince a payer that a 70-year-old diabetic needs an expensive device that is much more suited for a 25-year-old physically fit amputee.
"Research needs to focus on proving objectively the benefits of the devices supplied in relation to the cost of the device," Latsko continued. "Otherwise payers will continue to limit the O&P benefit offered to the patient, which ultimately, if it has not already, will carry over to government programs. This is what happened to the Medicare physical therapy rehabilitation benefit and the reimbursement levels for DME. Abuse of the benefit resulted in an almost arbitrary rationing of the service."
Griffith too sees the need for research to prove positive outcomes of O&P patient care. "It has been a buzz, and we received quite a few comments at this year's PrimeFare Annual Seminar, for the need to demonstrate provable positive outcomes. It's one of the biggest challenges we have. I think it's do-able in terms of putting together research criteria," she continued. Some of the difficulty lies in simply getting the time to document outcomes on video and in documents--"some format in which we can show consistent, provable outcomes," she said. "Ultimately, it's a means of proving medical necessity."
Carroll sees a positive role for research in the future: "With our younger clinicians of today coming directly out of the Internet age, and with their inquisitive minds, this population of individuals will not only drive research, but also demand it. This group will bring the O&P field to a level beyond comprehension."
Randy Schmitke, CPA, MBA, CFO, O&P Digital Technologies, Gainesville, Florida, takes a pragmatic view. "Research efforts and initiatives will be directed at methods of reducing the cost of componentry and reducing the cost of providing services. The general principles of business will drive this movement. What the market is willing to pay and what the customer wants will drive what providers supply and what manufacturers produce." With the continuous decline and shifting of payment amounts and structures, Schmitke feels that the overall cost of providing O&P services will be forced to go down in order to maintain profitability.
Along with helping to establish provable outcomes, Griffith too sees research as needing to discover ways to provide better quality products and services with optimal personnel involvement, she pointed out.
Paul Prusakowski, CPO, FAAOP, president of O&P Digital Technologies, looks to computer technology to increase productivity and cost efficiency. "In order to be competitive in today's marketplace, a practitioner must be incredibly efficient," he pointed out. "Computer technology can bring the ultimate level of efficiency as to how a practice is run. I am talking about a lot more than just using CAD/CAM or using a good billing software. I'm talking about reengineering the entire foundation of how a practice is run. We can't survive running a practice the same way as we did in the past. There is a higher expectancy and need for immediate access to information in both clinical management and business management."
Intelligent systems to help practitioners become more competitive are being developed, Prusakowski said. "The newest generation of practitioners who have been practically raised with computers and the Internet are going to be the main catalysts for change in this field. This new generation of practitioners will enter the field and transform our current practices into the computer-centric practices that will be the norm within this decade."
Mergers and Acquisitions
Mergers and acquisitions are expected to continue. "Because of declining reimbursements, I see many of the suppliers continuing to merge and/or acquire each other," said Andreassen. "We will probably end up with two or three super' suppliers that will control the market."
Griffith sees the merger/acquisition trend as continuing, but with some change: "Quite a few spin-offs have resulted from big mergers and acquisitions. The larger manufacturers are going to be looking at what's being developed by the smaller, more maneuverable companies, and considering what they can duplicate, improve on, or acquire."
Schmitke likewise thinks there will be more mergers and acquisitions among manufacturers and suppliers, as well as patient care facilities. He sees this is a logical business evolution. "Manufacturers and suppliers will search for ways to drive profits and, without a significantly expanding market, this will lead to adding products, tapping other niches, and attempting to reduce costs and increase efficiencies."
There also has been a shift in the last five years to the number of business-educated management personnel involved in O&P, which in itself will change some of the dynamics of the industry, Schmitke added.
"Mergers and acquisitions are most definitely going to continue to be a part of our future," said Carroll. "There will always be smaller players out there, and many times this group brings new and bright ideas into our field. It is this group that will be the future for acquisitions."
Latsko too sees mergers and acquisitions as a continuing wave of the future. "The O&P industry is different than most others in healthcare delivery because of the way the provider market is divided," he pointed out. Hanger has about one-quarter to one-third of the market; the strictly O&P providers have about the same; and the rest is divided among others who supply orthoses as just a part of their business, such as pharmacies, physicians, hospitals, therapists, and DME providers, he noted.
Analyzing the continuing trend toward mergers and acquisitions, he said, "As cost-cutting to deal with lower reimbursement starts to significantly impact manufacturers just as it has providers, cost-cutting at that level will be necessary. Group purchasing associations will begin to achieve very significant savings through volume discounts."
A point will be reached at which the only cost-cutting opportunities left will be in management, administration, and distribution, Latsko pointed out. "The best ways to eliminate some of those costs is through merger and acquisition," he continued, noting the consolidation in healthcare over the last decade, even in O&P.
What does the future hold for reimbursement? Not surprisingly, at this point, O&P professionals and businessmen paint a gloomy picture of reimbursement trends.
"I think we will continue to see a downward spiral in reimbursement levels for the short term," said Andreassen. "Unfortunately, during that time, many of the independent O&P facilities will be hit hard and struggle to make ends meet." However, Andreassen sees a sunnier picture ahead: "Eventually, I believe reimbursement levels will come back to an acceptable level, or at the very worst, level off."
Again, Schmitke takes a business approach to the question of reimbursements. "Does it seem logical for someone who has been able to reduce the price of something from $10 to $7 to now want to pay anything more than $7? Or does it seem more logical that they would now want to pay something less than $7? Or, maybe they will want more for their $7."
Schmitke noted the effects of supply-and-demand principles and quality issues, which are affected by government regulations: "I'm not diminishing the potential influence of these variables, but I do believe that economics will be the overriding influence. In general, I feel that reimbursements will not get better."
Schmitke sees change as a large factor in the equation for the future. "Clearly, the other element that is going to happen is change. A system that is not able to sustain itself will likely not remain the same. I believe there likely will be more government regulation because I believe that other clinical professionals are attempting to expand their revenue bases. This tension will create the need for rulemaking. The O&P industry will need to continue to work hard to delineate and differentiate the value that it brings to the healthcare service arena and in the end, to the consumer."
Griffith sees little relief in reimbursement from big managed care organizations (MCOs) and other large payers. However, she sees a bright spot: "We are seeing a lot more regional and local contracts coming in. The payers we are negotiating with have more interest and involvement in the community. We have been tracking this emerging local and regional trend for about a year now."
Carroll sees reimbursement in the future as being different, rather than more or less. The change will be in accountability: "We will be forced into providing outcomes studies and justification for the procedures that we wish to carry out. This will promote the need for more research and a greater scientific approach."
Although healthcare costs will continue to escalate, Latsko doesn't see increased dollars going to DMEPOS. "Most of the reimbursement dollars will go to hospitals and physicians because there are more voters working in hospitals and physician offices, and they have huge lobbying power through the AHA [American Hospital Association] and the AMA [American Medical Association].
"This will drive innovative cost-effective technologies in O&P and reduce high-cost labor," Latsko said. He noted that many American industries already have moved much of their manufacturing to other countries with lower labor costs. He sees this same trend happening in O&P. "Many orthoses are already being manufactured in Latin America. China will be a major player in supplying orthoses very soon, in my opinion," he continued.
"There will always be a need to have talented people measure, fabricate, and fit unique orthoses and most prostheses," Latsko said. However, more productivity must be achieved from each practitioner, he pointed out, which means they must work smarter and have the technology available for greater productivity.
In an effort to lower costs, some owners are working harder--but not necessarily smarter--themselves to reduce labor costs and keep the facility profitable, Latsko noted. "That cannot continue indefinitely, especially when margins shrink lower and lower."
The real drivers of the delivery system, though, are employers, taxpayers, and patients, Latsko pointed out.
"These three groups continue to show growing dissatisfaction at the cost and availability of care and treatment. Patients are picking up more and more of the cost of their care through co-pays, deductibles, and share of premiums.
"While service is such an important part of healthcare delivery, with O&P, it is the device--that does what it is supposed to do without discomfort at a reasonable price--that is being purchased," Latsko said.
He pointed out that patients are getting more savvy. "Patients are getting smarter about their healthcare as they pick up more of its costs. Shopping' through the Internet for healthcare, using objective statistical data, and, more importantly, price, will be the norm in the future."
Latsko sums up: "The visionary and creative in O&P will survive."
Bright Future Seen for Pedorthics
"We're not anywhere close to saturating the need for pedorthists," said Alan Darby, CPed, LPed, Resource O&P, St. Louis, Missouri, president of the Pedorthic Footwear Association (PFA). "While changes in the Therapeutic Shoe Bill have affected the profession, basically the zooming rate of diabetes in the population has driven the need for more pedorthic care."
Pedorthists are especially suited to treat diabetic and other foot problems, using the Medicare codes that relate to this type of patient care, Darby noted. "Orthotists can also do this, but often their time is better spent on work relating to other codes," he added.
Research in foot and ankle disorders is increasing and is being carried on by several different specialties, Darby said. He is contributing to a research project being conducted at Washington University, St. Louis. The principal investigator for that project is Michael Mueller, PT, PhD.
The Board for Certification in Pedorthics (BCP) is helping to prepare for the future of the profession. The BCP is undertaking an initiative to enhance the educational and/or experience requirements for becoming a certified pedorthist (CPed), according to The C.Ped.News, published by BCP. "&BCP is meeting the demands of the medical community for a more highly trained and educated professional pedorthist," stated the article by Ernesto Castro, CPed, chair of BCP's Pre-Certification Committee. "In addition, we are addressing the need for additional staff resources that are properly trained and supervised in pedorthics," the article continued.
The plan calls for a curriculum to be developed and instituted by 2006 that will provide three levels of credentials for pedorthists. By 2010, the requirements to become a certified pedorthist are slated to require an associate degree in pedorthics before taking the CPed exam or an associate degree with documented pedorthic work experience. Other allied health professionals will be able to opt out of additional education requirements, but will still be required to complete the pedorthic training and provide documented pedorthic work experience, according to the article.