How to ensure your success in the new digital economy

Report

The two big challenges your practice is about to face; and how you can meet them head on

For the first time in several generations, the business model underpinning the earnings of Australia’s medical specialists is being challenged. Recently qualified specialists setting up or buying into existing private practices need to know what’s changing and how to respond.

According to Mahesh Roy, National Head of Healthcare for Macquarie Banking and Financial Services, the traditional medical specialist business model is changing on multiple fronts, requiring all specialities to rethink the way they operate. He says Macquarie’s medical practice clients are seeing dramatic changes in their revenue streams and referral processes.

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Revenue streams

“Australian health insurers are starting to rationalise the financial benefit they offer specialists for costly medical procedures that either lack an evidence base or don’t pass a cost-effectiveness test. For instance, knee arthroscopies, according to peer-reviewed research, have little or no benefit for many patients, especially those over 55.

Practices that currently rely on professional networks to drive patients through the door should make changes to their business practices, starting with a strong digital presence.

“In 2015, orthopaedic surgeons performed around 30,000 arthroscopies, at a cost to the healthcare system of $150 million. On a larger scale, things like in-home care and rehabilitation after surgery will change many of the revenue streams that insurers pay to private hospitals, as they look to support claims with a cheaper costs and comparable outcomes.”

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Roy says insurers aren’t the only players in the health system expressing concern about the rising number of surgical interventions. Authorities are looking at a value-based healthcare model, similar to the one being implemented in the National Health Service in the UK

“The Medicare Benefits Schedule (MBS) Review Taskforce is considering how services can be better aligned with contemporary clinical evidence. Following the Productivity Commissions economic review last year, which singled out knee arthroscopies and unnecessary hysterectomies as ‘undermining the economy’, it’s a safe bet that these and some other procedures may eventually be removed, or receive a lower rebate, from the MBS in preference for preventative treatments and education.”

The health care system will move away from intervention and towards patient outcomes with a values-based philosophy.

This combined result is likely to reduce the amount of money specialists earn solely from procedures or consultations. Some practices will also lose a substantial percentage of the bread-and-butter procedures that form a large percentage of their revenue streams.


Referral processes

Roy believes the government’s drive to create a Digital Health Record for every Australian by the end of 2018 will expedite the development of a digital health care system – which will bring obvious benefits, but also have major implications for referrals and fee transparency.

“In a digital system, consumers will be able to access and share data, preventing duplicate assessments and procedures; they will also be able to compare specialists’ costs, outcomes and patient satisfaction.

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“As a result, patients may choose to do their own research, gauging the suitability of their specialists and their recommended treatments via their social networks and the testimonials of others. Practices that currently rely on specialists’ professional networks to drive patients through the door should be prepared to make changes to their business practices, starting with a strong digital presence.”

Successful specialists will change from an intervention focus to an education and prevention focus.

Brian Pereira, the CEO of technology consultancy Digital Reign, agrees. His company is helping the NDIS move from bulk to individualised funding. “We’ve already seen the results in the NDIS trial sites. Decision-making power is moving from the practitioner to the individual. People are choosing practices based on client satisfaction.”


What will the practice of the future look like?

Roy says the whole health care system will move away from intervention and towards patient outcomes with a values-based philosophy. “For example, about 20% of people who develop knee osteoarthritis get it through playing amateur sports. Estimates suggest that if we train sports coaches to advise players to stretch and land properly, at a cost estimated to be $1 to $2 million, it could save the health care system $100 million in treatments and procedures.”

From a practice perspective, the two biggest changes will be:

1. Holistic services

The specialist practice of the future is likely to revolve around holistic health management.

“Successful specialists will change from an intervention focus based on the eminence of the doctor’s decision – with a fast-moving series of one-off patients – to an education and prevention focus with life-long patients,” Pereira says.

At Macquarie, we’ve spent the last twenty years helping accounting, law and real estate practices to digitise their operations.

“Specialists will support patients over the long term by doing everything possible to avoid surgery and medication, including offering access to allied health professionals through their practices. For orthopaedic surgeons, that might be dietitians and physiotherapists; for cardiothoracic surgeons, it could also include psychologists to help people reduce stress, eat less or quit smoking.”

2. Digital operations

Pereira says that to participate in the digital health care system, practices must themselves become digital. “Even small practices can now afford cutting edge digital technologies that will automate many back and front office processes: referrals, appointment booking, prescribing, billing and patient communications.

What does it really take to go digital?

“This will not just dramatically cut administration costs, it will also improve customer service. For example, when referrals arrive digitally, the practice will be expecting a patient’s call and their details will already be in the system – a very different and welcome experience.”

But that’s just the start.

The winners will be those who start working with their advisers to adapt to this future – now.

“Once a practice is digital, you can start running analytics to predict what a patient might need in the coming months and use that information to push business to the practice. For example, the system can proactively contact patients to offer executive health checks, recommended tests based on health history, or allied health offerings associated with the practice. In time, specialists will even be able to run algorithms over DNA and family history to predict illnesses before symptoms appear.”


Lean on advisers and learn from other industries

Roy says the changes mean specialists must view their practices through a commercial, rather than a technical lens – something many find challenging. “Medical specialists undergo the longest and most gruelling education of any profession in Australia. But little – if any – of that is on how to run a business.”

The good news is, when it comes to digitising small practices, health-care can use the experience of other industries and lean on advisers. “Specialists don’t need to come up with all the answers. They just need to talk to the right people. Some banks and most professional services firms have already gone through the process in other sectors. They can advise on how to modernise a practice and the best technology to invest in.”

“At Macquarie, we’ve spent the last twenty years helping accounting, legal and real estate practices to digitise their operations. We’re currently working with law firms on how to use artificial intelligence and machine learning and have invested in a number of digital platforms for the healthcare industry that help with payments, data and client management.”

“The point is: the next 20 to 30 years of specialist practice is going to be very different. The winners will be those who start working with their advisers to adapt to this future – now.”


3 steps to digitise your practice

  1. Digitise your existing patient data by scanning it.
  2. Put in a digital capture process for all future patient records, admission forms, referral letters or reports.
  3. Automate and optimise as many processes as possible. 
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Unless stated otherwise, this material has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 ("Macquarie") for general discussion purposes only, without taking into account your personal objectives, financial situation or needs. Before acting on this general information, you must consider its appropriateness having regard to your own objectives, financial situation and needs. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service.