As I review Medicare Advantage systems one thing has been popping up over-and-over again.
They’re all heavily optimized for the current environment.
By that, I mean an environment that is over-funded with little compliance enforcement. One in which market share is desirable above all else.
These systems are extremely profitable—and growing more so as their managers further optimize their operations.
They’re so optimized that when condition change—as they soon must—the degradation in their performance will be abrupt and profound.
A race care on a closed course in great weather can go more than 200 miles per hour. The same car on a snowy interstate—not so much.
Leaving aside the ethical issues about what happens to the patients who increasingly depend on these programs, what is the business case for continuing operations in this manner?
If it’s “grab all you can now and worry about tomorrow when it comes” then I’m going to remind you that Medicare Advantage Organizations are functioning as insurers. Sure, their reinsurance backstops will pay off (probably), but at the cost of future access to their protection. 9/11 is a great predictive model. Large buildings can’t get “act of terrorism” coverage at any price.
Of course, the government could “bail” Medicare Advantage providers and organizations out in some fashion, but the change in condition to be anticipated is going to come from not enough money to pay for Medicare in the first place, so the question of bailouts is actually one of who has the political capital to get in line first.
When conditions do change—and again, looking at the Medicare trust fund data they soon must—The best performing organizations will end up being net “buyers” in a market where there is “blood in the streets”, attracting hoards of patients left without a medical home.
Even in a system replete with financial challenges, such organizations are going to be big, big winners.
So, here’s the question:
Are your operations “anti-fragile” enough to respond positively to change?
Experience suggests that top-down organizations, those who try to control costs without giving the actual providers of care skin in the game, or who don’t even try to control costs and concentrate on revenue generation will not be.
Those that do the opposite, will.
Which are you?