EP299: FFS (Fee for Service) Is a Whole Business Model—It’s Not Just a Way to Get Paid, With Alan Kaplan, MD, MBA, Assistant Professor of Urology at Georgetown University and a Practicing Urologist

If you are a forward-thinking specialist right now, alarm bells may be going off, given COVID and/or the prospect of another COVID-style pandemic. Also, all of the capitated and advanced PCP (primary care provider) practices popping up. Also, virtual care models.

FFS is a cushy status quo revenue model until it isn’t. One underappreciated point might be that FFS is not only a revenue/payment model. It’s also a business model. And as a business model, FFS very much drives how practices structure themselves to realize that FFS revenue.

Consider that to earn a fee for a service, someone (a human person) has to physically do the service. So, all FFS-style businesses have an inherent incentive to add labor and not use technology in any way that actually reduces the amount of billable human hours involved in providing care to patients. But if that top-line revenue line goes down—wow!—you’ll find yourself as many did with way too many employees.

An FFS business model has zero flexibility when it comes to revenue that isn’t consistently going up or, at a minimum, a flat line. If revenue plummets and payroll is big—big so as to power a way higher revenue number than is possible for whatever reason—you have a major financial problem on the quick.

That is what I talk about in this health care podcast with Alan Kaplan, MD, MBA. Dr. Kaplan is assistant professor of urology at Georgetown University, and he is a practicing urologist. He recently cowrote a paper with Dan O’Neill in the publication NEJM Catalyst Innovations in Care Delivery. The article discusses COVID-19 and health care’s “productivity shock,” as they call it. Dan O’Neill, by the way, was on the show. Also, he was on EP287 and part of EP292. But in the article that Dr. Kaplan and Dan O’Neill wrote, they give some advice to specialists and hospitals who are looking to evolve with the changing marketplace. Spoiler alert: Conceptually, it’s a shock to move from a place where, every year, you can count on your billings going up and up and move to a model instead that assumes that this is not the case.

So, yeah, there’s a little talk for sure about the joys and challenges of transitioning to value or a value-based payment model. But that’s only the very first consideration. It’s also about reconsidering the operating model and the strategic use of digital technologies.

We talk about all of the above in this health care podcast. Quick sidebar: My interview with Dr. Steve Schutzer (EP294) might be a good follow-on for a very actionable work plan for specialists to implement some of the advice that Dr. Kaplan gives in this podcast.  

You can learn more by contacting Dr. Kaplan via LinkedIn.

Alan L. Kaplan, MD, MBA, is a practicing surgeon, innovator, and health services researcher. After finishing his urology residency, a health care administration fellowship, and an MBA, all at UCLA, Alan helped build a multispecialty medical group in a highly underserved area of South Los Angeles. Alan is currently an assistant professor of urology at Georgetown University; an attending physician at the Washington, DC, VA Medical Center; and a physician advisor at IDEO, a human-centered design firm. Alan’s work over the past 10 years has centered on value-based care redesign, aiming to transition to a more just, equitable, and sustainable health care system for all Americans.

03:51 Who are we actually discussing when we use the term specialist? 05:58 How does the PCP taking on more risk affect the specialists’ path to value-based care (VBC)? 09:42 “Technology leads to … a reduction in labor burden … but in health care, that really hasn’t been the case.” 11:36 “Technology … in health care … has never really been about making the bottom line more efficient. It’s been about expanding the top line.” 13:39 What do specialists need to be considering if they want to stay relevant in the next 5 years? 14:27 EP292 with Brian Klepper, PhD. 16:53 Is there a future where specialists can transition from FFS to VBC while skipping the messy middle of a transition? 18:37 “The way we always did things is not the way that we have to always do things in the future.” 25:20 “When all is said and done, the relationship between [PCPs] and the specialists that they refer … those relationships are really, really important.” 26:14 EP219 with Arshad Rahim, MD, MBA, FACP. 28:13 What’s going to be a big driver for providers to become more independent in the next 5 to 10 years?

You can learn more by contacting Dr. Kaplan via LinkedIn.

@ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models in this week’s #healthcarepodcast. #healthcare #podcast #digitalhealth #vbc #ffs

Who are we actually discussing when we use the term “specialist”? @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

How does the PCP taking on more risk affect the specialists’ path to value-based care? @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

“Technology leads to … a reduction in labor burden … but in health care, that really hasn’t been the case.” @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

“Technology … in health care … has never really been about making the bottom line more efficient. It’s been about expanding the top line.” @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

What do specialists need to be considering if they want to stay relevant in the next 5 years? @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

Is there a future where specialists can transition from FFS to VBC while skipping the messy middle of a transition? @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

“The way we always did things is not the way that we have to always do things in the future.” @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs

“When all is said and done, the relationship between [PCPs] and the specialists that they refer … those relationships are really, really important.” @ALKaplan_MD of @DCVAMC discusses #valuebasedcare and #feeforservice models. #healthcarepodcast #healthcare #podcast #digitalhealth #vbc #ffs