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2013 brings new challenges for hospitals around the country

Many healthcare leaders around the country are agreeing that 2013 is going to be a challenging year for hospitals and healthcare systems, and many are going to have to refine their thinking, said Jeff Jones, managing director at Huron Healthcare, a healthcare consulting firm.

Some of the key challenges for hospital systems this year include aligning the payment system to become more value-based, rather than fee-for-service, forging new relationships with payers, preparing for the health insurance exchanges and Medicaid expansions, aligning stakeholders and using advanced analytics.

"For the past 10 to 15 years, many hospitals were focused on improving quality and the patient experience, but the payment systems were not rewarding them for it. It's been difficult to take really big moves in those directions because of that, and now with more budget pressures and hospitals being incentivized to move in this direction with reimbursement cuts – this is really driving a lot of change," said Jones.

Jones mentioned that hospitals are increasingly focusing on providing the right care in appropriate settings through a primary care model.

"What we're seeing is that organizations historically built strong hospital capabilities and didn't build strong primary care networks," he said. "Now they are making investments through mergers and acquiring primary care capabilities. There's this recognition that primary care will be a critical part of managing a person's health and wellness in an environment where they are paid for wellness and value rather than episodes of care."

Many smaller hospitals will continue to discuss merging with larger healthcare systems this year in order to survive many of the changes going on, said Jones.

"How do we go about integrating these operations as we add to their size and reach, and moving services from one organization to another? Hospitals will make a lot of tough decisions this year," he said. 

Dale Maxwell, CFO at Presbyterian Health System in Albuquerque, N.M., said that one of the issues facing his healthcare system, and perhaps many others around the country, is the still-lagging economy. 

"New Mexico is lagging the rest of the nation in coming out of the recession," he said. "The still high unemployment level and the number of uninsured patients that we're seeing is continuing to increase this year and putting pressure on our overall operating budget."

Maxwell added that the down economy combined with the continuing decline in reimbursement rates for hospitals makes it especially difficult to stay afloat.

"The cost of care is a theme among all hospitals, and how do you go about decreasing the overall cost of care?" said Maxwell.

Many smaller hospitals will continue to discuss merging with larger healthcare systems this year in order to survive many of the changes going on, said Jones.

 

"How do we go about integrating these operations as we add to their size and reach, and moving services from one organization to another? Hospitals will make a lot of tough decisions this year," he said. 

Nate Kaufman, managing director of Kaufman Strategic Advisors in San Diego, believes that many of the hospitals that will struggle the most this year will be the ones that were most successful in the past.

"The hospitals generating profits recently is because they get above-market contracts and haven't had to attend to their cost structure," he said. "Large, successful and academic hospitals may wake up one day and realize their volume is declining and their Medicaid percentages are up, and they really don't possess the skills to rapidly reduce their cost structure."

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