Hot healthcare finance topics in 2011
Many predictions were made early in 2011 about the issues that would challenge healthcare finance leaders this year.
As the HFMA ANI Conference occurs mid-year, it's an auspicious time to re-evaluate the issues that could (or already have) impact costs and revenues at healthcare organizations.
Here are ten predictions made by consultants, providers and policymakers in January 2011. Are they still accurate, from your organization's perspective, in mid-2011?
- Insurance membership will take a hit from slow recovery. Few unemployed will take advantage of COBRA while employees, faced with paying more of their health plan premium, will select high-deductible, low-premium PPO plans, hurting HMOs.
- No easing on payment pressure. Although health plan payments will keep pace with inflation and operating cost increases, they will not make up for declining or stagnant Medicaid and Medicare payments.
- Patients will postpone care, hurting providers. With high unemployment and underemployment and increased out-of-pocket costs, people will continue to put off treatment, keeping volumes soft at hospitals, ambulatory centers and physician offices.
- Cost is king. Soft volume, downward pressure on revenues and a deteriorating payer mix with increased bad debt will drive providers to seek more cost savings. However, unions, staffing ratios and regulations will make those cuts difficult. At the same time, health plans will begin to explore and increase the use of tiered networks and stratified payments to encourage use of lower-cost providers.
- Capital remains elusive. As in 2010, most non-profit hospitals will find it difficult to access capital. Lenders are requiring an increase in days cash-on-hand, coverage ratio, stronger EBITDA and smaller borrowings. Credit rating agencies want to see: 1) physician alignment strategy, 2) clinical integration and cost reduction action, 3) an IT plan, and 4) plans to capture more market share.
- Physicians will make or break new care models. To improve outcomes and lower costs, hospitals and medical groups will focus on accountable care, bundled payments, patient-centered medical homes and/or clinical integration. Reducing variation in care – primarily by physicians – will be central to any successful strategy. An effective bundled payment strategy, for example, requires specialists to address clinical resource consumption and supply cost and use while standardizing care protocols in conjunction with hospitalists and intensivists.
- Construction focus is on fast returns. Construction projects will be scaled down, with a focus on regulatory compliance, enhancing throughput, improving care/outcomes and, if possible, capturing additional market share. Providers also will prioritize construction that generates superior returns, such as surgical services and imaging centers. It won't be surprising to see the growth of freestanding emergency departments to reduce the need for hospitals, increase access and provide capacity for the newly insured.
- IT becomes more pervasive. Information technology underpins providers' ability to shift to new care models, so IT moves to center stage with efforts to implement electronic medical records, computerized physician order entry and health information exchanges – provided, of course, medical facilities already have in place e-prescribing, PACS and online results reporting and scheduling.
- Let's make a deal. Mergers and acquisitions will be brisk as more hospitals and physician groups acknowledge they lack the resources to invest in information technology, facilities and equipment for new delivery models or the leverage to negotiate effectively with health plans. Given their central role in new models, the value of primary care medical groups will increase. It's possible that health plans will enter the market to acquire these medical groups.
- Market share, market share, market share. Hospitals and medical groups have underused assets and must get them busy. Providers also realize that more volume will generate incremental revenue and decrease per unit cost. Hospitals will hunt for new programs to fill empty or underperforming assets.