As we did in our first blog last year, in which we reviewed the credibility
of our predictions for the healthcare industry in 2013, we begin this
new year by reviewing our predictions that we made for 2014. We again
ask the question – have our fourteen predictions become the new reality?
1. Rapid change continued to occur in all components of the healthcare
arena even though there continues to be many non-supporters of the Accountable
Care Act. The changes that are occurring, including focusing on value
rather than volume and migrating to pay-for-performance, which were stimulated
by the ACA, are being embraced as positives. As parts of the ACA are being
questioned and subject to review by the Supreme Court, the changes which
are driving the care delivery processes in a positive direction will flourish.
2. Growth of the revenue line has been almost impossible except where hospitals
and systems have acquired new assets or programs. However, even in these
cases, the expenses have usually grown faster than the new revenues, and
therefore the operating margins have declined.
3. Integration of physicians with their hospitals has continued to be a
high priority. Much of the work done by Royer-Maddox-Herron Advisors in
2014 for its various clients has been directly or indirectly addressing
this critical success factor. Strategies to move physicians from seeing
themselves as customers to participating with management as partners in
helping to drive the transformation processes necessary for success today
have been formulated and are being implemented by many health systems
at this moment in time.
4. Inpatient volumes continue to decline. This is a prediction that we
started making nearly a decade ago, has been on the list annually, and
will again appear on our 2015 list to be published shortly. Acute care
volumes have dropped between 5% and 8% across the country.
5. Primary care access continues to be a problem. There are not enough
primary care physicians, and their distribution in geographies where there
is the greatest need is also problematic. This will continue to challenge
adequate health care delivery until the salaries of physicians who choose
to practice family medicine, internal medicine, or general pediatrics
are elevated. Fortunately, our next three predictions have also come true,
which have helped to offset this lack of primary care services.
6. The numbers and use of mid-level providers have increased. An increasing
number of physicians are using mid-level providers in their practices,
hospitals are incorporating them into their hospitalist programs, and
many states have increased the scope of responsibilities for nurse practitioners,
including being able to write prescriptions and practice independently
with the virtual supervision of a physician.
7. The growth of freestanding urgent care centers and emergency rooms continues.
In fact in many communities they have accelerated and are situated within
three of four miles of each other.
8. New entrants into the marketplace has continued. Retail clinics are
growing by leaps and bounds – over 600 in CVS stores as they change
their brand to CVS Health, and significant retail clinic site increases
in Walgreens, Target, and Walmart stores.
9. Supply and labor costs are continuing to be scrutinized. As revenues
are falling, so must expenses fall; so, 2014 saw an increasing number
of employee lay-offs in the healthcare sector, and value-purchasing being
an agenda topic for leadership teams. These activities have supported
our next prediction..
10. The use of Lean or Six Sigma approaches has increased in order to enhance
the speed of decision making and decrease waste. The need for more accuracy
in predicting performance outcomes has increased as the tolerance for
a margin of error as decreased.
11. The call for transparency has increased. As both the government and
some insurance companies are rewarding good performance with more pay,
the need to have, and share, accurate performance data is critical.
12. Health and wellness care of populations have gained greater acceptance.
Some hospitals and health systems have even created leadership positions
that are responsible for population health management strategies and to
implement tactics including telemedicine at home, chronic care group clinics,
and home care assistant programs. One hospital has partnered with their
local paramedics to visit and care for their patients at home who were
the previous high utilizers of the emergency room.
13. New and enhanced leadership competencies are being required. These
include change management and strong team building. Unfortunately developing
these competencies is still challenging, causing nearly a 20% turn-over
in CEO positions, the highest ever.
14. Because the future is still unclear but rapidly changing, governing
boards and leadership teams are spending more time developing strategic
plans which can be implemented. They realize that if they do not envision
the future and move forward, they could be lost as the rapid waves of
changes engulf them and pull them under.
After reflecting on these fourteen predictions made in January of 2014,
it appears that, for the most part, what we thought was going to happen,
happened! In fact, the predictions became the reality. We hope the foundation
for our 2015 predictions is even stronger and enhances are credibility
to you as the year unfolds.
In closing this blog, we hope you all had a wonderful holiday season, and
that 2015 has gotten off to a great start. We pray it continues to be
filled with much peace and happiness for each of you, both personally