As enumerated in our first blog of 2014, posted on January 6th, most of
our predictions for health care changes in 2013 became reality. Even one
of the most provocative blogs entitled, “I Have a Dream: Acute Hospitals
Are No Longer Necessary”, seems to have increasing credibility with
numerous healthcare leaders. One such person is Dr. Robert Pearl who published
a recent article in Forbes Magazine entitled, “Hospitals May Be
Disappearing in the Era of Health Care Reform.”
So, based on our track record, the Royer-Maddox-Herron partners will make
the following predictions for 2014, many of which will be expanded upon
in upcoming blogs:
1. Rapid changes will continue to occur in all components of the healthcare
arena regardless of the degree of success of the Accountable Care Act/Obamacare.
Most everyone agrees the healthcare product must become safer, guarantee
a more consistent and predictable higher quality, be more accessible,
and be affordable to all.
2. Growth of the revenue line will become almost impossible. The slim revenue
growth that may occur will only be in hospitals or health systems in organically
growing markets, where the quality is so high that they can steal market
share, or where a new service line can be added that people will want to buy.
3. Integration will continue, both with hospitals and physicians. At present
there are about 4900 hospitals. Just 25 years ago there were over 7000
hospitals. People are realizing that hospitals that provide easy access,
but with little volume, might be contributing to poorer quality of care.
And hospitals and physicians realize that if high quality and lower cost
care is to occur, they must work more collaboratively together as partners.
Various physician integration models are being designed and implemented
in the U.S.
4. Inpatient volumes will continue to decline. Technology and evidenced-based
medical protocols will continue to permit more of the care of patients
to be rendered in out-patient settings, including clinics, ambulatory
surgery centers, hospice, palliative care, and hospitals-at-home. Telemedicine
will grow and contribute to this expansion, and the continued pressure
to reduce hospital readmissions, decrease unnecessary procedures and tests,
and implement successful care management programs will further add, in
a positive way, to the declining number of patients requiring hospitalization.
5. Primary care access will continue to be a problem. The ongoing lack
of primary care physicians will result in the continued inappropriate
use of Emergency Departments, where volumes will continue to rise between
5% and 10%. This will also: (6.)propel the growth and use of mid-level
providers; and (7.)the growth of free standing urgent and convenient care
centers. In addition, this will foster (8.) an increase in the services
provided by the “new rebar” expanders of healthcare services
they provide……Walmart, Target, Walgreens, and CVS….to
name a few.
9. Supply and labor costs will need to be reduced even further….less
than 60% of expenses. We have been recommending to our clients that they
must strive to make money using the Medicare payment schedules, since
we believe this will be the level of payment for all payers in the future.
To accomplish this, we will see an increase use of (10.) Lean (to enhance
speed and decrease waste) and Six Sigma (to increase accuracy and predictability).
11. The call for more transparency of outcome data will increase. And if
providers do not come forth, the insurance companies and the government
will continue to fill the void and make value/purchasing decisions based
on data they have, valid or not.
12. Innovative programs to foster health and wellness, population management,
and the increased use of complementary medical protocols for certain diseases
will increase and gain national attention. The movement to health management
rather than disease management as the primary role of health care providers
is gaining traction and will result in some significant changes and further
reduce volumes particularly, in inpatient settings!
13. New and enhanced leadership competencies will continue to evolve. Health
Management Masters Programs for both future physician executives and Administrators
will continue to be accredited on demonstrated competencies that their
students develop. Boards will be struggling to hire the right CEOS or
invent the present leadership teams to develop the new competencies required
to be successful in this rapidly changing environment. As a result of
this pressure, the high turnover of CEOs experienced in 2013 will continue.
14. Because of the level of uncertainty that still exits, Boards and Leadership
Teams will allocate significant time to strategic planning and future
thinking. There is no better time to focus on the future when you are
significantly challenged by the present!
These are some of our thoughts for 2014. We would love to hear your reactions
, which can be sent to us through our “Contact Section” of
our Web Page atv
RoyerHerronMaddoxAdvisors.com. And hopefully, as you continue to reflect on our blogs, these predictions
will make even more sense as this year’s journey in healthcare continues.
And of course, we will pause in January of next year to ask the all important
question, “Did what we predict, become reality?”