Is Health Care the Land of Opportunity or Despair?

by Cathy Miller on January 8, 2013

in Health and Wellness, Health Insurance

bigstock-Change-Ahead-Road-Sign-6646709One thing is certain. The health care industry knows change.

If you are a professional in the industry or a related business, you could write a book on change.

Will 2013 bring opportunity or despair as you prepare for major provisions of health care reform?

It all depends on your perspective.

Recent Trends

Critics of health care reform point to the different perspectives for health care versus insurance.

For purposes of this discussion, we’ll refer to health care as the delivery of care (by health care professionals, facilities and other providers). Insurance refers to the payment of health benefits.

Recent trends influence both the delivery of health care and the insurance industry.

From Volume to Value

Traditionally, health care business models measured success on volumes ~

  • The number of surgical cases, procedures, office visits, etc.
  • Increased volume meant increased revenue

Pressure from escalating health care costs and health care reform provisions, like Medicare’s Value-Based Purchasing Program, shift the focus from volumes-based to value, such as improved performance and outcomes.

Value-based compensation is a major change to the business model.

Imagine you are a shop owner and you charge a certain price for your widgets. The more you sell, the better your income.

Now, imagine that a law is passed that you have to receive a certain customer satisfaction score to collect the full price. If you fail to meet that score, you get only a portion of your price.

The example may be an oversimplification, but you get the idea.

The change would shake up your business. For the better? I guess we’re going to find out.

Mergers and Acquisitions

Health care reform’s Patient Protection and Affordable Care Act (PPACA) has insurers evaluating the bottom line.

With provisions that hit profit margins, the insurance industry is on the merge. An article in the Washington Post highlighted recent mergers.

  • Aetna and Coventry Health Care
  • Health Care REIT and McLean’s Sunrise Living
  • Cigna and HealthSpring
  • Wellpoint and Amerigroup

Hospitals have been consolidating for greater efficiency and competitiveness.

And here’s something you thought you’d never see. Some of those new partners are insurers.

New Business Models

In addition to the transition from a volumes-based model to one based on performance and outcomes, other health care models have emerged.

Accountable care organizations (ACO) are making a comeback in this era of reform. The strategic partnership brings together provider and payers for a specific population to coordinate care and improve overall efficiency.

PPACA offers provisions for an ACO for Medicare’s Shared Savings Program.

Insurance Exchanges

Another PPACA-influenced trend to watch is the creation of state health insurance exchanges.

The exchanges offer a marketplace where individuals and small employers (Small Business Health Options Program, “SHOP”) can purchase health coverage.

Each state had the following options.

  • Set up its own exchange
  • Form a coalition with other states
  • Create a regional exchange
  • Opt out, in which case, the federal government creates an exchange for the state

Enrollment is targeted for October 2013 with a January 1, 2014 effective date.

Click on this interactive state map for information on individual states.

New Jobs

Recent reports indicate health care may be the place to be for jobs.

  • Health care employment increased by 338,00 jobs in 2012
  • Over 45,000 jobs in December for hospitals and nursing/residential care facilities

The growth in health care employment continually surpasses overall employment trends.

Opportunity Knocks

The ever-changing health care environment brings a different look.

  • New forms of compensation to providers
  • Different partnerships and business models
  • Legislative and marketplace changes

Does it create a land of opportunity? What’s your perspective?

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Notice of Disclaimer –Cathy Miller is not an attorney or health care provider and cannot provide legal or health care advice. The information provided is for your general background only, and is not intended to constitute legal or health care advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your physician for health care issues.

 

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