Business Trends Affecting Healthcare
As a business, healthcare is subject to the same bottom-line issues that affect any entity that serves the public. It’s also in the midst of rapid change and unparalleled growth, both in terms of service and administration, which the Bureau of Labor Statistics expects to grow 20 percent by 2020.
Medical institutions will need leaders, including online MBA grads with a concentration in Health Services, who understand essential policy issues and their implications, and are able to balance medical judgment with business acumen and nimble problem-solving skills.
Fast-changing business issues that healthcare executives can expect to keep an eye on for the remainder of 2017 include cost efficiencies, changes in payments and reimbursements, telemedicine and other tech innovations, “systemness,” and care that is increasingly consumer focused.
1. Increasing importance of cost efficiency:
Healthcare providers and payers have been under pressure to reduce costs, while market conditions and policy changes are applying tension to continue the trend.
Expanded coverage for individuals through the Affordable Care Act, coupled with primary care shortages and high emergency department volume “can put pressure on inpatient capacity, operating room schedules, and care management resources,” Laura P. Jacobs, president of GE Healthcare Camden Group, a top healthcare consulting firm, wrote in a January 9, 2017 article, “Ten Healthcare Trends For 2017,” for Trustee magazine.
“Pressure to reduce costs because of lower rate increases from payers means that managing patient flow efficiently and reducing variation through defined workflows and clinical protocols are both critically important for a health system if it wants to achieve or maintain financial sustainability.”
Efficiency is key. Healthcare executives and trustees should watch changes in patient volume, length of stay, and costs per episode of care, Jacobs advised, as well as both labor and non-labor hospital costs and performance benchmarks of doctors and other medical personnel employed by the facility.
Some hospitals also look to increase efficiency by renting out unused floors or wings for other purposes, such as long-term acute-care, behavioral well being, inpatient recovery, or hospice operations.
2. Changing payment and reimbursement rules:
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) went into effect on January 1. Among its provisions are new ways to pay doctors for treating Medicare beneficiaries – specifically that payment will increasingly depend on quality of care, patient experience, and use of electronic health records by the medical facility or practice. The move is part of a larger overall shift to value-based reimbursement, driven in part by higher premiums on policies purchased through the Affordable Care Act as well as calls for redesigning Medicaid and Medicare.
Medicare covers more than 57 million Americans, or about 18 percent of the population, according to figures in a November 5, 2016 article in USA Today. Payment changes are affecting thousands of physicians, hospitals, and related medical facilities that treat Medicare patients and are reimbursed by the government for their services. While the impact on the overall medical industry will be widespread, smaller practices without the infrastructure to support electronic records and related metrics could face particular challenges.
3. Advancing telemedicine:
Tech advances have long been key drivers in healthcare progress, especially when influenced by other forces in the market. Both doctors and patients have embraced telemedicine, which enables providers to perform a range of functions, from setting appointments or taking vitals during an office visit, to monitoring patients’ heart rates and blood pressure through wearable devices, and even providing treatment remotely, particularly for chronic conditions.
Behind the convenience enjoyed by doctors and patients stand a number of business realities, including changes in insurance coverage and cost-efficiency concerns for health facilities, according to Ralph D. Derrickson, CEO of the virtual care provider Carena.
“Factors like the rise in leaner, more expensive health plans, value-based demands placed on providers, the new Medicare Access and CHIP Reauthorization Act (MACRA) and ‘consumerization’ will all drive more rapid adoption (of telemedicine) in 2017,” he said for Health Data Management’s article, “10 Top Healthcare Information Technology Trends for 2017.”
4. Adopting “Systemness:”
As hospitals and other healthcare organizations, grow, they spread out – not only geographically but also in terms of governance and management. The trend among many facilities is away from the silo model and toward a greater degree of integration between administration, clinical systems, technology, and patient services, or “systemness.”
Systemness can “create a seamless patient experience, achieve efficiencies, enhance access to capital, promote innovation, and optimize population health management,” said GE Healthcare’s Jacobs.
Healthcare facilities need disciplined focus on efficiency and integration, Jacobs said, as well as a governance and management structure that supports systemness goals.
5. Increasing focus on consumerism:
Consumer choice is a growing trend in healthcare that affects medical practices and facilities in significant ways.
First, facilities are competing in the marketplace, changing their care model to meet a greater emphasis on customer service, customer expectations, and value for service.
On the patient/consumer side, people are shopping around for providers – whom they expect to partner with, rather than be treated by. They want care that makes their lives easier and pricing structures that are transparent so they can make financial decisions. On the other hand, they also are experiencing high-deductible insurance plans and health savings accounts that shift more of the responsibility for costs to their side of the ledger.
For healthcare managers, the trend has meant additional investment in infrastructure and service.
“The healthcare venture (capital) community has invested heavily in channel offerings like telemedicine, retail clinics, and house-call fleets to deliver healthcare more affordably and less traditionally, meeting consumers where they want healthcare and when,” Rob Coppedge, CEO of the investment firm Echo Health Ventures, wrote in “Four Investment Trends to Watch in 2017” (MedCity News, December 30, 2016).
“Although each seeks to be the preferred channel of choice, 2017 will be the first year in which consumers in numerous markets can begin to make clear decisions about site and type of service based upon transparent cost, convenience, and personal preference.”
Changes in other sectors of the economy, from insurance coverage to government policy to tech advances, can affect the operation of a medical facility or practice. Administrators and students studying for an online MBA degree with a concentration in Health Services have to stay aware of a range of trends to be prepared to make the most efficient and cost-effective decisions for their facilities.
University of Alabama at Birmingham’s Online MBA Degree Program
Understanding the healthcare management of the future begins with an online MBA degree with a concentration in Health Services from the University of Alabama at Birmingham. The program combines traditional instruction with modern online technologies. Classes are completed collaboratively online by computer and/or mobile device. In addition to Health Services, concentrations are available in Management Information Systems, Finance, and Marketing. For more information, visit the University of Alabama at Birmingham’s online MBA website.