2018 was an interesting year across the healthcare landscape. We saw strong attempts to dismantle the ACA, the dawn of the healthcare digital age with personal devices, continued strong growth by private equity investment firms and huge mergers along with disruptive market entries by an Amazon led coalition. The healthcare industry, routinely viewed as the slowest to adopt new technological advances and implement innovative ideas, is being faced with new disruptive forces — forces that won’t wait for the industry to catch up. So what does this mean for healthcare providers and what can they do to prepare for 2019? Here are five predictions to consider:
- Rising labor costs will drive innovation with providers – Slow rises in reimbursements from commercial and federal payers, combined with a lower commercial payer mix from an aging population, will cause tremendous margin pressure for providers. This will force them to find a way to either improve their cost to collect and/or find an outsource model that makes sense. More forward-thinking providers will look to improve their operations with RPA functions and find ways to adapt machine learning into their processes. Others will look for help from vendor partners/outsourcers to bridge that gap. Either way, finding a way to bridge the gap because of there to market conditions, will be critical to maintain margin.
- The Amazon lead coalition will make a statement in 2019 – If we think for one minute that Amazon, who has been a huge disruptor in every market they have ever entered, will not do the same thing with healthcare in 2019, we are kidding ourselves. What will that be? Some say it could be their own insurance plan or maybe a way to break into the drug market. While we don’t know the answer for sure just yet, we do know they will likely take a first step in 2019 to address the industry’s concerns to help drive down healthcare cost.
- The Amazon coalition disruption will fuel even more investment by PE firms and lead to more mergers/acquisitions in 2019 – The investment by PE firms has continued its growth trajectory for the last few years and predictions are this will continue in 2019. We will also continue to see more mega-mergers like CVS and Aetna because of this movement. The issue of growing healthcare cost is not correcting itself and it’s clear that our government cannot do this either, so the private sector will continue its efforts to find ways to make this change themselves.
- The ACA will survive but through a different delivery structure – The federal law as we know it has been stripped of much of its strength. Since a Republican-controlled Congress could not repeal and replace the law, the states have stepped in with newly given authority from the Federal Government to make changes. What does this mean? Republican states will continue to drive work requirements on Medicaid patients and push non-compliant exchange plans. Democratic states will work to expand Medicaid, strengthen the existing exchange plan structure and create their own mandates. The future of the ACA will most likely come down to the Presidential election in 2020, but until then we will see rulemaking falling to the states, creating different standards for each.
- Growth of telemedicine and low-cost delivery models leading to specialty companies – HDHPs are still rising and the amount being pushed to the patient continues to grow. This has led to the growth of specialty companies looking to take market share from providers for these services. Telemedicine companies exploded, retail clinic partnerships expanded, and the creation of in-house medical treatment options for larger companies and direct relationships with providers cutting out the payer grew in 2018. Unless the health system is a part of the venture, they lose this revenue stream, as traditional doctor’s office visits are no longer needed. It also prevents problems as it can take away a valuable referral path for providers to mainstay traditional procedures that make up the lion share of their profitable revenue. This has grown exponentially over the last few years and is expected to continue in 2019.
This past year has been an exciting one with new entrants into the market that appear poised to make disruptive changes in the industry. Exciting as that may be, let’s be clear — As our nation’s spending on healthcare continues to grow faster than inflation, we are at a crossroads. Time is running out and change must happen soon. It does not appear that traditional avenues will work, so these new entrants and initiatives in the market are timely. Technology and innovation will be interesting factors for healthcare in the years to come, but 2019 could be the year where healthcare takes that next big step forward. Either way, the face of healthcare is rapidly changing, and it will be exciting to see where it goes next.
Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies.
© 2019 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.
Healthcare Revenue Cycle – A Changing Environment
With change on the horizon affecting profitability, it is more critical than ever to look at ways to improve your revenue cycle process. Tackling the whole process at once can be overwhelming. Here are four areas where you should focus.
Healthcare financial leaders faced a myriad of challenges in 2018 and we covered many of those topics on the OS blog. While we're already focused on addressing the challenges of 2019, we want to highlight some last year's hottest topics. Here are five articles from...
Let’s face it. You want to run a profitable business. But do you know how much each account costs you as compared to your profit on the account if it is paid in full? Do your account reps know how they are progressing toward their goals? This vital data is...
While healthcare providers continue to feel stress from reduced reimbursements and lowering margins, those issues can be conquered largely through the effective collection and use of data, along with good old-fashioned communication. That’s the conclusion from a panel...