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5 Healthcare Uncertainties Made Clearer

 |  By kminich-pourshadi@healthleadersmedia.com  
   August 27, 2012

Summer may be winding down, but while many CFOs found time to take a vacation, the business of healthcare did not slow down.
In fact, there's so much going on that it's dizzying to keep pace. Much of this summer's healthcare discussions have centered on uncertainty and everyone from the financial ratings agencies to politicians to physicians are stirring the pot. So, in case your much-needed time off didn't allow for you to keep up on all the big healthcare news, here's the rundown:

1. SCOTUS decision confusion. Though the Supreme Court's ruling on the constitutionality of the Patient Protection and Affordable Care Act was supposed to offer some clarity, it didn't in all areas. Pay attention to these in particular:

2. Ratings agencies outlooks. Both Moody's and Standard and Poor's have written extensively about how healthcare reform will negatively influence hospital and health system ratings. In mid-July Moody's Healthcare Quarterly reported that even new revenue sources for not-for-profit hospitals won't offset Medicare reductions of $150 billion over the next 10 years.

The Moody's report follows on the heels of a June S&P Healthcare Economic Index report finding that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs has increased by 6.14% over the 12-months ending April 2012. Both reports offer a dour perspective, but they are nevertheless essential reading for financial leaders.

3. Innovation delayed. Before the historic Supreme Court ruling on the ACA, we knew that the long-awaited decision was negatively impacting healthcare business innovation. The upshot? Growth is still compromised. For even if a hospital or health system opts to grow—likely through a merger—it still may flounder without at least attempting to pioneer some new programs.

4. M&A in motion. Speaking of mergers, industry consolidation though mergers and acquisitions continue to grow and at a historic pace. The activity that has taken place during the last two years is beginning to reshape who the key players are in healthcare. So far, the number of transactions in 2012 has nearly doubled that of (during this same time period), with healthcare service mergers comprising transactions worth $19.2 billion.

You likely have heard about many of the larger deals, but you may not realize that 21 physician groups have merged thus far in 2012. That's going to change the approach of care delivery in many areas. For additional details on mergers and acquisitions, check out the HealthLeaders intelligence report, M&A: Hospitals Take Control.

5. ICD-10 deadline delay confirmed. The deadline delay sealed by the Centers for Medicare & Medicaid Services in its final rule Friday was just that, a delay and not the death of this initiative.

Any hospitals and health systems that had been using the uncertainty around the deadline as an opportunity to further procrastinate on implementing this initiative now know that the clock runs out on Oct. 1, 2014. Whether those delay tactics proved to be a  costly mistake for hospitals is something only time can tell. Some of the larger systems, such as Mayo Clinic, however, haven't been wasting time getting training started. They've smartly been proceeding with their plans.

There is a pervasive amount of ambiguity in healthcare these days. All the rules have changed in the last few years, and what you knew last week (before your vacation) may not help you with the decisions you need to make next week (when you get back to work).

To get clarity and ultimately to keep your organization ahead of the curve you'll need to stay nimble and keep a watchful eye for innovative solutions (HealthLeaders Media will help you with that).

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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