Healthcare finance leaders see scary financial challenges ahead in 2014 around declining reimbursements, health insurance exchanges, and high-deductible health plans.
As senior healthcare leaders look ahead to 2014, they foresee big financial challenges as healthcare reform rolls out, new reimbursement models come into play, and collecting full payment for services rendered becomes even harder.
Michael Hulefeld, executive vice president and COO of New Orleans-based Ochsner Health System, says one of his main concerns is new payment models that threaten revenue.
"Obviously the declining reimbursements model coupled with an overall decline in utilization is putting a lot of pressure on providers," he says.
Ochsner is being proactive in its efforts to prepare for new reimbursement structures, Hulefeld says.
"In terms of how we are going to deal with these issues, we've got a lot of teams in place right now focused on how we can reduce the cost of care while at the same time improving patient outcomes and quality," he says. "For example, we are looking at DRG by DRG to try to redesign how we provide patient care, and we feel that we have got to reduce costs by 15% to 20%. We are very focused on clinical redesign at this stage."
In addition to shoring up its financial status through cost-cutting, Ochsner is looking at potential avenues for top-line growth.
"We are also looking at various growth opportunities in terms of how we work with physicians in our local market, as well as if there are ways to expand the markets we currently service," Hulefeld says. "We are looking for opportunities for shared savings for better utilization as we ramp up efforts from the population health perspective. This is a complex time in healthcare, and if we don't get good at population health, we aren't going to be as successful as we want to be."
Greg Pagliuzza, CFO at UnityPoint-Trinity in Rock Island, IL, part of UnityPoint Health, says one of his biggest concerns at the moment is all the uncertainty surrounding how healthcare reform will impact revenue.
"The relative quiet in the insurance world has exploded into much activity as a result of healthcare reform," he says. "As we build our revenue projections for 2014, we do not have experience as to the impact of expanded Medicaid. … Illinois has one of the lowest Medicaid reimbursement rates in the United States and is overhauling its reimbursement methodology to a format that is not finalized. This could increase or decrease reimbursement."
Pagliuzza says he is also concerned about the health insurance exchanges and the many mysteries that surround how they will impact revenue.
"The greater unknown is the impact of exchanges," he says. "The anticipated growth in insurance coverage is unknown. The net revenue impact is unknown due to the relatively high deductibles of the offerings. The competition is forming alliances that would have not occurred without healthcare reform, and the impact of this is unknown."
High risk from high-deductible plans
Eddie Soler, executive vice president and CFO at Florida Hospital Health System in Orlando, sees the growth in high-deductible health plans as a big threat to his organization.
"The majority of patients on a higher deductible plan do it to reduce the monthly premium. Most of them can't afford the higher deductible, which means our ability to collect it is severely compromised. Health reform promises to insure more individuals, but my concern is that there will be more than today who are underinsured due to these higher deductibles."
Ochsner's Hulefeld says the pressure is on providers to help protect their revenue by making sure patients understand their own coverage and their own financial responsibility.
"A lot of it is coming down to educating patients prior to service and at the point of service," he says. "When they go to have a procedure done or a test done or for an office visit, having the patient understand their financial responsibility will be key."
However, even with outreach efforts to educate patients, Hulefeld says there is still reason for concern among provider organizations.
"The worry is that you can do upfront education, but when a patient uses services is when the rubber is going to meet the road," he says. "I'm not sure patients are really going to understand what it is they are buying on the exchange and what their benefits are."
"The onus is going to be on the provider," he adds. "I've described it as if someone selects a high-deductible plan, the provider is ultimately the insurer for their care. It's not really the insurer that is taking on the risk for a policy with a $4,000 deductible. The risk has been passed on to the provider."