4 Unpleasant Predictions for 2012
It remains to be seen whether the Medicare sustainable growth rate formula, which calls for 30% cuts in physician payments, will be repealed, as the American Medical Association (AMA) and many other healthcare associations are lobbying. But things might go from bad to worse, as far as physicians are concerned: This month the Medicare Payment Advisory Commission recommended that Congress eliminate the existing SGR formula and replace it with a plan that includes reimbursement cuts to specialists and a pay freeze for primary care physicians. Either way, your physicians are likely to be unhappy.
Poise yourself, too, for some difficult commercial payer negotiations. However, in an interesting twist this year, these negotiations could morph and become a dialog about population management. Moreover, the use of bundled payments will gain a stronger foothold.
Prediction 3: Growth becomes an imperative. The survival of some hospitals and health systems is at stake. Cutting costs is not enough; organizations must grow to survive. Two areas CFOs should look at are service line growth and market consolidation.
Service lines have long been where financial leaders turn to enhance the bottom line. The way service lines are selected is changing, however. Gone are the days you could base a service line choice on the rate of reimbursement, because reimbursements are declining. However, you can still look at patient volume. Baby boomers virtually guarantee increasing volumes.
The CFOs I’ve recently spoken with are planning to invest in orthopedics and cardiovascular service lines. The key to making both of these profitable is, naturally, greater volume in conjunction with cost-conscious implant selection. HealthLeaders hosted a webcast just last week on strategies to make your joint service lines more profitable.
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