3 Strategic Alerts for Financial Leaders

For those hospitals that have delayed transitioning to the quality-based care model, the time is now to make a move. Patient volumes are already beginning to decline nationwide, and quality outcomes are starting to be rewarded. Even those hospitals that have started to make the transition should anticipate a financially bumpy few years, however, until the transition is complete.

"Even as future payment methodologies change at an uncertain pace, it is already clear that payment-per-procedure will decline, creating more pressure on hospital top-line growth," says Goldstein's report. "This weaker outlook for revenue growth and the corresponding need for cost reductions are key drivers of our negative outlook on the not-for-profit hospital sector."

Strategic recommendation: Moody's suggests healthcare leaders create a strong team consisting of the board, administrators, and physicians to "flawlessly execute" financial plans that concentrate on clinical care and the reduction of patient procedure variation. I would add that they should batten down the hatches and start making sustainable cost reductions that can see their organization through this rough transition.

2. Regulatory respite. A lot of state and federal paperwork and regulatory requirements are involved with running a healthcare organization. But some good news came last week from the Centers for Medicare & Medicaid Services, which announced it intends to relax regulatory red tape involved with two final Medicare rules. The effort will yield payers and providers savings of approximately $6.1 billion over the next six years.