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Healthcare Uncertainties to Intensify in 2014

John Commins, for HealthLeaders Media, January 2, 2014

Whelan says many health systems are at an inflection point where they have compressed their costs and in some cases compressed utilization, but the financing system is not there to support what they've done. "The commercial payers are saying they aren't ready and the only thing they are telling providers is 'you aren't going to cost shift and you aren't going to get an increase on your commercial contract,'" he says.

"If the incentives and the payment system were aligning at the same time, the markets would be moving smoothly in that direction. But some hospital systems are finding themselves out in front and they're doing the right things but damaging themselves financially. It's all about appropriate care and utilization and taking waste out of the system, but when it is still dominantly a fee-for-service arrangement and it's all about transactions, they are taking transactions off the table."

Whelan believes that 2014 will "test the mettle" of healthcare providers who've made a commitment to value-based care and a serious investment in their accountable care organizational competencies.

"This is going to be a big year for them and whether the market is going to start moving with them," he says. "Otherwise, it's hard for them to back off at this point. They've got their physicians on board. It's either going to create more financial distress or some of them may starting looking to unravel what they are doing and going back to where they were before or stopping the momentum."

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