Healthcare's Grim Winter Feels Endless
They forecast a bleak period of low revenue growth, retrenchment, and adjustment as new reimbursement rules are implemented and tweaked. In such a context, consolidation is a defensive measure, not a growth grab, at least at first.
So they huddle against the revenue chill, which is upon us. Several publicly held hospital companies have recently reported earnings that have disappointed Wall Street. Insurers recently sold off as much as 10% citing costs incurred in preparation for new rules. Those rules will govern how much of their earnings they may retain in profit and how much they must pay out in benefits. Other rule changes have to do with Medicare Advantage funding cuts, the prohibition of lifetime maximum benefits and the inability of insurers to reject applicants for pre-existing conditions.
Regardless of what you think about healthcare reform, one of the big results from it will be that without a major redesign, profits won't be as easy to earn in the near future.
If that's the prelude, the forecast for the actual implementation of such widespread change is frosty indeed. And this is all before we begin to determine the full impact of the forced budget cuts (otherwise known as the sequester) from Congress, as well as austerity under another name that is likely in the near future.
So, extending the metaphor, what does spring look like, and when is it likely to come?
We may have to wait a few years to find out, and there won't be a major announcement or a date on the calendar to mark it.
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