Getting Reform Right
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PPACA's financial impact
When asked about the financial impact of PPACA, most respondents expect negative implications for their organization over the next three years: 78% expect an increase in total costs, 77% project that spending for compliance will grow, and 71% anticipate greater unreimbursed expenses. Only 22% expect to see revenue increase and just 16% anticipate improved margins.
Nearly half (49%) expect capital spending to increase as a result of PPACA. But while that number may be a surprise to some, it may reflect investment in IT and electronic medical records, according to Pate, who says he was surprised that only 18% expect a decrease in capital spending. "If we are successful ... what we've got to do is decrease capital investments in facilities and get more focused on value-based investments."
With those projected cost increases, though, it follows that 58% of respondents expect revenue to decrease and 67% expect a corresponding decrease in margins.
In this situation, Brenzel explains that hospitals and health systems have historically had two options: Find new services to generate new revenues or increase market share. But, he says administrators are pessimistic about either option succeeding in the current environment.
Clinical integration will be the key to holding down costs, says Taylor. "If we do things right and be more efficient, eliminate waste and unnecessary cost, then although revenue may not increase, we can impact the cost of the delivery of care and provide care within the reimbursement."
This article appears in the December 2012 issue of HealthLeaders magazine.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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