The healthcare industry is in the middle of major and rapid changes being brought about because healthcare costs are a significant part of the total costs incurred by federal and state governments, as well as businesses and individuals. These costs have been increasing for many years and as a result, all healthcare providers are under the microscope, and hospitals find themselves at the center of much of this focus.
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The Patient Protection and Affordable Care Act contains many provisions aimed at tempering healthcare costs incurred by the federal Medicare program by reducing payments to hospitals. Many state Medicaid programs have followed suit with similar payment reductions in an effort to balance budgets during a struggling economy, which has negatively impacted tax revenues and increased Medicaid rolls. At the same time, commercial insurers are negotiating extra hard on behalf of employers and individuals to keep rate increases for their health insurance products as low as possible. On top of this, utilization of hospital services is also falling, as all of these payer groups have implemented mechanisms to keep patients out of the hospital.
The impact of all of this activity on the financial health of hospitals has been negative and significant. In response, most hospitals are pursuing aggressive strategies to reduce operating costs. This survey explores the most common areas hospitals are focusing on to achieve cost reductions and the overall benefits that hospital leaders expect to realize from these efforts, as well as the barriers they see to achieving these goals.
Consistent with this trend, we at Middlesex Hospital have embarked on an ambitious effort to significantly improve our operating performance by reducing expenses and optimizing revenue. An effort of this magnitude has an impact on everyone in the organization and requires constant communication and collaboration between and amongst doctors, nurses, and other clinicians and employees. The results of the survey help to validate that our efforts are in step with the majority in the industry.
Continued change in the healthcare industry is a certainty, but whenever there is change, there are also opportunities. From these survey results, we can see that healthcare leaders are being proactive in embracing the need for change in order to thrive in an increasingly difficult economic environment.
Vincent G. Capece Jr.
President and CEO
Middlesex Hospital
Middletown, Conn.
Lead Advisor for this Intelligence Report