My strategic management firm is currently working with an association of ancillary healthcare providers known as NAQAP. During this engagement, we have become fascinated with the broad range of important service providers in this particular space that are loosely connected and yet very essential to the future of healthcare, regardless of how it ends up being “reformed.”
Why should hospitals pay attention to ancillary providers?
The ancillary care industry is large and growing even larger. According to the Ancillary Care Services website, ancillary care is currently one of the fastest-growing sectors of healthcare, representing nearly 30% of medical spending. In addition, the ACS Provider Network includes more than 33,000 healthcare providers in 32 specialty categories, along with specialty care programs that save more than 50% on costs.
For hospitals, this is significant because it means that ancillary providers have the potential to provide essential care outside of the hospital at more affordable costs.
Who are these ancillary providers? Often they are right in front of us but are seen as discrete service providers. Rarely are hospitals and the public at large recognizing how these providers, in an integrative way, play a major role in care delivery today.
They fall into three major categories: Those involved in diagnostic services such as the labs, imaging, radiology, speech and hearing testing and so forth; those who deliver care or are the therapeutic providers, from occupational therapy and physical therapy to alternative medicine and speech pathology; and those offering a wide range of care-delivery services, including skilled nursing facilities, hospice, home health services, urgent care centers, retail centers and other custodial centers.
And that’s not all. Also under the ancillary care umbrella are those who provide revenue support via coding, billing and collections, as well as patient transporters, EMTs, accountants and legal services professionals. As you dig deeper into this field, you realize that it is a very large industry without an integrated place in the market.
An industry with many subsets, none of which are immune to the changes in healthcare delivery
As hospital systems consolidate and rethink how to care for patients along the entire care continuum, many ancillary providers are facing a dramatic decrease in access to patients. As one hospital executive told us recently: “I am only going to use those who meet our standards for quality and care so we can control the revenue coming from bundled pricing. So we are looking carefully at who to partner with and who to stop sending patients to.”
The ancillary providers are looking at quality, cost management and other aspects of how they deliver services to meet such requirements.
Another system executive shared how his organization was building an entire process to keep patients in their own homes as much as possible. One would think that the ancillary providers could be critical components in this transformation.
An important time for ancillary providers, but beset by many challenges
Given the broad, multifaceted nature of this industry, we think its challenges could best be addressed by a collaborative platform that builds a community among these service providers that would be mutually beneficial.
The sector’s most urgent challenges include:
- The absence of interoperability in the systems used by ancillary providers for capturing, coding and billing patient care. The systems for billing and communication with providers and payers are particularly disjointed. This is critically important if care is going to shift from the individual patient to a population health model. Coordination of care, utilization management and patient satisfaction may all hinge on the ability of providers—ancillary providers included—to access the same information regardless of where patients go for their care.
- A consumer’s ability to select the delivery of care is essential to the viability of many of these ancillary providers. The large deductibles that patients now have dramatically influence their decisions about where to get care and how much they’re willing to pay. Whether they need an X-ray at a certain price, physical therapy in a nearby location or a home health service for their parents, today’s consumers of care want the best choices at the best price—and they assume all care is the same.
- Ancillary providers will have limited leverage as long as they operate as independent businesses. Being on their own might have worked in the past, but we are quickly reaching a point where these providers can get better services, pay less for materials and access better business solutions if they think of themselves as (and act like) an association with shared goals and increasing power.
How should hospital systems respond?
In deciding how best to use ancillary care providers amid massive changes throughout the entire healthcare spectrum, hospitals need to select partners so they can coordinate care while still offering patients choice. In addition, they would be wise to rethink how to work with both ancillary providers and medical records systems to design better ways for information to flow across the care continuum.
This is a fast-moving part of a fast-moving transformation of healthcare delivery. I would stay tuned.
Andrea Simon, Ph.D., is the principal and founder of Simon Associates Management Consultants. She has more than 20 years of experience as a senior executive with financial services and healthcare institutions.