What issues will impact hospitals long-term?

No one has a crystal ball that can predict the future with 100 percent accuracy. But examining the current state of healthcare in combination with the nation's economic outlook can give hospitals a fairly realistic picture of trends that could play a role in their future viability. Becker's Hospital Review has identified some key factors--several that work hand-in-hand to indicate treacherous waters ahead and several that indicate potential life-preservers for savvy hospitals.

The bad: If health reform remains stalled, there will be no corresponding influx of newly insured patients. Add sustained high unemployment into the mix, and hospitals can expect to see a long-term decline in the number of patients who can actually pay for services. One lost job typically means at least two people lose their insurance coverage, notes Minneapolis-based research consultant Allan Baumgarten. Further, many patients who have retained their insurance are switching to high-deductible plans, which typically reins in demand, he points out.

In addition, reimbursements won't keep up with inflation due to ongoing federal and state budget deficits, says Dick Clarke, president of the Healthcare Financial Management Association in Westchester, Ill. Consequently, hospitals will have to look for even more efficiencies. Unfortunately, expense reductions won't be easy to find since most have "already picked the low-hanging fruit, reducing per-unit supply costs and the cost of personnel," says Clarke.

Some hospitals may even face overcapacity issues due to overbuilding in affluent areas as they seek to broaden their access to paying patients, says Baumgarten. One Texas county, for example, recently added three new hospitals, bringing its total to a potentially unsustainable six hospitals.

The opportunities: Hospitals will increasingly collaborate with other healthcare providers to create integrated systems that are focused on keeping patients out of the hospital. "The old incentive to admit more patients will be replaced by the new incentive to improve outcomes," says Clarke. Why? Both public and private payers will tie reimbursements to outcomes.

This increased integration will help hospitals in their quest to become more efficient by allowing them to work with physicians and other providers to cut total costs on a per-episode basis across the healthcare continuum, adds Baumgarten.

In addition, many small freestanding hospitals will be unable to sustain life as an independent organization, says Clarke. These hospitals will have to join larger hospitals that can create integrated systems capable of dealing with new payment methodologies such as bundled payments.

To learn additional factors that will affect hospitals:
- read the Becker's Hospital Review article

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