Rethinking the rules of healthcare

Hospital leaders trying to figure out how to handle challenges such as increased consolidation, growing competition, diminishing profit margins and pressure to contain costs can think their way through the answers by considering some new rules, health economist Paul Keckley writes in H&HN Daily.

None is "necessarily a new idea, but each contributes differently to answering a hospital's question about what to do," writes Keckley, managing director of the Navigant Center for Healthcare Research and Policy Analysis.

For example, "all healthcare is local" is replaced by "most healthcare is local." Employers, health plans and individuals now might be able to purchase services at lower cost in other markets, he writes.

Other revised rules from Keckley and related questions to ask in determining what to do include:

  • Physicians are business partners, not customers. Are risks and rewards shared equitably?

  • Employers are activists, not observers. Is the hospital able to directly manage employers health needs and assume risks for results?

  • Consumers are customers, replacing the idea that patients are users. Does the hospital have a retail health strategy?

  • Funding is capped, not unlimited. How will that impact margins, sustainability, capital and operating priorities, and how can non-core assets optimize use of capital?

"The future for healthcare is bright: It's a high profile, in-demand industry that's expected to grow 6 percent per year for the next decade," he writes. "But it's bad news if Old Rules are followed en route to answering the 'What to do?' question."

The healthcare market may grow overall, but a recent market report about how consumers are transforming U.S. healthcare projected a consumer-driven health market could cut hospital inpatient business by 40 percent over the long term. The report also projected 85 percent of diagnostic services would be performed by retail outlets.

The rise of retail clinics has some critics worried about the impact on hospitals, such as leaving hospitals with patients whose conditions are more expensive to treat, and missing out on the opportunity to develop a long-term preventive care relationship with a primary care physician.

For more information:
- here's Keckley's column

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