MarketShare Strategy

5 Key Predictions for 2014

Each year at The Godbey Group we make predictions for the coming year to help our clients and friends anticipate future opportunities and challenges. For 2014 our crystal ball says that both challenges and opportunities for providers will come from the rolling implementation of the Affordable Care Act. We predict: 1. Patient eligibility will become a major challenge. Providers face a two-pronged challenge of determining patient eligibility in 2014. In states where the expansion of Medicaid was embraced, providers will still be challenged to determine the accurate eligibility of newly enrolled Medicaid recipients. All providers will be challenged to determine the accurate enrollment of patients in the new insurance marketplace products. The accuracy of enrollments rolls provided by the insurance marketplaces to insurance companies has been a disaster so far. This risk then passes to providers, especially physicians, who will be challenged to provide services mandated by the law without adequate proof of coverage. 2. Narrow physician networks will become a major challenge. Insurance plans chose to limit their financial risk by implementing narrow networks for the new online insurance marketplace products. The consequences and challenges will become apparent in 2014. Narrow physician panels will become an apparent dissatisfier to newly enrolled patients, especially those looking for their current physician. As patient enrollment in the new plans grow it’s predictable that patients will find it difficult to gain access to their selected physician. Ultimately hospitals participating in these narrow networks will find their hopes for increased volume choked off by narrow physician networks. Access to care under the Affordable Care Act will become a growing issue for the media and the public in 2014 and beyond. 3. The 2015 launch date for Accountable Care Organizations will be a challenge and an opportunity. Hospital administrators say it’s a coin toss as to whether they will participate in ACO’s in 2015. Without a track record or clear path, hospitals are indecisive about the move towards the ACA. On one hand the Center for Medicare & Medicaid Services has already announced reductions in payments to hospitals for 2014 and beyond. And on the other hand the Affordable Care Act holds out the promise of shared savings for successful management of Medicare quality and costs under ACO agreements. So it’s a coin toss, with 48% of CEOs saying they will not participate and 52% saying they will participate in ACO’s. 4. Reimbursement will fall below Medicare levels. Health care utilization in the first 3–4 quarters of 2014 will see an unprecedented spike as new cardholders are projected to utilize healthcare resources at a rate of 120% of current insured. Utilization/volume will drive cost up, necessitating a overall price reduction in an attempt to balance the equation. 5. 30% of the fully insured will lose their insurance by the fourth quarter of 2014. With the increase in costly benefits and the elimination of underwriting ability, insurance companies are hedging their bets and escalating insurance premiums to small employers skyhigh and unaffordable. As a result expect 30-50 million people to lose their insurance coverage. We hope these observations help you think about your prospects in the coming year. To all our colleagues and friends we wish a prosperous and healthy new year. Tweet Share Neil Godbey is President of The Godbey Group, Irving, Texas. Since 1999 The Godbey Group has been helping leading hospitals and healthcare systems negotiate favorable managed care and value-based...

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Is growth now a dirty word in healthcare?

With all the emphasis in healthcare reform on cost-cutting and reducing utilization, has the idea of growth become a dirty word? Recently Dr. Donald Berwyck spoke to HFMA and challenged the nation’s hospital chief financial officers to take control and root out waste. A parade of politicians and policymakers have spent the last two years talking about the need to cut the nation’s budget for healthcare. Of course they’re correct as far as it goes. What’s missing is an emphasis on generating legitimate revenue to sustain our healthcare delivery system. We still need to take care of sick people even as we move to do a better job of keeping the majority healthy throughout their lifetimes. Growing and expanding your market is one thing, but raising rates to generate more revenue is no longer the answer to bottom line pressure. With open enrollment on the new health insurance marketplaces only weeks away, it is still important for hospitals to ensure that their contracts with health plans at least cover the direct cost of care for patients. In the long run this is the only way that providers can sustain their offering to take care of patients in the new healthcare reform world. Now covering direct costs means an organization has a firm handle on the direct cost of providing each service or procedure that they provide. Surprisingly a number of hospitals’ accounting systems don’t really make it easy for them to have discrete cost accounting for individual services. That has suddenly become a table stakes issue. Beyond that, the future stability of hospitals has to move beyond mere cost-cutting. No industry can survive long if it’s only strategy is cost reduction. At some point an organization and an industry must find ways to generate revenue sufficient to sustain their service offerings. So it’s not a choice between cost-cutting and revenue-generating growth because in today’s world the hospital needs to be skilled in both. Author Neil Godbey is the President of The Godbey Group, Irving Texas. Since 1999 The Godbey Group has been helping hospitals and healthcare systems negotiate attractive managed care and value-based contracts....

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