Thought Leaders: These Are "Turbulent," "Transitional" Times In Healthcare

by Akerman LLP - Health Law Rx

The phrase "the only constant is change itself" has rarely been so true across an entire industry. The U.S. healthcare sector is having to adjust to rapidly changing times. That whirlwind of change was discussed by industry leaders at Akerman's recent panel event titled "Healthcare Issues for 2014: What Can You Expect?"

Panelists included Karen Zeiler, Senior Vice President of the Florida Hospital Association; George S. Huang, Director and Senior Analyst for Wells Fargo Securities; and Edwin Miller, Vice President of Product Management for electronic medical practice solutions provider CareCloud. The panel highlighted many of the changes which are causing the industry to adapt. Those changes – almost all of which stem from federal healthcare reform – include:

  • Shift in payment models from fee-for-service to paying for value
  • Increased focus on health outcomes
  • Changes in care delivery models
  • Payment cuts to hospitals and Medicaid
  • Taxes on insurers and medical devices
  • Electronic medical records incentives and innovative uses
  • New ICD-10 billing codes
  • Changing utilization trends
  • Increased demand for price transparency

Below are some insights from our panelists regarding emerging themes within the healthcare industry.

Bullish Long-Term Outlook

The healthcare sector is in a turbulent, transitional period that has led to conservative behavior by investors. Industry leaders are also building up their balance sheets and shifting new capital expenditures to information technology ("IT") and less-expensive care settings such as outpatient surgery centers. Total healthcare bond issuance has decreased significantly since 2008, but there is optimism that industry outlook will be positive over the 7- to 10-year range, so long as health systems find innovative ways to improve the way care is delivered and integrated, optimize capacity and increase efficiency.

Hospitals Facing Cuts, Innovating Despite Lack of Medicaid Expansion in Florida

Reductions in reimbursement and increased medical device taxation under the Affordable Care Act ("ACA") have increased pressure on hospitals to innovate. Adding to the burden is the high level of uncompensated care that hospitals are obligated to provide. In Florida alone, hospitals provided $3 billion in charity care last year. Expanding the Medicaid program could reduce the number of uninsured Floridians (estimated at four million), but hospital leaders do not expect expansion to pass the Florida House of Representatives this year. Meanwhile, hospitals are: (1) investing in new IT tools to better understand data, improve outcomes, and reduce costs; (2) eliminating waste in the supply chain by examining under-utilization and eliminating over-capacity; and (3) consolidating to increase market share, expanding further into the outpatient same-day acute market, and acquiring a large number of physician practices.

Emphasis on Interoperability and Meaningful Use

To achieve meaningful use and accountable care milestones, providers require a platform of interoperable IT resources that integrate, manage and analyze provider data. In response to this need, hospitals are shifting investments from the physical plant to the IT infrastructure. Cloud-based information systems are increasing in prevalence, with many providers moving toward integrated practice management solutions, incorporating clinical, financial and operational information into a single platform. Although the vision of seamless interoperability has not yet materialized, the industry is making great strides while adapting to new healthcare delivery models under the ACA.

Tomorrow is Here

The industry is changing and adapting to healthcare reform and advances in technology at a rapid pace. Providers and patients will experience glitches and bumps along the way as new care models are ironed out and new technology is introduced. Hopefully, presuming the bullish investors are correct, the industry will adapt to thrive, and patient outcomes will improve.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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