Big Picture Healthcare Articles

Healthcare costs will continue to rise in 2003 due to these factors:

• Baby boomers continue to age and consume more healthcare
• Hi-tech diagnostics and treatments continue to be developed, offered and approved
• Impact of sicker patients in HMOs and managed care finally meeting criteria for treatment
• Increased costs of nursing shortage
• War
  
  

There will be an increase in customer/patient dissatisfaction with health plans as co-financing and co-payments increase. Healthiest individuals will drop out of plans.

The impact of this trend is that people who are paying more for their health care are less likely to be tolerant of marginal or incompetent care. Measures designed to be cost effective, but which use less skilled labor for various procedures will have high complaint levels. Marginal providers will find more patients leaving their practices and higher malpractice claims. Innovative healthcare executives will resist replacing higher skilled practitioners with lesser ones, for long-term effectiveness.

There will be an increase in both customer-driven and market-driven healthcare. Major healthcare benefit consulting firms are pushing defined-contribution plans where employers stop attempting to cover the full cost of health care in the US, but rather only pay X dollar amount (typically $3,000 per person or $5,000 per family) which employees may allocate (usually through a medical savings account) to what ever services they desire including: chiropractic, psychiatric, massage.

The first impact of this trend will be to drive dollars out of traditional providers' coffers and into alternative providers' coffers. (With the increase of care utilization by baby boomers, there is more than enough business to go around, however.) The defined-contribution is often described as customer-driven; the shift of funds from traditional plan covered to alternative is market-driven.

The second impact of this trend will be total public outrage, by the 1-8% of the population who have major medical utilization and who discover that they must pay as much as $10,000 before their stop-gap coverage kicks in, given that they already spent their medical allowance on other things. That is if there is stop-gap coverage at all. Savvy healthcare executives will be prepared with payment plans and new insurance vehicles.

More natural options will pull dollars out of traditional health care institutions and move the dollars to more innovative clinics. Traditional healthcare providers may find they will have to learn how to market their services to compete, when there is not a guaranteed flow of patients to their door.

There will be an increase in demand for higher accountability from healthcare providers, pharmaceutical firms and those that dispense prescriptions. Think stock market accountability, tobacco lawsuits. Side effects will be less tolerated and drug companies who make light of side effects will find themselves on the wrong end of lawsuits, not unlike the tobacco companies. Innovative providers will be better informed and provide less biased continuing education to avoid being implicated.

As the nursing shortage increases, best-in-class institutions will pay premium wages and cater to other nursing demands to keep their best nurses happy. They will partner with nursing schools to recruit the best new grads. They will partner with Johnson and Johnson and others to talk up the career of nursing.

Other institutions will substitute less skilled technicians for nursing personnel to cut costs and to keep facilities running with fewer nurses. There will be an accompanying PR backlash and ultimate loss of patients.

There will continue to be financial conflict between provider needs, insurer needs, and consumer needs. Savvy financial professionals will develop innovative approaches to solving these conflicts.

As more self-employed individuals face healthcare premium increases as high as 40-50% per year, they will be forced out of the health insurance market. Combined with increasing unemployment and underemployment of people with no benefits, the total portion of the population with no health coverage will continue to rise, perhaps to as much as 20-25% of the population. This will increase the call for Universal HealthCare along with all its undesirable constraints, from the provider perspective. Savvy plans will think twice before passing disproportional increases on to these un-groups. Savvy providers will have plans to support people without benefits. Savvy lobbyists will think long term as they try to avoid this contingency.

What can a healthcare financial management executive do? Be prepared. Be proactive and strategic. Plan for the worst and be pleased with the best. Think long-term profitability. Take innovative steps to anticipate the changes. Consider working with a consultant who can assist you to be all that you can be. (That sounds like an advertisement. Two maybe. Hmmm. Oh, yeah, the Army.) Which reminds me, I almost forgot.

War. Short term financial impact: caring for wounded. Long term financial impact: managing new tough-to-define chronic disease from biological and germ warfare. Think diseases like Asthma, Lupus, Fibromyalgia, Diabetes and Heart Disease are costly? Try managing the cost of germ warfare. Think AIDS on steroids. In a new consumer-driven post Sarbanes-Oxley time, excuses and denials will not be accepted. Innovative healthcare managers will be prepared, investing in state of the art treatments known to treat tough disease. Think physical treatments, light, energy, space age NASA. Think bucking the status quo, not preventing change.