The pace of the fee-for-value transition, cost transparency and forming mutually beneficial partnerships were key topics of discussion among nearly 50 hospital and health system finance leaders at the 2015 CFO Exchange in Colorado.
Three themes emerged at this year’s Exchange, which are consistent with what we’re experiencing in the industry:
1. Payment reform is moving more slowly than anticipated.
Fee-for-service remains the dominant payment mechanism, and while many hospitals see taking on risk by managing population health as the path to maintain fiscal health, many insurers are reluctant to offer innovative payment models. In the meantime, although the Patient Protection and Affordable Care Act has increased the number of insured patients and reduced uncompensated care, high-deductible plans and many of the “silver” and “bronze” exchange plans leave patients with an unexpectedly high burden for healthcare spending—and many hospitals with increasing levels of bad debt for insured patients.
2. Transparency is an elusive goal.
Many CFOs remain frustrated by the inability to define the cost for every procedure in the hospital, and while consumers seek transparency regarding the price and quality of healthcare services, that information is difficult to provide given the complexity of the reimbursement environment. It is clear that hospitals have a handful of common goals: Provide care in a way that balances cost and quality; minimize unnecessary utilizations; and retain patients and revenue streams within the system. In many cases, this means delivering care to patients in different ways depending on complexity and need—using case management and care coordination for chronic patients, while leveraging urgent care, retail locations, and e-solutions to provide convenient access to care for less acute patients.
3. Partnerships are key to managing the financial impact.
To rise to the clinical and financial challenges in this transformational time in our industry, partnering with the right organizations is critical. These partnerships are not all about mergers and acquisitions. Hospitals are approaching partnerships from every angle: Creating narrow networks to better manage populations, partnering with physicians to drive clinical efficiency and improvements, and even partnering with large employers to craft direct-to-employer plans that cut out the middle man in reimbursement. But not just any partner will do. Culture and strategies must be aligned for these partnerships to be effective over the long term.
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- As the fee-based payment model remains dominant, high-deductible plans add to the financial burden of both patients and hospitals
- Consumer pressure for transparency and today’s complex reimbursement environment are prompting hospitals to adapt
- Hospitals are meeting clinical and financial challenges with creative partnerships that go beyond M&A