Healthcare Reform Overview
The Patient Protection and Affordable Care Act will have a profound effect on healthcare providers, including reductions in reimbursement to hospitals and physicians; focus on value based purchasing – higher quality and lower costs; financial incentives and penalties tied to clinical quality outcomes and a transition away from fee-for-service payment to bundled payments and Accountable Care Organizations (ACOs).
Healthcare Providers: Recommended Responses
Healthcare organizations developing plans to respond to reform initiatives must create a path for the organization that:
- Aligns the board, executive staff, medical staff, and clinical staff
- Implements measurement, monitoring and benchmarking systems for costs and quality
- Streamlines processes to enhance clinical outcomes and reduce costs
- Integrates information technology, including electronic health record technology, with clinical and administrative processes to support care management across all settings
- Focuses on improving clinical performance through evidence based medicine
It will be critical for organizations to get a clear understanding of their strengths and weaknesses relative to each reform initiative.
Thriving under reform initiatives will require organizations to evaluate the entirety of their business, optimizing operations in all areas to enhance net revenues and reduce labor, supply, drugs and other costs. The goal should be to achieve or beat ‘best’ quartile performance.
Hospitals must continue to improve quality while increasing cost effectiveness.
Hospitals should undertake an in-depth evaluation of what service lines are crucial for their success – and which lines might be scaled back or divested based on funding limitations.
Healthcare reform will forever alter the landscape of medical care in the U.S.
Hospitals will have to align medical staff to address quality of care and comprehensive performance improvement under healthcare reform measures.
An organization’s ability to collaborate with physicians to redesign clinical processes, minimize unnecessary services, lower readmission rates, and reduce hospital acquired conditions will be critical to their success under reform.
Hospitals now not only need margins to meet their missions, they need margins to meet the demands of reform.
Short-term and long-term savings from critical performance improvements will help position organizations to succeed under reform and beyond.
While many of the ramifications of healthcare reform and its effect on hospitals remain to be seen, one thing is certain: there will be less money in the system to go around.