With President Barack Obama's decisive election victory last week, many healthcare organizations accepted that the Patient Protection and Affordable Care Act is here to stay, even though House Speaker John Boehner (R-Ohio) is still pushing to repeal it.
What is more questionable to the future of healthcare is the impending fiscal cliff and the automatic Medicare cuts that will come if President Obama and Congress do not agree on a deal to reduce the nation's deficit.
Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions, says hospitals and health systems should start preparing for the worst — Medicare cuts larger than the discussed two percent each year for 10 years with sequestration.
"The news doesn't appear good," he says. "They have to find more money from somewhere to get the economy in order, and we think healthcare will be a prime target. We do not think the government will cut as much as envisioned from defense, and the next bucket they can take money from is healthcare."
Because of the impending sequestration of Medicare and the outlook on the economy, hospitals should begin to reduce costs dramatically if they have not done so already. "Cut costs, and be aggressive about it," Dr. Keckley says.
One way to seek alternative revenue is in retail health. "There is a huge market there that can be tapped, and it complements in- and out-patient care," Dr. Keckley says, noting that many health systems overlook retail health.
For example, more people are buying pregnancy tests off-the-shelf now, rather than going to a physician or hospital to get a blood test. Another example is that vitamins can impact if certain drugs are effective, but most acute-care systems do not address that and leave it to over-the-counter stores. Along with retail health opportunities are opportunities in alternative health, such as yoga classes. These are non-traditional revenue streams for acute-care systems, but are worth looking at for future profits.
Post-acute care is another area where many health systems can find revenue, especially with the readmission penalties in place from the PPACA. A lot of care that the elderly receive is happening in specialized facilities, such as skilled nursing facilities. "The post-acute market is a growth corridor for emerging systems," Dr. Keckley says.
Even though the amount that Medicare will be cut is still uncertain, health systems that begin preparing for major cuts and looking into new revenue streams now will have an advantage when the national budget is announced.
6 Scariest Issues in Healthcare Right Now
Rep. Dr. Michael Burgess Proposes 1-Year Extension of SGR
What is more questionable to the future of healthcare is the impending fiscal cliff and the automatic Medicare cuts that will come if President Obama and Congress do not agree on a deal to reduce the nation's deficit.
Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions, says hospitals and health systems should start preparing for the worst — Medicare cuts larger than the discussed two percent each year for 10 years with sequestration.
"The news doesn't appear good," he says. "They have to find more money from somewhere to get the economy in order, and we think healthcare will be a prime target. We do not think the government will cut as much as envisioned from defense, and the next bucket they can take money from is healthcare."
Because of the impending sequestration of Medicare and the outlook on the economy, hospitals should begin to reduce costs dramatically if they have not done so already. "Cut costs, and be aggressive about it," Dr. Keckley says.
Find alternative revenue
Most hospitals will not be able to rely solely on acute care moving forward. "If they do, they better have a huge advantage in the market in clinical outcomes and have competitive prices," Dr. Keckley says. Therefore, hospitals and health systems need to do more than just cut costs: They will need to bring in money from new and different sources.One way to seek alternative revenue is in retail health. "There is a huge market there that can be tapped, and it complements in- and out-patient care," Dr. Keckley says, noting that many health systems overlook retail health.
For example, more people are buying pregnancy tests off-the-shelf now, rather than going to a physician or hospital to get a blood test. Another example is that vitamins can impact if certain drugs are effective, but most acute-care systems do not address that and leave it to over-the-counter stores. Along with retail health opportunities are opportunities in alternative health, such as yoga classes. These are non-traditional revenue streams for acute-care systems, but are worth looking at for future profits.
Post-acute care is another area where many health systems can find revenue, especially with the readmission penalties in place from the PPACA. A lot of care that the elderly receive is happening in specialized facilities, such as skilled nursing facilities. "The post-acute market is a growth corridor for emerging systems," Dr. Keckley says.
Even though the amount that Medicare will be cut is still uncertain, health systems that begin preparing for major cuts and looking into new revenue streams now will have an advantage when the national budget is announced.
More Articles on the Fiscal Cliff:
AHA Proposes 12 Deficit Reduction Strategies in Lieu of Medicare Cuts6 Scariest Issues in Healthcare Right Now
Rep. Dr. Michael Burgess Proposes 1-Year Extension of SGR