Top 7 Financial Healthcare Trends and Challenges for 2016

On a recent episode of “Face the Nation,” there was a panel discussion about former presidents who were particularly skilled at helping their country overcome challenges in the 21st century. The discussion focused on the characteristics that made these presidents effective leaders:

  • Resilient
  • Inspiring
  • Collaborative
  • Great Communicators

I certainly think these attributes, paired with an in-depth understanding of financial healthcare trends, will help financial leaders overcome challenges and make improvements in 2016.

In addition to highlighting what I think are the top seven financial healthcare trends in 2016, I’ve also included action-oriented strategies that will help healthcare financial leaders stay ahead of the curve.

#1: More data sharing.

As health systems improve their analytics capabilities and the quality of their healthcare data, sharing it with clinicians will become increasingly important. Sharing data has a proven impact on accountability, productivity, care quality, and innovation. Meaningful data can inspire, facilitate collaboration, and serve as a very effective communication tool. Although it’s tempting to wait for perfect data, prioritize frequent data sharing over perfection.

Lead The Way:

  • Share data with your clinicians: Stop hoarding data. Stop waiting for perfect data. Share data with your clinicians often.

#2: Continued shift from volume-based care to value-based care.

CMS announced its goal: by 2018, 50 percent of fee-for-service payments will move to alternative payment models, such as bundled payments and accountable care organizations. CMS also issued final regulations for joint replacement (published November 2015), starting the mandatory movement to bundled payment in 67 metropolitan areas for Medicare.

percent of medicare FFS

Lead The Way:

  • Understand clinical measures: healthcare financial leaders need to get a handle on clinical quality and how much it costs to achieve a unit of healthcare outcome and quality. Understand the clinical measures and how much it will cost to get them.
  • Develop cost systems to quantify your margins: develop new, automated systems that show costs for activities across all sectors.
  • Create your risk vision: we’ve been under various CMS quality programs (Readmission, Value Based Purchasing, and Hospital Acquired Conditions) for years. If you aren’t improving yet, then you need to prioritize helping your teams improve.

#3: Industry consolidation (and alternative delivery models).

We’ve seen three large insurance mergers over the past few months: Aetna/Humana, Anthem/Cigna, and Centene/HealthNet. And according to a recent Health Affairs blog, Georgia, Connecticut, and Colorado could experience a 40 percent or more commercial insurance concentration.

We’re also seeing a spike in alternative delivery models, including retail space. In October 2015, Walgreens announced they’re buying Rite Aid—an acquisition that would allow Walgreens to broaden retail health (both Walgreens and Rite Aid are very active in the walk-in health clinic business).

“Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy. In both mature and newer markets across the world, our approach is to advance and broaden the delivery of retail health, wellbeing, and beauty products and services” says Walgreens Boots Alliance Executive Vice Chairman.

Lead The Way:

  • Update your marketing/contracting plan: determine what consolidation means for your contracting strategy. Assess what you’ve lost to the retail movement. Have you seen a decrease in urgent care and physician office visits? Decide if it’s a market you should compete in.

#4: Population health is a top priority.

Population health is the recurring theme in a recent interview of healthcare leaders from the 21 winning Healthcare IT News’ 2015 Best Hospital IT Departments. Fort HealthCare’s Senior Director of IT effectively summarized the increasing prioritization of population health: “population health is 100 times bigger and the road isn’t yet paved; it isn’t just about the data or the tools used by clinicians, it really is about changing the way healthcare organizations think about practicing medicine. Care models must change to support the needs, which is a dynamic shift in the way we think today. How will we support the added work that population health will bring about? It’s all unknown, and it’s up to healthcare leaders to figure it out.”

Lead The Way:

  • Get comfortable with blurred lines: provider and payer roles will become less obvious, and we’ll continue to rely less on four-walled structures.
  • Learn the new terminology: Are you familiar with Return on Engagement? In a PMPM capitated environment, you won’t be able to spend the same amount of time and resources on all patients. Healthcare financial leaders will need to have some means of estimating the Return on Engagement for patients, beyond the current patient risk stratification methods being used. They have to be able to predict which patients will have the highest Return on Engagement, and allocate resources accordingly.
  • Know how to treat a population: know how to treat a population and take risk for that population. Load claims data and analyzing physician, diagnosis codes, and treatment pattern data. This data analysis will either confirm your sneaking suspicions or reveal surprises.
  • Learn new measurements: there are 23.5 million covered lives under ACOs and 7.8 million covered lives under the Medicare ACO structure. Know the number of covered lives in your market and determine how to measure success. Decide how to define what you buy versus what you produce.
  • Collaborate to improve the care continuum: identify partner organizations and stakeholders you’ll need to collaborate with to achieve a broader definition of care—as a bundle or population. Then get out in the community and look for partners. Anyone in the 67 markets covered by the new CMS joint replacement project will need to prioritize collaboration.
  • Study patient flow: start by identifying the bottlenecks at your hospital or clinic. Use data to study patient movement and help clinicians eliminate silos. Then study patient flow outside your organization. Focus on improving the admission/discharge process to meet patient needs.

#5: Engaging patients through technology.

Using technology to engage patients will be a focal point of patient engagement conversations in 2016. The healthcare Internet of Things market is expected to hit $117 billion by 2020. The adoption of wearables increased by 60 percent in 2015. Half of patients hospitalized in the last year started using wearables after their hospital stay.

Lead the Way:

  • Understand how different patient segments use technology: healthcare technology is not a one-size-fits-all solution. Understand how different patient segments use technology. A majority of wearable owners are under 35; think about how you’ll reach other segments. Consider barriers to adoption, including the fact that 1/3 of wearable users stop use after 6 months.
  • Attend the International Consumer Electronics Show (CES): CES is a global consumer electronics and consumer technology tradeshow that takes place every January in Las Vegas.  CES showcases more than 3,000 consumer technology companies, features more than 200 conference sessions, and has more than 150,000 attendees from 150 countries.

#6: Revive the analytics around revenue cycle.

We’ve spent several years planning for ICD-10. The first month of claims processing didn’t show any huge spikes in denials per CMS (the historical rate was 10 percent, and in the first three weeks of October, 10.1 percent of claims were denied). Now that ICD-10 is in place, we need to revive the analytics around revenue cycle.

Lead the Way:

  • Put the right analytics tools in place: Don’t get too comfortable in that false state of tranquility based on high-level metrics. Make sure cash is still flowing at the same rate. Implement frequent reporting so you can quickly and efficiently identify trends.

#7: Increased healthcare spending.

Healthcare spending increased by 5.3 percent in 2014—a significant increase compared to previous years, when it was closer to 2.5 percent. We’re spending $9,523 per person for healthcare. I certainly hope I’m wrong about this trend. Regardless, we need to contain these increases by being vigilant about costs.

Lead The Way:

  • Take a leadership role in reducing waste, overtreatments, and unnecessary variation: you can’t tackle everything at once, and there may be negative impacts on revenue, but work with clinicians to do the right thing for your patients/members.

2016: The Year of the Consumer

2016 might just be the year of the consumer, with everyone’s attention on patient engagement and the consumer experience. But with increased healthcare spending, the continued shift from volume-based care to value-based-care, and a rise in alternative delivery models, healthcare financial leaders need to proactively manage a variety of high-level priorities in the coming year.

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