Just when the financial markets seemed to have recovered – bam! Our not-so-little healthcare sector within the economy is sent into a tail spin, with the implementation of the Affordable Care Act. It’s almost like all our neighbors still recovering from the Great Recession are looking at us in healthcare like “OK, it’s five years late, but now maybe you see how challenging things are out here.”
I couldn’t agree more. Five years ago, my 401k and investments went down, capital was hard to come by and my charitable giving declined. But all that steadily improved for me and many Americans. Then came the implementation of Obamacare or the Affordable Care Act. With this material change to all things healthcare, I’d like to make a few observations from 2013:
Non-for-profits are not passive stewards of their mission anymore.
The days of our nation’s non-for-profit hospitals and health systems being mild mannered, meek operators at the mercy of Medicare, Medicaid and commercial payers are gone. These systems now negotiate, demand and leverage their size and market share to their favor every day of the week, and that will not stop anytime soon.
They are also more demanding with their suppliers and patients. Without hard figures, I would guess they have far fewer suppliers than they did a year ago, as well as lower prices for products and services from the surviving suppliers.
I would also venture to guess they have aggressively pursued nonpaying patients more so than any time in the past. Call it their pursuit of survival or demand for results, but the non-for-profits should be taken seriously. They are the hard-nosed constituent in our healthcare system. In fact, I think they very well may be the cornerstone of system.
Successful suppliers understand the new value equation.
Reimbursement for providers has changed for good. Providers are no longer measured solely on volume, but also on outcomes and patient experience. This is true for many of their payer arrangements – not just Medicare – so suppliers need to make sure their value proposition lends directly to the triple aim focus of reform;
- Decreasing cost
- Increasing quality
- Enhancing patient experience
Suppliers better have a compelling story of how their products or services lend to these tenants.
Interesting, isn’t it, how fast things changed? Non-for-profit providers have grown into results heavy, demanding businesses. Suppliers known for pushing products to meet aggressive sales targets have been compelled toward ensuring their offering is an altruistic solution to the healthcare provider and patient.
It certainly sets up interesting roles for stakeholders in 2014.
Thanks for reading this issue of The Journal of Healthcare Contracting.
John Pritchard
