February 17, 2023 – This year, 2023, has the potential to be another transformative year for the healthcare industry. 2021 and 2022 – the years following the onset of the COVID-19 pandemic in 2020 – changed the healthcare landscape dramatically. The pandemic, other public health emergencies, natural disasters, and technology are just some of the factors that have forced the industry to evolve at a rate well beyond its average. Healthcare group purchasing organizations (GPOs) continue to evolve to meet the needs of their provider customers, helping them access the safest and most innovative products and services. While there are many circumstances to take into consideration, and many more than we cannot yet predict, the Healthcare Supply Chain Association and its member GPOs will focus on three key categories in 2023.
Year-end projections for 2022 from the American Hospital Association and Kaufman Hall reveal that anywhere from 53% to 68% of the nation’s hospitals will end 2022 in the red, nearly double the 34% reported in 2019. The situation is even more dire for rural hospitals, many of which are forced to reduce hours, eliminate services, and enact pay cuts to stay operational. The new federal Rural Emergency Hospital (REH) payment program – the first new program since 1997 – and a funding boost in the omnibus spending package may help stave off some rural hospital closures in 2023. Rural hospitals who convert to rural emergency hospitals will receive a 5% boost to Medicare outpatient reimbursement and an average annual facility fee payment of $3.3 million.
In exchange, however, they must eliminate their inpatient beds, which is not an attractive option for all rural hospitals. The $1.7 trillion spending package passed in late December included several victories for rural hospitals, including a two-year extension of an add-on Medicare payment adjustment of up to 25% per discharge for low-volume hospitals, a reduction in the physician fee schedule cut from 4.5% to 2% for 2023, and the extension of critical telehealth waivers. GPOs will continue to focus on providing critical cost-savings to small and rural hospitals by reducing transactions costs and helping them obtain discounts for essential products and services.
Read more in the latest issue of The Journal of Healthcare Contracting.