The healthcare industry is in a state of emergency today. In an industry where change notoriously happens gradually at best, leaders should change to a posture of aggressive urgency if they want their facilities to survive.
The negative after-effects of the COVID pandemic are felt by no industry greater than healthcare. The virus has left in its wake a system that is not only tired but wounded – physically and fiscally.
“In an industry where change can be measured in eons, there is a dire need for a greater sense of urgency,” said Bryan McDonald, managing partner for HORNE Healthcare.
Workers in the industry are exhausted, and costs to keep them working have skyrocketed. The industry embraced telemedicine out of necessity, not choice.
There are many other challenges and issues within the industry. But the biggest is the impact of the drive to efficiency that capitation brings. Simply defined, capitation is when an organization transforms a variable cost into a fixed cost.
In the case of the healthcare industry, what we’re seeing is that insurance companies demand a fixed cost for the people they cover instead of variable fees. They are demanding providers decide how much it will cost to treat the people insured, prior to treatment.
There has never been a time in the history of healthcare with a bigger market segment built around capitation, and insurance companies are working to take full advantage of it. They have data going back for decades, allowing them to set fixed costs to their advantage, putting healthcare organizations into something akin to bidding wars against one another.
“Our role is to help clients figure out this new way of doing business, to step in and ensure they navigate this situation successfully,” McDonald said. “We want the obstacle to become the way.”
And if this isn’t complicated enough, private equity groups are moving in. They are siphoning the most profitable ambulatory services in the industry, such as sports medicine groups and other large specialty clinics.
In the past, Medicare payments have dictated the going rate for many medical services and procedures. Not anymore.
We predict that soon, 50% of Medicare participants will be in some sort of capitated program. Additionally, over the next decade, there will be two classes of healthcare entities: those that can negotiate well and stay private, and those largely dependent on government support.
Capitators are pushing the financial risk to the providers, but the providers are not getting the rewards. This new way of providing healthcare will affect academic medical centers, private entities and government programs.
“HORNE Healthcare is taking swift and deliberate steps to position ourselves to solve the biggest problems of our clients,” McDonald said. “We’re doubling our efforts to leverage the expansion of our Healthcare expertise outside of traditional services and to be the provider of choice by state governmental partners.
“While we are accountants and auditors by trade, we pride ourselves on being a professional services firm with unique thoughts, approaches and services that stretch beyond the typical CPA firm’s offerings and capabilities.”
HORNE Healthcare can deliver timely and relevant insights, as well as actionable intelligence of our clients’ data, drawing upon experience from a diverse set of disciplines and backgrounds. HORNE Healthcare’s team is prepared to provide integrity monitoring with a focus on data transparency and contractual compliance.
“It’s not an easy path forward, and time is of the essence,” McDonald continued. “We understand the industry’s objectives and know how to move forward in a way this is mission-critical and fiscally responsible.”
HORNE Healthcare can help you navigate the change happening in this industry. Contact us today to find out how.