Healthcare Competition This Way Comes

Philip Betbeze, for HealthLeaders Media , August 16, 2010
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Norman Stephens, who is president and CEO of the much smaller Portneuf Medical Center in Pocatello, ID, also sees big benefits in investing in better patient outcomes, saying the health reform act won’t change his organization’s focus on demonstrably better outcomes for its patients. But a small hospital’s priorities and aptitudes are quite different from a big-city system like Henry Ford.

“Clearly there will be continued pressure to monitor utilization,” he says, of the healthcare law. “But a 4% swing in our income isn’t why we’re doing this. We’re more worried about the embarrassment to the community and this hospital if we don’t look good on our outcomes. That will cause a much bigger hit to our profitability and revenues.”

He agrees the environment under the new law will get more transparent, “and that’s a good thing, but our reputation is worth more.”

Cost-cutting will continue to be a priority, as hospitals and health systems foresee many more patients who will be insured but at rates that don’t pay the cost of care, says Peter S. Fine, FACHE, president and CEO of the 25-hospital, Phoenix-based Banner Health.

“We have to think more aggressively and rethink our teams to reduce our cost per unit of service,” he says. “The huge investments we have made in IT over the last few years will allow us to achieve some of the goals we’ll have to achieve as this bill plays itself out.”

He also sees Banner participating in many of the expected demonstration projects authorized by CMS to pioneer accountable care organizations.

 “Over the course of the next four to five years there will be changes on how they will reimburse based on the outcomes of these demonstration projects. We have to move aggressively within a world like that that’s clearly been tried before with HMOs,” he says, referring to the widespread use of capitation under commercial health insurers, which patients found unappealing.

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