Financial Forecast Follies

Edward Prewitt, for HealthLeaders Media , January 14, 2013

A second category of expected activities to boost growth prospects is structural: entering into joint ventures (41%), acquiring physician practices (38%), and acquiring or merging with other hospitals or health systems (27%).

We wrote recently about M&A strategies for small hospitals, which are particularly vulnerable in the current climate, but the ongoing trend toward consolidation affects healthcare organizations of all sizes and types.

So with industry income likely to drop, and an increasingly competitive market in which to create new sources of revenue, are healthcare leaders despondent about their prospects in 2013? Well, no. A majority of Industry Survey respondents expect positive (45%) or strongly positive (10%) financial results this year. Another 30% say their financial results will be flat. Only 12% say the 2013 forecast is negative (9%) or strongly negative (3%).

This math doesn't seem to add up. It's unlikely that a majority of organizations will be immune from a negative climate. Can healthcare leaders really expect bad things to happen only to other organizations?

A clue to this seeming paradox may lie elsewhere in the HealthLeaders Industry Survey. We asked the respondents for their take on the state of the industry. The top choice was that it's on the wrong track—chosen by 39%. Nearly a third (32%) say the industry is on the right track, and 28% aren't sure.

Yet when asked about the state of their own organizations, the respondents overwhelmingly (71%) say they're on the right track! Only 14% believe they're on the wrong track, and for another 15% the jury is still out.

Healthcare leaders seem to have confidence in themselves and their own organizations—that's good. But it would be bad to be caught off-guard by overly optimistic forecasts. It's not too late for healthcare leaders to adopt a new resolution for 2013: take an honest look at reliable income, accounting for likely lower reimbursements.

Edward Prewitt is the Editorial Director of HealthLeaders Media.

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