"The percentage of the population age 65 and older is expected to grow and grow over time and those are the folks who consume more healthcare resources," he said. "That coupled with a lot of the expense management efforts over the last three or four years have been low-hanging fruit like renegotiating supply contracts and right-sizing staff levels, things of that nature."
Many hospitals are focusing on the next level of expense reductions that include harder-to-find and longer-term efficiencies in areas such as enforcing standardized clinical protocols, improving patient throughput, hand-offs, and post-discharge care coordination.
"At some point you have to reengineer the process of healthcare management, which is really where a lot of the more sophisticated and aligned health systems are right now in trying to redevelop the throughput of healthcare—rethinking that altogether," Pascaris said.
"We think the next phase of expense management is probably going to be more difficult in terms of restructuring the process of healthcare delivery and that is probably going to be a bit more disruptive coming into an era where more of the population is at that Medicare eligibility," he said.
"It is going to be that much more of a challenge moving forward, which is part of the reason why we have seen and will continue to see more consolidation in the industry, more hospitals joining together or joining larger health systems to take advantage of economies of scale."