Healthcare Uncertainties to Intensify in 2014

John Commins, for HealthLeaders Media , January 2, 2014

Pacing the shift toward value-based care models leads the Huron Healthcare's list of the top five healthcare challenges that providers will face in 2014. Other challenges include:

  • Responding to the Economic Dynamics of Local Markets : As healthcare organizations continue to operationalize value-based care delivery models, they are grappling with what can be achieved given the economic dynamics of their local markets. Gordon Mountford, Huron's executive vice president, says that high quality care at a lot cost is a national goal for healthcare providers "but there's not a national solution for how to get there. Local market dynamics create unique challenges and opportunities that drive the need for different strategies for success."
  • Securing and Growing Market Share: Regardless of the pace of payment model change, securing market share remains a primary concern. "Volume still pays. Even under value-based payment systems, volume through the system will remain an important driver of revenue," Whelan says.
  • Developing Alternative Revenue Streams: Healthcare organizations with cash reserves and strong margins are better-positioned to make investments that are related to, but not directly in support of, their core business of patient care. Jeff Jones, managing director at Huron, says that direct patient care will always be the largest percentage of revenue for most hospitals and health systems, "however, executives are looking at options that supplement declining revenue from third party payers through alternate revenue streams."
  • Containing Core Operating Costs: Executives continue to seek ways to contain the costs of core operations, tackle fundamentals, and reduce utilization through standardization, care variation management, and other next-generation approaches.

"Every health system on a go-forward basis likely over the next five years needs to target 6% to 10% annually in improvements, either to revenue top line or expense management," Whelan says. "That is a pretty daunting task if you look at an organization and a 6% to 10% improvement for them is tens of millions of dollars a year. The metrics in which you are going to manage yourself are really about how to drive this core strategy that is very dynamic, that is going to move quite a bit on you, but the key metric is annual improvement of 6% to 10%. That is what you are going to have to have to survive."

John Commins is a senior editor with HealthLeaders Media.

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