At last count, there were five plans competing to be a replacement for the Affordable Care Act, and no doubt others will follow. Their backers — a list that includes President Donald Trump, House Speaker Paul Ryan, Health and Human Services Secretary nominee Rep. Tom Price, R-Ga., Sen. Rand Paul, R-Ky., Sen. Susan Collins, R-Maine, and Sen. Bill Cassidy, R.-La. — promise an orderly transition over the course of two to three years and no disruption in coverage for the 20 million newly insured through Medicaid expansion in 31 states and the health care marketplaces in states. Details to follow!
Since its passage in March 2010, the focus for hospitals has been on compliance with the ACA. It clearly set in motion changes that have been monumental for hospitals: the shift of payments from volume to value, heightened visibility for quality, safety, costs and patient experiences, additional responsibility for population health management, and increased financial penalties for avoidable complications, avoidable readmissions and unnecessary utilization, and many others.
Beyond the ACA, hospitals faced equally daunting challenges: shrinking reimbursements by Medicare resulting from sequester and market basket update cuts, reductions in state Disproportionate Share Hospital and Medicaid funding, pressure from private insurers for deeper discounts, and increased costs for medical technologies and drugs. To complicate matters, one in three U.S. physicians, facing many of these same hurdles, elected to become an employee of their local hospital, compounding the scope and complexity of the challenges.
While Congress implements its repeal, hospitals are left to navigate in uncertain waters. For hospital boards and management, the paralysis of inaction is a bigger risk than proactive pursuit of initiatives that are imperatives, even as the dust settles. While it’s sensible to proceed deliberately with major capital projects and operational endeavors for which clear near-term opportunity is discernible, the punch list for hospital leadership teams should necessarily include these items:
- Shared risk arrangements with private insurers: In all likelihood, value-based payment programs like bundled payments will continue. They save money for payers and force providers to coordinate care more effectively. The new administration is likely to suspend mandatory participation in bundles but encourage them voluntarily as a mechanism for stimulating competition. They’re not going away.
- Accelerated cost reduction: Every opportunity to reduce fixed and operating costs should be on the table, with no sacred cows. Outsourcing, disposition of nonearning assets (i.e. parking decks, back office facilities), job sharing, the supply chain, the revenue cycle, lower costs of capital, compensation, clinical program rationalization and much more need to be considered. The key is this: Acceleration of cost reduction is necessary as costs goes up, margins go down and the ranks of the uninsured swell.
- Physician leadership: Lowering costs, improving quality and managing patient experiences is the trifecta upon which competition between hospitals will be based. To achieve this triple aim, clinical processes must be led by clinicians skillful in leadership, process improvement, information, financial management and decision-making. Clinical skillfulness is table stakes.
- Access to efficient capital and cash flow: Access to capital at attractive rates and efficient use through cash management and off–balance sheet leverage arrangements are vital to the hospital business office of tomorrow. As high-deductible health plans become dominant, revenue cycle activities, whether internal or outsourced, that use sophisticated analytics to support cash flow management will be table stakes. The treasury and business office functions of the future are decidedly more complicated than those of the past.
- Enterprise growth: The scale and scope of services necessary to operate in the "new normal” require competencies in insurance, post-acute care, retail, telemedicine, digital health and more. The end game is not short-term consolidation of hospitals and hospitals: It is systems of health that serve individuals in their homes, workplaces and schools, not just clinics and facilities.
- Workforce productivity: Hospitals are labor-intensive, and our patients are sicker and more demanding than ever. Clinical innovations and the need for new services stress our workforces. It’s a people business, and our people are keys to our success.
- Advocacy: Now more than before, making the case about the unique role of hospitals vis-a-vis advocacy at the local, state and national levels is imperative. In this era of fake news and 24/7 visibility, hospitals must articulate a cogent policy platform that’s clear and relevant. Our role in communities, as infrastructure fundamental to community well-being and public health, is a unique position on which our policies can be built.
Admittedly, the list is not sexy, but that’s exactly the point. Times are uncertain. It’s a time for hospitals to buckle up and navigate the uncertain politics of repeal and replace.
Paul H. Keckley, Ph.D. (firstname.lastname@example.org), does independent health research and policy analysis and is managing editor of The Keckley Report. He is a member of Speakers Express; for speaking opportunities, please contact Laura Woodburn.
The opinions expressed by the author do not necessarily reflect the policy of the American Hospital Association.