Despite delays, confusion and technical problems, the clock continues to tick down to the implementation of the majority of the Affordable Care Act's insurance provisions on Jan. 1. Throughout the hospital universe, boards and CEOs have been scrambling to come to terms with the law and still will be sorting out the ramifications years from now. However, neither the complexity of the law and its regulations, the reinstatement of previously banned insurance policies, nor the one-year corporate mandate delay gives hospital leaders a pass when it comes to preparing for the changes a few weeks away.
Boards and senior leaders should brace themselves for seven major challenges.
1. More patients: The ACA's stated purpose is to give more access to more health care users. In that regard, it is already a success. Once they navigate the Marketplace website, millions of previously uninsured Americans will have the insurance they need to pay for their health care. Hospital executives must manage a delivery system in which more patients will be chasing fewer resources. Resource allocation and management must be maximized. The pressing question that the C-suite and governing boards must answer is, "How?"
2. More public scrutiny: Once the ACA eventually becomes fully operational, this dramatic increase in newly covered, first-time patients will lead to increased public scrutiny, including the inevitable appearance of activists and litigators. They'll seek newly enfranchised patients with complaints about the level of care they received or thought they deserved. Hospitals should expect an increase in lawsuits and public exposure.
3. Tighter finances: There are two financial issues facing hospitals and their boards. First, a key element of the new health care landscape centers around value-based purchasing, which requires hospitals to provide efficient, cost-effective services throughout their organizations. Second, Medicaid reimbursement for the surge of newly qualified patients won't cover the costs of care. Some physicians already are choosing not to accept Medicaid patients. Facing more patients, increased budget challenges and complex government regulations, boards and administrators must learn how to walk this delivery tightrope. C-suite executives must be experienced innovators who can push their hospitals to do better with less while not sacrificing high-quality outcomes.
4. Disappearing physicians: Facing more patients, more rules and fewer reimbursement dollars, many physicians are already opting out of the system. Others are seeking alternatives to traditional hospital-affiliated private practices. The most experienced physicians — those near the end of their careers — may find these challenges a bridge too far. Under the ACA, hospital boards and leaders must find creative new ways to manage increased patient demand with fewer practicing physicians, all while operating under increased scrutiny.
5. Managing employee benefits: Setting aside patient care, hospitals are employers and face the same new requirements as do other employers. As benefits continue to strain budgets, how will employee costs be more efficiently balanced with the requirements of high-quality patient care? How will this impact the need to attract and retain outstanding health professionals? Thousands of nonhospital employers already have instituted shorter work weeks, while others are opting to pay the fine and requiring employees to find their own coverage. Some boards may direct hospitals to do the same. Additionally, as reimbursement increasingly is driven by patient satisfaction surveys and long-term, quality-performance metrics, labor relations decisions will have serious reimbursement implications.
6. New technology: Once the remaining technical problems at Healthcare.gov are resolved, the ACA will fuel consumer expectations for new patient care technology. Advances in data and medical record management, robotics and the wireless transfer of information are all indicative of the changes that will define the future of care delivery. Effective board oversight and hospital management will require new technology-based, data-driven systems. Finding the resources to obtain the latest technology while managing competing demands for those limited resources will be another drain on the attention and wisdom of hospital boards and their C-level executives.
7. Essential collaboration: Regulations on Oct. 1 effectively doubled hospitals' 30-day readmission reimbursement penalty, which is driving the need for collaboration among hospitals and other health care providers. The latest set of proposed readmission regulations, released earlier this year, is just a taste of things to come. Collaboration comes down to orchestrating partnerships with other providers to ensure a uniformly high level of care while reducing the risk of readmissions.
Every one of these challenges will shape the future of hospitals as centers for high-quality care and as viable businesses. Some organizations will be strained to the breaking point: They will merge, be acquired or close their doors. More innovative organizations will pioneer their way to prosperity. What happens depends on the board and the CEO it selects to manage this change.
Dan Ryan (dan@ryansearch.net) is the principal of Ryan Search & Consulting, Franklin, Tenn.
