For-Profit Healthcare Faces Multiple Threats in 2018

Rich Bajner via Modern Healthcare

Navigant Managing Director Rich Bajner told Modern Healthcare he thinks hospitals of all stripes should focus more attention on a combination of more near-term challenges, including a payer mix that continues to shift away from commercial and toward government payers. 

Hospitals also need to strengthen their revenue cycles as more patients buy high deductible health plans. 

Hospitals are seeing a "rapid deterioration" in surgical volumes as well, as more procedures are performed in ambulatory surgery centers, Bajner said. That's due to both regulatory changes like Medicare covering more outpatient services and new technologies that allow for less invasive procedures. In the end, hospitals are left with lower margin patients compared with surgical patients.

"That's hurting our clients pretty significantly," Bajner said. 

The industry also must contend with the continued focus on affordability. Big data and analytics permit price transparency and let consumers shop around, Fitch noted in its report.

Fitch says the companies best positioned to defend profitability in 2018 will be those that show innovative depth or commoditized breadth, such as a pharmaceutical firm focused on a handful of therapies or a healthcare provider that can successfully establish a continuum of care within a certain market. Several national companies have invested in scale and found it doesn't pay off, Bajner said. That usually happens because they're not able to develop relevance in each of their local markets. 

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