B2B Payments

Report: Hospital Execs See Payer Partnerships In Their Future

Hospital executives are seeing improvements in the economy, but they also continue to feel pressure to improve the efficiency with their facilities, a new survey report shows. To help address cost management, many are becoming interested in partnering with public and private payers in risk-based contracting.

More hospitals are participating in group purchasing organizations (GPOs) and accountable care organization (ACO) initiatives to improve cost efficiencies. Moreover, hospital executives are showing a growing interest in partnering with federal and private payers in risk-based contracting, which they expect to have a dramatic impact on cost management, new research shows.

In its research report, which is based on a survey of U.S. hospital executives, ITG Market Research found respondents generally continue to see recovery in the overall economy, and many are starting to see improvements in their organizations’ financial performance. More than half of executives surveyed perceived U.S. business conditions to be improving, and 35% expected conditions to improve this year.

However, given shifting hospital profit centers, executives are looking to leverage new approaches and health care IT solutions to cut costs and capture value from efficiency and quality control tools, the company said in its report release.

“There has been a promising uptick in executive confidence about the overall economy,” Graeme Christianson, ITG director of healthcare market research, said in a statement. “But executives are now asking when this economic lift will translate into improvements in the financial performance of their own hospitals or health systems.”

The Patient Protection and Affordable Care Act remains a concern, with most executives believing the full impact has not yet been realized. Some executives have observed higher volumes of insured patients in the outpatient setting, which they attribute to the new health care law. But outpatient growth has been at the expense of inpatient volumes, ITG said.

Declining reimbursement is creating the most anxiety, the research found. More than 60% of surveyed executives identified reimbursement cuts as one of their chief concerns. “The implication is that executives are concerned that any increase in volume of insured patients from the new health care law will not offset the significant cuts they are seeing in reimbursement,” Christianson said.

With costs constrained, one-third of executives reported staffing cuts in the first half of this year, and over 40% expected their spending on large capital equipment to fall over the next year.

To adjust to the new health care environment, many hospitals are investing in new healthcare IT solutions designed to provide efficiency and cost management benefits, including Population Health Management and Enterprise Business Intelligence solutions.

“We are entering a post-EMR [Electronic Medical Records] world,” noted Christianson, who also mentioned that nearly 90% of hospitals in the survey have a fully functional EMR system. “Executives are asking themselves, ‘We have an EMR, so what’s next?'”

The most common risk-based models in use today are the shared savings and bundled payments models, but hospitals and payers are experimenting with a variety of different approaches, ITG said. To date, risk-based contracting has penetrated a relatively small proportion of U.S. hospitals, but almost half of executives who are not participating in risk-based contracting plan to begin implementation within the next 12 months, the research found. Risk-based contracting also relies heavily on healthcare IT solutions to manage patients, track supply chain activity, and contain costs, ITG said.

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