South Florida Hospital News
Thursday May 28, 2020
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February 2016 - Volume 12 - Issue 8

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Are You Prepared to Capitalize on Opportunities in Today’s Healthcare Market?

The past five years in healthcare have been exciting, with several market trends creating opportunity for hospitals, physician groups and investors. Hospitals have been expanding their presence and market leadership through M&A, joint ventures, capital improvements and physician recruiting. Physician groups have been expanding with ancillary services, technology upgrades and provider additions. Private equity groups have been investing in healthcare and will continue to do so as the industry grows even stronger.
 
Trend #1: Vertical integration
With more insurance companies integrating with providers, payers have become a real competitor to hospitals and health systems through the vertical acquisition market. Hospitals who want to stay competitive will need to address this financial risk by better understanding their revenue stream and costs so they can reduce uncertainty in profitability. Hospitals tend to have a high fixed-cost basis, and moving into alternative reimbursement models will be key to future success.
 
Trend #2: Outpatient billing changes
In the past, hospitals could bill the same rates at their outpatient facilities as they could for on-campus care. Many hospitals acquired physician practices and converted them to outpatient centers to expand their footprint at lower costs while collecting the same payments. Under a new rule by the Centers for Medicare and Medicaid Services (CMS), services at off-campus provider-based departments can no longer be billed at hospital rates – with few exceptions. With reduced payments expected from outpatient departments in the future, hospitals will have to adjust their revenue projections and M&A strategy while finding new ways to reduce costs.
 
Trend #3: Value-based care
The traditional fee-for-service model is dwindling. In the old model, providers have a financial incentive based on volume of patients and number of treatments provided rather than patient outcomes. In order to promote better quality of care at a lower cost, reimbursement contracts are shifting to value-based payment arrangements that hold providers accountable for cost and quality of care.
 
To succeed in the new model, physicians and hospitals need to be able to calculate their outcomes over cost of care. Those who don’t invest in technology with analytic models, methodologies and technology to better understand their claim data, provider data and other metrics will have a hard time keeping up with the changes.
 
Healthcare is a dynamic industry with changes in regulations, reimbursements and costs. But every challenge is an opportunity, and organizations that are prepared to grow and adapt with the changes will thrive in today’s market.
Kevin N. Fine, MHA, is a director of healthcare advisory services in the Miami office of Kaufman Rossin, one of the Top 50 CPA and advisory firms in the U.S. He can be reached at kfine@kaufmanrossin.com.
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