Nationally, health care lags about a year behind other industries — so this year might be the year that the recession hits home for those in the industry.
“The primary emphasis for all health care organizations in the year ahead will be on reducing costs and creating greater value in the health system, a focus that will have a domino effect from one sector to another, and redefine roles, responsibilities and relationships,” said David Chin, partner and leader at PricewaterhouseCoopers Health Research Institute.
The company listed its top issues in the health industry sectors — trends that affect insurers, hospitals, physicians, pharmaceutical and life sciences companies, as well as the growing number of non-traditional markets.
This year, the effort to reduce cost is the top of the list.
“No stone will be left unturned,” Chin said. “Hospitals, physicians and other providers will look to squeeze every penny out of their operations and supply chains, renegotiating purchasing agreements and contracts with suppliers on everything from food services to medical devices and pharmaceuticals.”
Penrose-St. Francis Chief Financial Officer Danny Reeves said the hospital is dealing with the same issues that face all hospitals: more uninsured and underinsured patients.
“We’re going to be dealing with cost issues as well,” he said. “People without insurance tend to avoid health care because of the costs but then they go to the ED (emergency department). People aren’t exactly breaking down our doors to pay more, and vendors aren’t exactly trying to take less for devices. The challenge is to manage resources going in and the resources going out.”
The aftermath of health reform will be another issue for the industry. Last year, people had to wait and watch for reform, but 2010 will be the year organizations start to absorb the first waves of regulatory changes.
The changes include major insurance market and payment reforms, dozens of new agencies and new grant programs, reimbursement and pricing pressures. Providers will deal with increased oversight, tax changes and the overall implications of increased coverage and consumer demand.
Some groups aren’t waiting for reform — they are changing their models to focus more managed care and individual attention. Both Memorial Health System and Penrose-St. Francis Health Services are focusing on changing the way they treat patients — instead of simply fixing what is wrong, the hospitals are focusing more on overall outcomes and prevention — goals of reform.
“We know that health care in the United States is the most sophisticated in the world — technologically,” said Memorial Health System CEO Larry McEvoy. “But we also know that we spend more money per patient than any other country, and we rank 35th in outcomes.”
His hospital system is seeking to change that, he said.
“Our future as a community organization is to provide higher quality with less costs and do it in a way that meets the needs of the community,” he said. “We’re changing our model — instead of only fixing what’s wrong, we’re going to be looking at keeping people healthy.”
This next year will also be the year the government accelerates change — using a system of rewards and penalties. The year could be a double-bonus year for doctors who act to take advantage of government incentives to adopt electronic medical records and e-prescribing. The government will no longer be a passive player in the arena — instead it is going to be an active buyer of health care and it is moving from volume-based payments to value-based purchasing.
Local health care organizations — Centura, Penrose-St. Francis Health Services and Memorial Health System — are already moving that direction. While Congress is hammering out differences in the Senate and House of Representatives bill, the hospital systems are focusing more on value.
“We don’t have any big buildings this year — but we do have a new focus,” he said. “We are a community based health care system, and we’re going to be focused on how to deliver that care in the ways that best help the community — keeping people healthier, safer.”
Centura is launching its Centura 2010 program — which also focuses more on outcomes and less on volume. The statewide health system is also focusing on ways to use all its assets throughout the state.
The company is focused on statewide trauma care, under the direction of Penrose CEO Margaret Sabin. The plan is to access Centura systems at every level of care, said CEO Gary Campbell.
“If there is a trauma patient at St. Thomas More, who needs more intensive care, then we can use the system at Penrose,” he said. “And if they need still a higher level of care, then they can go to St. Anthony’s in Denver.”
The Centura 2020 plan is to “move care upstream,” — focusing more on managed care, but not the system of the 1990s. Instead, care will focus on outcomes, just as the reform discussion highlighted deficits in outcomes.
“We want to keep the patient well — having several re-admittances to the hospital isn’t good for them,” said Wendi Dammann, director of external affairs for Centura. “We’ll be working to decrease those kinds of problems.”
PricewaterhouseCoopers said part of cost containment will mean an increased focus on fraud and mistakes. The government will go after mistakes — the “never” events in health care — in a major way in 2010.
Reform is banking on as much as $1.6 billion in savings from fraud prevention and recovery to bend the curve on cost growth. The Obama administration has boosted its budget for 2010 by 50 percent, and a significant portion is dedicated to prosecution and enforcement.
Doctors might be employed in different ways in 2010 as well.
The percentage of hospitals employing doctors has nearly doubled since 1994, and the trend will continue as doctors seek greater stability and electronic connectivity. New models such as accountable care organizations will require providers to re-evaluate relationships, operational infrastructure, payer contracting and overall funding models.
2010 will also be the year that sees renewed focus on community health care. And that focus is already seen at Peak Vista Community Health Centers, the area’s safety-net clinic. Peak Vista has more than 480 employees and sees more than 56,000 patients.
“Peak Vista’s patient base has exploded because of the economic downturn,” said Lynn Pelz, spokeswoman for the organization. “More people are losing their jobs and thus their benefits so have little-to-no access to a health care home. As such, multiple new initiatives are in the works.”
A grant from El Paso County will allow the organization to provide services through a new “bridging the gaps” homeless medical outreach van. Peak Vista will have the van — thanks to a new partnership with the county and Catholic Charities — on the road in early 2010.
While the hospitals plan no major capital improvements, Peak Vista has several in the works that will mean care for an additional 13,900 new patients and approximately 41,000 additional medical, dental and wellness visits.
Peak Vista is building a new homeless health center at 117 W. Rio Grande St. next to the Salvation Army. It is renovating and expanding its facility at International Circle, which was a gift to Peak Vista from the El Pomar Foundation. After the renovation, it will house the pediatric health center and an expanded dental health center. Registration, new radiology department and first visitor parent visitation program also will be at that location.
The focus on community also means an additional focus on school-based clinics. Peak Vista is expanding the Entrada Health Center at Harrison School District 2 schools in 2010. They also plan to offer a community clinic in District 11 schools.
Technology and telecommunications sectors become leading players in healthcare during 2010. With a huge boost from the 2009 stimulus package, technology and telecommunications companies are aggressively capturing a growing share of the health care business.
Beginning this year, the convergence of health care businesses and telecommunications will change the regulatory rules, the basis for competition and the way health services are delivered.
Pharmaceutical companies will become a full partner in the health care delivery team — as that segment of the industry begins to focus on prevention and outcomes.