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Healthcare Industry Changes and Trends

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There are four major trends for the healthcare industry in 2011, according to a report by PriceWaterhouseCoopers (PwC). The report includes information gathered from an online survey of 1,000 U.S. adults. The survey assessed the perspective of consumers regarding health reform, usage and cost.

 

Physician Office Visits Seen to Take a Plunge

 

The first trend is the potential for a decline in physician office visits. According to the Commonwealth Fund, between 2003 and 2009, health insurance deductibles rose an average of 77%. The rise in cost was for people in employer-sponsored plans. In the same time frame family coverage premiums increased 41%. This trend is expected to continue based on the PwC report.

Healthcare Industry Changes and Trends and Physicians Office VisitsThe most common 2010 health plans had deductibles anywhere from $400 to $999. Rising deductibles and a struggling economy are forcing people to forgo medical care and skip doctor visits. Decisions will have to be made about when to seek medical care and when to fill prescriptions.

According to the PwC report, doctors and drug companies will be the first groups affected since this is where consumers spend much of their healthcare dollars. Eventually this trend will then begin to affect other services like lab and x-ray.

 

The Health Information Technology Splurge

 

The second trend is record high spending on health information technology (HIT). Providers will be increasing their HIT capabilities in order to comply with new government regulations.

The 2009 economic stimulus bill authorized $19 billion to upgrade HIT capabilities in the U.S. Hospitals and physicians can start receiving money in 2011 for the “meaningful use” of electronic health records (EHRs). Providing patients with paper copies of their health records is the first stage of “meaningful use”.

Part of the $19 billion economic stimulus bill is the inclusion of incentive payments through Medicare and Medicaid. These payments would be made to hospitals and clinicians when they use electronic health records.

 

Medical Loss Ratio Seen to Make Insurers Spend More for Patient Care

 

Use of the medical loss ratio (MLR) is the third healthcare trend for 2011. The MLR mandates the amount of an insurance company’s revenue that must be spent on improving patient care instead of spending on administrative costs.

Beginning in 2011, the Affordable Care Act (ACA) will require health insurers who cover large groups to spend 15 cents or less of their revenue dollars on administrative costs. At least 85 cents per dollar must be spent on medical care or the improvement of healthcare quality. Small group and individual plan insurers will be required to spend 80 cents per dollar.

The second quarter of 2011 will see the beginning of insurance exchanges. Grant money will be provided by the federal government to help establish these exchanges. The PwC report estimates that in 2014, 13.8 million people will enroll in health insurance exchanges. There will be much debate over the definition of a qualified health insurer.

 

Accountable Care Organization Seen to Save Money and Boost Patient Care

 

The fourth trend is the new care model that has been created by the healthcare reform law called an Accountable Care Organization (ACO). This is a group of providers working together to treat patients and then split the payments received for the provided care. The government will begin marketing the choice of forming ACOs in 2011. The hope is that these ACOs will save money while at the same time improve patient care. In 2012, ACOs that meet quality and cost-saving benchmarks will be paid bonuses by Medicare using a “shared savings” design. This means that providers will receive cash bonuses by reducing the cost growth of Medicare.

The PwC report points out that the big risk for ACOs is managing their patients. They will have to keep their patient population healthy and devise ways of also keeping them enrolled in the ACO. The PwC survey asked respondents about their likelihood of staying with an ACO. Half of the respondents said that they would only stay with an ACO that they felt was responsible for their care. The report stated, “Providing incentives for patients to be a part of this accountability model could be the difference between profits and losses for an ACO.”

The ways in which these changes and trends in the healthcare industry will affect providers and consumers is still unknown. The debate continues concerning healthcare reform and whether it will survive intact. 2011 will be an interesting year.

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