…highly profitable, procedurely-based services are being stripped away by new forms of competition…

Positioning Your Organization In A Changing Marketplace

A Changing Healthcare Industry Landscape
Powerful drivers of change are fundamentally altering the landscape of the healthcare industry:
 1. The passage of the Patient Protection and Affordable Care Act (ACA) sets the stage for a total transformation of the traditional healthcare delivery model. As part of CMS’ strategy to expand value-based purchasing, this legislation encourages the creation of Accountable Care Organizations (ACO’s). As of January 2012, Medicare provides financial incentives to organizations that agree to manage the care for defined populations and be at risk for clinical quality and cost control. It is ICS’ premise that commercial payers will follow suit in order to stabilize premiums and remain competitive in the private market. Alternative arrangements such as capitation, bundled reimbursement, pay for performance, episode-based case rates and similar innovative reimbursement models will likely be implemented, particularly as ACO’s contract with commercial carriers or self-insured plans. 
 2. The momentum toward ACO’s as well as capitation and bundled payment moves the industry away from the traditional cottage-style, somewhat fragmented fee-for-service delivery model toward more integrated and aligned healthcare systems. This will require well-developed care pathways and transitions, and very importantly, will require an unprecedented degree of integration and alignment between hospitals, physicians, and other caregivers.  Head-to-head competition between hospitals and physicians is having an adverse affect on the economics and coordination of healthcare delivery. Developing creative structures—e.g., physician employment, co-management models, joint ventures—can be a "win-win-win" for the hospital, physicians, and community. And as physicians face declining payment rates, there are new incentives for them to explore alternative practice models.
 3. There is a strong movement toward patient-centered healthcare as well as heightened consumer awareness of factors related to technology, quality, convenience, and cost. This awareness is being elevated by growing abundance of health provider information and performance data that are available to patients.  Consumers are becoming very discerning in their choice of where and how they wish to receive healthcare services.
 4. With the impetus of the Affordable Care Act and movement toward ACO models of health delivery, there will be a growing emphasis on population health and related models of healthcare that focus on prevention and wellness. This will require a more proactive, population- and patient-centered approach that encompasses biometric screening and predictive modeling, lifestyle and behavior modification, monitoring, coaching, and ongoing disease management.  It will also require a close relationship between healthcare systems and payers/employers in order to improve the health status and minimize healthcare costs for covered lives.


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