PricewaterhouseCoopers' Health Research Institute has released a report on the top six healthcare industry issues of 2011 — a year when health organizations are expected to undergo strategy makeovers as they react to new rules and payment models brought on by healthcare reform.
The annual survey identified the following six key issues for 2011:
1. Booming business in Health Information Technology. The HIT spending boom is driven by the following three forces:
3. ACOs. Accountable care organizations have created buzz in the industry that this is the next big thing for population health management. But 2011 could be a make-it-or-break-it year for ACOs depending on Congressional action. In anticipation of new performance payment incentives, health organizations are positioning themselves to participate in ACOs and share risks and rewards of keeping people healthier. While ACOs hold great promise for reduced costs and improved quality, the challenge will be keeping people in the ACO and engaging them to stay healthy, which could be the difference between profit and losses.
4. Consumers could continue to reduce utilization. Higher health insurance premiums, steeper deductibles and more co-insurance costs mean consumers are spending more out of their own pockets for healthcare. Cost shifting may have reached the end of the line as increased price sensitivity has caused consumers to cut back on utilization. PwC forecasts a trickle down effect, starting with physicians and pharmaceutical companies as consumers reduce office visits and drug spending, followed by reduced sales of other medical products, fewer lab tests, imaging scans and other diagnostics. The danger lies in whether short-term cost avoidance could lead to more expensive conditions long term.
5. M&A activity expected to trend upward. Mergers and acquisition activity among all healthcare sectors are expected to continue to trend upward in 2011. Increased consolidation is expected among payors, physicians are aligning with hospitals, hospitals are merging with other hospitals and health systems, and recent deals reflect blurring of the lines between the payers and providers sectors. Competition for acquisitions is likely to come from private equity funds investing in healthcare.
6. Patients look to health organizations that are always 'on." The mobile health market is growing exponentially as health organizations use wireless and remote technology to interact with patients anytime, anywhere. To influence patient outcomes, organizations have to engage patients and understand how to connect with them. Healthcare organizations are spending tons of resources to produce online content, yet PwC found that consumers are three and a half times more likely to go to the media and third-party information service companies for information about treatments and conditions than to any other site, especially pharmaceutical company web sites.
Read the full PwC report, "Top Health Industry Issues of 2011."
Read other stories on the biggest issues of 2011:
- 10 Key Trends for Hospitals in 2011
- 5 Reasons For Hospitals to Be Optimistic About 2011
The annual survey identified the following six key issues for 2011:
1. Booming business in Health Information Technology. The HIT spending boom is driven by the following three forces:
- Federal requirements that hospitals and physicians meet at least stage one requirements for the meaningful use of electronic health records to qualify for federal stimulus funds in 2011;
- An aggressive timetable for massive upgrades in back-office infrastructure to comply with new medical coding requirements (ICD-10) that will add five times the number of diagnosis and inpatient codes and require providers and payors to use the new HIPAA 5010 electronic transaction format, which will require more than 1,300 system modifications by January 2012; and
- Final FDA rules that will require online reporting of adverse events related to medical devices, resulting in possible new tracking technology throughout the supply chain.
3. ACOs. Accountable care organizations have created buzz in the industry that this is the next big thing for population health management. But 2011 could be a make-it-or-break-it year for ACOs depending on Congressional action. In anticipation of new performance payment incentives, health organizations are positioning themselves to participate in ACOs and share risks and rewards of keeping people healthier. While ACOs hold great promise for reduced costs and improved quality, the challenge will be keeping people in the ACO and engaging them to stay healthy, which could be the difference between profit and losses.
4. Consumers could continue to reduce utilization. Higher health insurance premiums, steeper deductibles and more co-insurance costs mean consumers are spending more out of their own pockets for healthcare. Cost shifting may have reached the end of the line as increased price sensitivity has caused consumers to cut back on utilization. PwC forecasts a trickle down effect, starting with physicians and pharmaceutical companies as consumers reduce office visits and drug spending, followed by reduced sales of other medical products, fewer lab tests, imaging scans and other diagnostics. The danger lies in whether short-term cost avoidance could lead to more expensive conditions long term.
5. M&A activity expected to trend upward. Mergers and acquisition activity among all healthcare sectors are expected to continue to trend upward in 2011. Increased consolidation is expected among payors, physicians are aligning with hospitals, hospitals are merging with other hospitals and health systems, and recent deals reflect blurring of the lines between the payers and providers sectors. Competition for acquisitions is likely to come from private equity funds investing in healthcare.
6. Patients look to health organizations that are always 'on." The mobile health market is growing exponentially as health organizations use wireless and remote technology to interact with patients anytime, anywhere. To influence patient outcomes, organizations have to engage patients and understand how to connect with them. Healthcare organizations are spending tons of resources to produce online content, yet PwC found that consumers are three and a half times more likely to go to the media and third-party information service companies for information about treatments and conditions than to any other site, especially pharmaceutical company web sites.
Read the full PwC report, "Top Health Industry Issues of 2011."
Read other stories on the biggest issues of 2011:
- 10 Key Trends for Hospitals in 2011
- 5 Reasons For Hospitals to Be Optimistic About 2011