SOURCE: The Camden Group

The Camden Group

January 12, 2010 13:27 ET

The Camden Group Announces "Top 10" Healthcare Industry Trends and Challenges for 2010

Continuing Economic Challenges and Anticipated Healthcare Reform Drive Major Developments in Year Ahead as Key Trends of Efficiency, Quality and Cost Reduction Gain Momentum

LOS ANGELES, CA--(Marketwire - January 12, 2010) - The Camden Group, one of the nation's leading healthcare business advisory firms, today announced its annual forecast of the "Top 10" trends and challenges in the nation's healthcare industry. The continuing effects of the Great Recession and expected healthcare reform are the driving forces behind many of the 2010 "Top 10" trends. The Camden Group expects that in the year ahead there will be increased momentum around major healthcare industry themes, such as efficiency and integration, quality improvement, cost reduction and information technology.

"With the overall economy finally emerging from the last year's brutal recession, the healthcare industry is facing a new year that will continue to pose serious challenges, but also offer opportunities to smart players that can adapt quickly to rapidly changing realities," said Steven T. Valentine, President of The Camden Group. "Healthcare reform is of course the elephant in the corner right now, and the entire industry is anxiously waiting to see how reform really pans out once it becomes law, as expected."

Valentine continued: "Beyond reform, however, there are numerous other industry trends that we expect to pick up speed in 2010, creating both winners and loser in a healthcare sector that is undergoing the most profound change in history."

The following are the "Top 10" trends and challenges that The Camden Group predicts will have a major and continuing impact on the healthcare sector during 2010:

1.  Waiting for Reform - The general consensus is that some level of
    healthcare reform will be enacted into law later this year. The
    question now becomes: What does it all mean? Even if reform does pass,
    actual implementation will take months and in some cases years. Expect
    the biggest impact to be changes in reimbursement, particularly
    relating to Medicaid, Medicare, Disproportionate Share Hospital
    payments and even some commercial payment rates. Hospitals should
    anticipate all payment rates moving closer to Medicare levels over the
    next few years.
2.  Recession Woes Not Going Away Anytime Soon - With respect to the still
    halting economic recovery, 2010 can be summed up like this:  "Expect
    the worst, hope for the best." Unemployment is expected to remain high,
    depressing demand for healthcare services and keeping bad debt levels
    high. This will also affect charity and indigent levels, which will
    also continue at high levels.  Until changes to premiums and benefits
    start to kick in, enrollment in Medicare Advantage will remain
    constant. There is light in the economic tunnel, but for healthcare it
    remains relatively dim, at least for the foreseeable future.
3.  Physician/Hospital Alignment: Primary Care Tops Food Chain - The reform
    initiatives now being finalized are tending to favor primary care
    physicians, especially as medical home and Accountable Care
    Organizations (ACOs) take root. Specialists and sub-specialists will
    find tougher sledding as hospitals move to bundle payments, pursue
    clinical integration and respond to value-based (VBP) purchasing
    programs. Hospitals will employ more primary care and specialty
    physicians to enhance access and enhance care coordination. Seeking a
    safe economic harbor and more balanced lifestyles, physicians will
    continue to show preference for employment by hospitals.
4.  There's a New Model in Town: Clinical Integration - Some of the
    industry "stars" that emerged from last year's healthcare reform debate
    include highly integrated providers like the Cleveland Clinic and the
    Billings Clinic. Most view clinical integration as the inevitable
    provider model of the future, especially given new federal and health
    plan guidelines that dictate it, including bundled payment structures.
    Accountable Care Organizations (ACOs) will also be introduced to allow
    qualified providers to assume responsibility for overall costs and
    quality of care for certain populations. Ultimately, these integrated
    models reinforce the key industry mantra of increasing efficiency,
    lowering costs and improving outcomes.
5.  The Urge to Merge Persists, Driven Mainly by Economic Necessity - The
    severe economic challenges of the past year have driven numerous
    hospitals even closer to the brink. Looking ahead, those institutions
    that cannot survive will be acquired, converted to alternative care, or
    closed altogether (in the next five years, we expect to see a number of
    hospitals close). The strong -- or at least, "stronger" -- providers
    will survive because they are able to generate sufficient patient
    volume (such as 90-95% operating capacity), manage their payer mix,
    substantially reduce costs and drive more efficient operations.
6.  Unions Get Organized, as Workforce Supply Lags - In the past few years,
    unions have aggressively targeted the healthcare industry as a
    membership growth opportunity. We expect to see unions continuing to
    step up their efforts to organize healthcare workers in 2010. At the
    same time, a top priority will be to push for mandated staffing ratios
    among nurses and allied health professionals.  The growing demand for
    these professionals will increase the need to support advanced nursing
    training, programs and recruitment.
7.  The Hunt For Capital Isn't Getting Any Easier - The global financial
    collapse in the fall of 2008 continues to reverberate throughout the
    healthcare industry, with access to vital capital continuing to be
    difficult. To deal with this tight capital environment, smart strategic
    planners are concentrating on critical areas such as resource
    allocation, net income generation, and preparing for the new era in
    healthcare delivery. They will focus capital expenditures on core
    competencies, such as IT infrastructure, revenue generating equipment
    and services, and streamlining processes that improve results.
8.  Technology Remains Beating Heart of Reform - One of the breakthrough
    themes of the past several years has been the adoption of advanced
    technologies to revolutionize all areas of the healthcare system.
    Indeed, healthcare reform is largely predicated on the broad -- and
    faster -- adoption of information technology solutions, including
    clinical information systems, Computerized Physician Order Entry and,
    of course, Electronic Medical Records (EMRs). These tech-driven changes
    are so important that reform legislation includes both financial
    rewards and penalties to ensure the adoption of clinical IT
    infrastructure across the healthcare industry.
9.  If You Don't Perform, You Don't Get Paid - A true revolution is brewing
    in the fundamental philosophy of, and approach to, how healthcare
    providers are paid for their services. This accelerating trend is
    dragging the healthcare industry (kicking and screaming at times) to be
    more in line with other performance and metrics-driven industries.
    Given this shift, we expect to see an even greater focus in 2010 on
    Pay-for-Performance (P4P) programs, which are evolving to include both
    quality and cost metrics. These new P4P strictures include both
    financial carrots and sticks to "encourage" providers to increase
    quality and safety, and improve patient outcomes. Underscoring this new
    era of accountability, expect to see increased transparency through
    public posting of quality and patient safety data.
10. Empowered Patients Will Seek Value, Preferred Brands - Healthcare has
    never been known as a brand-driven industry. But, that is changing...
    and rapidly so. Driving this shift is the increasing empowerment and
    choice that consumers will have in making their healthcare decisions.
    Reform is certainly a catalyst for this "leveling of the playing
    field" in healthcare. More fundamentally, though, the industry is
    entering an era when it will have to compete and survive based on
    objective measures that include quality, performance, accessibility,
    and even price. Healthcare providers -- including physicians and
    hospitals -- will increasingly need to demonstrate real value to win
    the hearts, minds and business of patients.

About The Camden Group

With offices in Los Angeles, Chicago and the New York area, The Camden Group is one of the nation's leading healthcare advisory firms. The firm provides a broad array of healthcare consulting services in areas including strategic and business planning, financial advisory, operations improvement, compliance, and hospital/physician alignment. Since its founding in 1970, The Camden Group has advised more than 1,000 hospitals, medical groups, outpatient facilities, and other healthcare organizations nationwide. For more information, visit us online at www.TheCamdenGroup.com.