Five Cost-Cutting Health Care Trends to Watch


Posted by Joel Wittman

With health care reform requiring close scrutiny of financial performance, hospital and health systems are closely examining ways to reduce spending.  Following is one person’s thoughts about how fiscal responsibility can be achieved:

1. Mergers and Consolidations

Mergers and acquisitions in the health care sector are at an all-time high in terms of dollar value.  Hospitals and physicians are no doubt integrating and other providers are combining and coordinating care delivery models in response to the current and expected changes resulting from health care reform.  There are experiments in reimbursement and payment methodologies that should lead to fiscal sanity but can also lead to a concentration among providers.  Some believe that this will lead to less expensive care while others argue that it will lead to monopoly and its attendant effects on the health care financial landscape.  What do you think?

2. Reduced Readmissions

Tied to reimbursements, readmission rates are the target of hospitals to reduce the number of patients for the same condition.  Previous studies have found that a number of things can help reduce readmissions, such as home health use after hospitalization, patient engagement and education, use of nurses for patient follow-up, and remote health monitoring.  Hospitals should be focused on reducing readmissions and unnecessary admissions for conditions that probably would not have led to an admission if the person had gotten proper primary care.  Will accountable care organizations help in this regard?

3. Comparative Effectiveness Research

As leading institutions continue to look at evidence-based medicine and patient outcomes, new research is being developed about what is most effective.  A most hopeful trend is occurring in health systems where they are really looking in detail at examining what doctors actually do and what the results are in terms of outcomes and then feeding it back into the system.  Look into Geisinger and Kaiser Permanente as leaders in this practice.  but, will this be widely accepted by physicians as their medical decisions and care are more frequently scrutinized?

4. Care Coordination

With initiatives already in motion for accountable care organizations and patient-centered medical homes, more attention will focus on outcomes from care coordination and managing the entire care spectrum of the patient.  There is a trend to reimbursing health care providers based on outcomes instead of paying for more care.  Will the government (read Medicare and Medicaid) focus on this paradigm of paying providers or will extraordinary pressure be exerted by various advocacy organizations to maintain fee for service reimbursement?

5. Collaborative Communication

With increasing requirements for compliance, hospitals and providers will need to collaborate in their communication efforts.  New ways to work together will evolve resulting in more lines of communication.  Hopefully, the expansion of health information technology will lead to virtual connections between providers.  But at what cost and in what time frame?

And so it goes.  Payors are aligning with providers either through acquisitions or other creative forms of working together.  With increased emphasis on outcomes-based medicine, companies that provide care coordination oversight and patient care management will assume more importance in the health care cycle.  Was Humana prescient in its acquisition of SeniorBridge Family of Companies with the strategy of positioning them to favorably respond to the changing health care environment?  Will others follow?  Stay tuned.

Joel Wittman is an Adjunct Associate Professor at the Wagner School of Public service of New York University.  He is the proprietor of both Health Care Mergers and Acquisitions and The Wittman Group, two organizations that provide management advisory services to companies in the post-acute health care industry. He can be reached at joel.wittman@verizon.net.