major trends affecting hospital payment

HEADNOTE

Healthcare financial leaders can implement some cost-saving and cost-shifting initiatives to enhance their organizations' margins in 2008.

The healthcare industry is at a crossroads. Healthcare spending is growing three times faster than wages

and is expected to double from current levels to exceed $4 trillion by 3016, according to a February 3007 Health Affairs article. As a result, there is tremendous pressure on key industry stakeholders to mitigate this cost growth. This cost pressure means that hospitals need to extract additional efficiencies out of their operations and spend more time on revenue strategies. Yet hospitals have a significant opportunity to enhance margins by focusing on managed care performance, a critical focus in 2008.

Hospitals will need to work with stakeholders toward achieving more controlled growth in medical spending. These stakeholders, including government, employers, payers, and providers, are forging ahead with several models to contain the growth of healthcare costs and ensure quality of care. Price transparency, consumer-directed health plans (CDHPs), pay-for-performance (P4P) programs, health savings accounts, and the payment incentives of the Centers for Medicare and Medicaid Services (CMS) are all moving health care in that direction. Regardless of which model reigns, in the future, a greater emphasis will be placed on the value of healthcare services with the demand for transparency of service price.