Running a hospital or healthcare practice is already labor and capital intensive, highly regulated and impenetrably complex. The Affordable Care Act and the growing trend toward consumerism has added constant change to the list of industry challenges. While the ACA itself is the law of the land and implementation is moving forward, the foundational elements to be implemented are as firm as warm Jell-O. Change is the new normal:
- States may or may not expand their Medicaid programs;
- Health Insurance Exchanges (HIX) may be set up by states or by the Federal government in certain states, and the Federal HIX implementation structure is not fully defined;
- Accountable Care Organizations (ACOs) are being formed and tested in near real-time;
- Definitions of Essential Health Benefits (EHBs) can vary by state and guidance is required;
- The “standard” 8 pages format for the newly mandated Summary of Benefits & Coverage (SBC) can now be any length determined necessary by insurance companies (Note: the purpose of this new, somewhat redundant, document was to provide a standardized plan comparison for consumers.)
Provider’s biggest concern may be potential changes and interpretations surrounding “Necessary Care.” According to the Journal of the American Medical Association, “care that did not show a proven health benefit, and where a less costly alternative was not used,” accounted for between $158 billion and $226 billion in 2011. Proposed regulation around necessary care shifts financial risk to doctors and hospitals and this, along with other regulations and stricter Medicare compliance requirements, will require investment in Electronic Health Records (EHR) and other major infrastructure upgrades that smaller providers are not equipped to fund.
The combination of independent providers’ flight from risk, a need to dramatically reduce costs and increased capital requirements is driving the next big source of change: Mergers and Acquisitions.
The pace of consolidation is mind boggling: the annualized number of hospital acquisitions or mergers nearly doubled between 2009 and 2012. Plus, physicians are merging with health plans and hospitals, hospitals are merging with hospitals and long-term care providers, health insurers are investing in hospitals and physician practices. Not to mention non-provider consolidation in biotech and pharmaceutical manufacturers, disease management companies and all along the healthcare supply chain. In an interview with The Huffington Post, Robert Laszewski, president of Health Policy and Strategy Associates referred to the M&A climate in healthcare as an arms race in which the players are merging into bigger entities in hopes of restraining their own costs and grabbing larger shares of the markets.
According to PWC’s Healthcare Executive Agenda consolidation is not a panacea and even small healthcare mergers carry a lot of risk. We’ve seen the same thing in the merger-prone print industry – nearly two-thirds of deals do not meet pre-merger expectations. This lack of stellar success is not likely to stem the tide of mergers; however, it does present many opportunities for print service providers and industry consultants to make these newly consolidated entities more successful. Here are a few thoughts:
- While individual providers and provider groups have low volumes of communications, larger merged-entities have volumes that are more attractive for outsourcing.
- Newly formed entities have redundant documents and systems that need to be unified or eliminated in order to gain the sought-after costs savings from the merger. Consultants and Outsourcers can help to meet those needs more quickly.
- The ability to consolidate volumes, processes and technology allows outsources to deliver immediate savings from house holding, postal optimization, white paper processing and electronic services such as electronic payment and presentment.
What needs to happen after a merger? Plenty of situations where service providers can add value:
- Determine brand strategy. Research demonstrates that capital markets respond more favorably to brand strategies that involve combining elements of the two companies than strategies that replace one entirely or leave both untouched. This requires an analysis of the strength of both companies.
- In parallel with re-branding considerations, a business communications audit needs to be performed to identify the people, processes and technology used for generating business documents. This audit should generate documentation on current processes and recommendations for leveraging the best practices within each firm, the combined volumes of the merged firms and eliminating redundancies.
- New branding (and likely new regulatory language) will need to be incorporated in the systems that are proposed to be maintained going forward. Efficient implementation will typically require an additional analysis and redesign step to create document standards and streamline implementation.
The newly merged company will likely also be evaluating their supply chain; eliminating vendors or “right-sizing” with vendors that fit their new status as a larger organization. The ability to support these firms with the analysis and streamlining processes makes it more likely that you will be considered for additional outsourcing opportunities rather than dropped from the vendor list.
While it would be prudent for these companies to go through a detailed pre-merger fit and synergy analysis from both a financial and a customer perspective – most often the customer and customer communications strategy is in that “warm Jell-O” mentioned earlier. The opportunity to help companies evaluate these issues pre-merger or immediately post-merger can be of huge benefit in achieving the hoped-for cost savings and also maintaining market share by communicating effectively with customers and making sure the bills get paid amidst the merger madness. Let’s call that preventative care.
The bottom line is that if constant change is the new normal for health care providers, there will be constant opportunities for companies who can help them deal with those changes.
Editor’s Note: Additional information on changes in the Health care industry is available from our sponsor, Canon Solutions America. See the PressGo! Industry Guide to Healthcare.
Elizabeth Gooding is the president of Gooding Communications Group and the editor of InsightForums.com helping clients in highly regulated industries—and the service providers they depend on— to optimize the designs, processes and production technology used for multi-channel communications.