2013 Healthcare Predictions – Accelerated Change to Avoid the Fiscal Cliff

• Bruce Johnson, Executive Chairman

It’s that time again – time for year-ahead predictions. Making predictions for the healthcare space is nothing new for us. In fact, I think we did a pretty good job calling some major industry trends last year. If you want to hold me to that, you can read more about them here. 

When the team at GHX started the prediction discussion for 2013 though, it felt different than in years past. The enormity of the predictions felt both more impactful and urgent. This was not only because of the presidential election (but that was certainly a part of it), but also due to where the healthcare industry is today.  We have all heard about the fiscal cliff recently. We believe there is a healthcare fiscal cliff too – and we need to take action in 2013 to ensure that we are turning an unsustainable industry  path into a sustainable one. With the impending changes to healthcare resulting from the Affordable Care Act, among a host of other market dynamics, 2013 will be about accelerated change in order to avert healthcare’s fiscal cliff. Now, let’s dig into some of these predictions:

• Acceleration of Industry Consolidation: Continued financial pressure will accelerate industry consolidation in an attempt to create greater economies of scale. Survival means that traditional organizational lines will continue to blur as companies acquire complementary healthcare offerings (i.e., insurance companies acquiring hospitals). The industry may eventually even consolidate down to as few as 50 -100 large IDNs over the next several years, serving an expanding patient population and delivering care at the most efficient location.  I believe the greatest variable here is certainly velocity, as whether consolidation occurs is not in question.

• Centralization: A natural next step to increased consolidation is greater centralization, affording the industry an opportunity to elevate the supply chain for retail-style operational efficiency. We’ll see a greater focus on tools/technology to get here, which means that hospital and suppliers must embrace a business model change to achieve the efficiency level required to move forward. All of this is easy to say, but much harder to actually do. But it is happening. I’ve seen many professionals in the healthcare C-suite refocus their efforts around supply chain recently – especially since it’s the second largest and fastest growing expense for most provider organizations today.

• Supply Chain Dependence: A key driver of new business processes will be compliance with Stage 1 Meaningful Use, which focuses on data capture and sharing. As organizations work toward new business requirements, they will mirror other industries and rely on the supply chain as a backbone – a key component of technology infrastructure – that can help capture and share the data they need.

• Global Commonality: Healthcare is a global market and that will be even more evident in 2013. Every time I travel to our European customers I’m reminded of the increase in global standardization and more commonality across borders. The FDA’s UDI is evidence of that. While it only applies to manufacturers doing business in the U.S., a universal UDI requirement will help healthcare organizations worldwide better understand the role products play in delivering greater value and higher-quality outcomes. UDIs make it easier to electronically capture data on products used at the point of care, which in turn helps providers determine total costs per procedure, increase billing accuracy and improve inventory management.

If you’d like to read more about the GHX predictions, we put out a press release today that talks about them in more detail. Give it a read and let us know what you think in the comment section. I look forward to hearing from you.   

Bruce Johnson

Executive Chairman