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Healthcare reform has ushered in a number of changes that, if providers choose to accept them, require not only the adoption of new care models and IT systems, but the financial wherewithal to ensure these implementations occur within specified amounts of time without negatively impacting the bottom line.

As regulations around accountable care organizations (ACOs) become clearer over the next few months, providers are focusing more attention than ever on deciding if this new model is right for them, and making the best corresponding financial decisions for their institutions in a number of key areas.

Consolidation and Coordination
 Martin Arrick, Managing Director at Standard & Poor's and a guest speaker at the upcoming HFMA 2011 ANI Healthcare Finance Conference, believes providers are currently struggling with a foreseeable decline in rates and reimbursement levels. The ACO model is one that he predicts most providers will opt out of.

"This may change once final regulations are published, but as written now we see very little desire amongst providers to become an ACO," he explains. "Separate from that, I see many providers looking to do a better job coordinating care between the various levels of care, as well as hospitals and physicians. This, along with other financially related issues, is contributing to more industry consolidation." 

Consolidation - a direct effect of healthcare reform and its healthcare IT incentives - and coordination bring with them unique financial challenges, according to Arrick. 

"This is a multifaceted area, but to the extent that care for 'populations' emerges as important for an individual provider, then tight coordination and alignment with the local physician community appears to be essential to help reduce unnecessary care and successfully manage under increasingly constrained payment streams such as bundling," Arrick says. "As volume pressure has increased over the past two years, more providers are returning to a historic strategy of recruiting (employed) physicians to help improve overall market share. This is a complicated strategy, as fixed costs go up and the added volume, if any, may be volume you would have gotten anyway." 

Revenue Cycle Performance 
Norma Zeringue, Senior Vice President of Strategy at Conifer Health Solutions, has seen an up tick in providers' interest in solutions that will help their facilities with development of coordinated care and ACO models, ICD-10 planning and EMR execution. 

Improving overall revenue-cycle performance has also taken on a greater sense of urgency, as healthcare organizations try to make sense of the shared-savings component of the ACO concept before fully committing themselves to partnerships. The areas of eligibility, denials management, and documentation and coding are areas of particular focus."With the ever-changing governmental and payer regulations in these areas, providers need to either have experts at their individual organizations or hire experts to develop specific processes and procedures," says Zeringue. 

"With either option, the revenue cycle leader needs to ensure they are meeting the regulatory requirements in a compliant manner, and also in a way that reduces their operating costs. 

"This balancing act is the key to the success of the revenue cycle and a significant factor that impacts a hospital's bottom line. If a hospital system does not execute these two items flawlessly, their future growth and performance will be impacted," she adds. 

Tying it all Together 
Though healthcare reform may take a few twists and turns between now and election time, the aforementioned areas of consolidation, care coordination and revenue cycle performance will still be three main areas providers must pay special attention to when considering adopting new financial solutions and workflows. 
As Arrick points out, "Most providers are currently working very hard to bring their costs down, and this is helping to drive near-improvement in the financial results and balance sheets of many providers. In fact, this is helping drive a near-term improvement in credit quality. And as previously mentioned, they are increasing physician employment as a way to enhance alignment. Both of these strategies appear to be sound reform readiness strategies that will be helpful no matter what direction reform takes."

Source: Billian's HealthDATA