Are Hospital Business Models on a Burning Platform? Not Yet, But It’s Inevitable.

From reading recent headlines, one might easily get the impression that hospitals are resistant — or at least ambivalent — in their pursuit and adoption of accountable care initiatives.

Are Hospitals Dragging their Feet on Accountable Care?

Commonwealth Fund: “only 13 percent of hospital respondents reported participating in an ACO or planning to participate within a year”

KPMG Survey: “(only) 27 percent of [health system] respondents said current business models were either not very or not at all sustainable over the next five years”

Health Affairs: “Medicare’s New Hospital Value-Based Purchasing Program Is Likely To Have Only A Small Impact On Hospital Payments”

The Bigger Picture

Do hospitals today perceive their current business model on the metaphorical “burning platform” — when the status quo is no longer an alternative?

The answer from the headlines above might suggest “no”, but I believe the correct answer is “not yet, but it’s inevitable”.  Hospitals are feeling the heat, but it’s just not yet hot enough to jump off the platform and abandon existing business models.

Fiscal forces are in play to continue to turn up the temperature to the point where change is inevitable. Modern Healthcare reported:

The AHA estimates that about 10% of Medicare revenue will be at risk in 2017 as a result of:

  • Value-based purchasing
  • Penalties for high rates of readmissions and hospital-acquired conditions
  • Incentives for participation in the inpatient quality-reporting program
  • Incentive payments tied to achieving meaningful-use standards in the use of electronic health-record systems.

None of these initiatives are dependent on the Accountable Care Act (ACA) legislation. The first three of these date back to the Bush administration.

With 10% of your revenues inevitably at risk in the near future, what’s a hospital CFO or CEO to do? While you might believe you can hold out for a year or two, the conclusion is inescapable: We must change.

Yes, I’m frustrated that more hospitals are not yet leading or engaging in accountable care initiatives. But, I’ll be patient. It’s just a matter of time.

26 thoughts on “Are Hospital Business Models on a Burning Platform? Not Yet, But It’s Inevitable.

  1. Pingback: Vince Kuraitis
  2. Pingback: Paul Sonnier
  3. Pingback: Bob Climko
  4. Pingback: Stephanie Gaffin
  5. Pingback: Netspective Health
  6. Pingback: Michael Stanton
  7. Pingback: Aparna M K
  8. Pingback: Aparna M K
  9. Pingback: Michael Stanton
  10. Pingback: Vince Kuraitis
  11. Pingback: Charlene Marietti
  12. Pingback: Mark Browne
  13. Pingback: Donna Scott
  14. Pingback: Amit Dhabalia
  15. Pingback: Mediprocity
  16. Pingback: Doug Della Pietra
  17. Pingback: Randall Oates, MD
  18. Pingback: Phil C. Solomon
  19. Pingback: Jon Mertz
  20. Pingback: Vince Kuraitis
  21. Pingback: Erik Pupo
  22. Pingback: Kevin Bower

Comments are closed.