With National Health IT Week underway, I’ve been thinking a lot about the state of the industry. But when I look back over the last several months, rather than progress, I see mounting challenges and pressures. There have been several incidents that have contributed to the financial strain hospitals and health systems are facing, including:
- Introduction of reimbursement penalties – Almost exactly a year ago on October 1, 2012 the readmissions penalties included in the Affordable Care Act kicked in. The penalties place enormous pressure on hospitals and health systems, especially in the cardiology service line. This has served as a motivating factor for population health efforts for providers to continue to care for patients once they have left the hospital.
- Uncertainty over national leadership – As readmissions penalties went into effect, the pending election caused uncertainty over whether the reimbursements would continue, which in turn caused hospitals and health systems to worry about their expenses. Once Barack Obama was re-elected, it became clear that the ACA measures would move forward, and that hospitals and health systems needed to begin bracing themselves for the 40 million uninsured patients about to enter the system.
- Sudden onset of sequestration – Just as hospitals and health systems were adjusting to health reform changes, they were hit with an unexpected challenge on April 1, 2013 – sequestration cuts. Basically, sequestration doubles the healthcare cuts put in place by the ACA, with $2 billion in cuts for 2013 and an expected $9 billion in the coming year. Sequestration is going to contribute to the ongoing industry consolidation, because hospitals that can’t stay in business are going to sell into larger health systems. Which brings me to…
- Continuing industry consolidation – The past year proved that industry consolidation is going to be an ongoing trend. The June purchase of Vanguard Health Systems by Tenet Healthcare was one of the largest acquisitions the industry has seen. While consolidation is a solution to financial pressures, it also reinforces the challenge of interoperability, given that facilities’ EHR systems are not going to play nice without optimization.
- Preparing for the future – Throughout the past year, providers have been plagued by the looming challenges of Stage 2 Meaningful Use and the ICD-10 transition. While facing cost cuts, hospitals and health systems are under the gun to get the technologies and process changes in place necessary to meet these two upcoming regulations.
These increasing pressures bolster the need for health IT to help hospitals and health systems improve ROI to compensate for financial cuts and challenges. We all need to realize that the biggest ROI comes from leveraging the existing infrastructure. It is all about optimizing – not replacing – your existing EMRs and medical devices. National Health IT Week is a great forum to build awareness for the value of health IT, but it’s also an opportunity to foster collaboration among vendors. Increasing industry tensions will require health IT vendors to change their ways and start collaborating with each other to offer the solutions providers need now. Collaboration does not come from creating imaginary consortiums but by supporting providers on their current integration needs.