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2013 Outlook: Reform will drive healthcare industry's shifts


By Melanie Evans
Posted: January 5, 2013 - 12:01 am ET
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As healthcare exits a year in which reform survived major challenges and enters the final year before millions are expected to gain health insurance, the industry's push to gain greater efficiency will continue to transform operations, heighten pressure on quality initiatives to deliver a return and squeeze suppliers to the nation's hospitals and doctors.

Years of cost control among U.S. hospitals will force the sector to undertake more fundamental changes to care delivery to further curb expenses in the coming year. But that won't ease pressure to squeeze spending on medical and surgical supplies, an ongoing target for hospital cost-control efforts. Initiatives to improve quality will be under increasing pressure to deliver a return on investment along with better outcomes.

The year ahead will also bring continued consolidation in several sectors.

New payment models, such as accountable care and a coming influx of newly insured under the Patient Protection and Affordable Care Act will continue to drive hospitals to expand their care networks, including physician practice acquisitions. For-profit hospital operators will use readily available cash and access to debt to finance more dealmaking.

But consolidation hasn't been without challenges. Antitrust authorities can expect a decision this year in one case from the U.S. Supreme Court. Other cases will likely lead to high-profile court battles.

The threat of scheduled (and proposed) cuts to federal health spending also looms over the coming months.

Medicare was scheduled to cut spending by up to 2% in February as part of a deficit-reduction law that triggers federal tax increase and spending cuts in 2013. Negotiations to avert those budget measures included one proposal that could raise borrowing costs for not-for-profit hospitals. And could this finally be the year physicians see a long-term fix to their Medicare payments?

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Public hospitals, meanwhile, continue efforts to undo cuts to Medicaid's disproportionate-share program.

For more on these trends, read on.


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