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Outlook 2014: The year ahead in healthcare business

2014 promises challenges, changes, growth


By Harris Meyer and Melanie Evans
Posted: January 4, 2014 - 12:01 am ET
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While the coming year in healthcare will be strongly shaped by the sweeping provisions of the Patient Protection and Affordable Care Act, 2014 also will be notable for a continuation of trends that predated President Barack Obama's landmark law.

Providers will continue to confront cost containment and consolidation, new information technology challenges and the need to constantly redesign care processes to improve quality.

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After five years of political warfare over the reform law and intensive preparation by the healthcare industry, millions of Americans will get health insurance either through private plans or expanded Medicaid programs in 2014. Insurers will be watching closely to see whether a substantial number of younger and healthier people sign up for coverage, enabling them to keep premiums down in 2015.

But how many uninsured Americans will actually gain coverage, and whether the reform law will help keep healthcare spending growth down, are two of the many uncertainties in the year ahead. The law encouraged the establishment of Medicare and private-sector accountable care organizations—in which hospitals and physician groups share financial rewards and risks for managing patient populations. Providers, payers and economists will be watching to see whether these ACOs deliver on their promise of improving quality and reducing costs.

It's uncertain whether hospitals will continue to see stagnation in the volume of patients in 2014, forcing them to find other ways to increase revenue and maintain operating margins. But they hope the expansion of coverage under Obamacare will encourage newly insured Americans to seek out needed elective care. They also hope the coverage expansion will reduce levels of uncompensated care, though the degree will vary depending on whether a hospital is in a state that chose to expand Medicaid to adults earning up to 138% of the federal poverty level.

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Hospitals under any scenario will continue to focus on squeezing operating expenses. The cost of supplies will remain a key target as will reorganization of services to achieve greater efficiency. And they likely will continue seeking partners, both through mergers and non-ownership arrangements, to gain efficiencies of scale. Hospitals and doctors also face tough IT challenges in 2014, as they will have to ramp up to meet Stage 2 and Stage 3 requirements for meaningful use of electronic health records at the same time as they prepare for the crucial Oct. 1 conversion to the more complex ICD-10 coding system. What follows are predictions from Modern Healthcare's reporters on the business trends, challenges and opportunities the industry faces in 2014. Follow Harris Meyer on Twitter: @MHHmeyer

Follow Melanie Evans on Twitter: @MHmevans


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