The Trump Healthcare Market

Posted by Don McDaniel on Dec 13, 2016 11:10:00 AM

Find me on:

What a more capitalist approach to payment reform could uncover in the new administration

Trump blog photo - white house healthcare.jpgThe healthcare industry is facing a new kind of unknown with the incoming Trump administration. As President-elect Trump lays out his plans and makes his appointments for key roles, we’re beginning to get more clarity into what we should be able to expect in the coming months and years in terms of how healthcare policy, regulations, and payments may change. 

At this point, the healthcare future is unpredictable. In general, however, I think there are some things that are going to be increasingly important to the state of the healthcare economy.

Here are the four things I'm most interested in watching over the coming months:

1. Mandated benefits will fall and premier provider networks will rise. One of the things that is most likely to happen is a reduction in requirements, especially the individual mandate. As regulations fall, the individual mandate to purchase insurance or be penalized will disappear and so will mandated sliding scale subsidies. Fewer participants in the system will result in less revenue and increased cost pressure. As a result, expect narrow networks—or premier provider networks—to rise. 

2. The consumer-driven healthcare market will change perceptions on hospital consolidation. Changes to the ACA may result in higher rates of uninsured patients, which will drive bad debt and put hospitals in a tough situation. Hospitals must focus even more on strategies that effectively reduce costs. This may drive an even greater increase in hospital and health system consolidation, as leadership argues that the only way to increase their revenue is to increase volume and scale. Historically, however, no hospital merger or acquisition has ever been good for the consumer. If HSAs become more prevalent, healthcare consumers will become more conscious of how they spend their healthcare dollars. This may hasten the decline of physician employment in hospitals, but at this point, there’s no telling where those physicians will go or how they’ll organize.

3. Consumers demand greater insight into the hidden costs of healthcare. For years, consumers have not been exposed to the actual cost of care—allowing prices to rise largely without customer input. A patient population that’s more educated and informed about the actual cost of care is a good thing for the market. We could see HSAs become a more widely used tool that will drive a more consumer-directed healthcare marketplace. The greatest benefit of this increased reliance on market forces is the development of greater consumer sovereignty over their healthcare decisions.

4. Make hay while the sun shines. The margin for error in healthcare is going to get even smaller, and providers better be prepared to change their business models and embrace a quality-based payment system. If you’re a physician, ask yourself: if 100 percent of your revenue was capitated right now, would you run the business differently? You should become very aware of the fact that consumers will have greater price transparency and increased power to make more informed choices about how they spend their healthcare dollars. Consider increasing adoption and use of pre-paid plans.

While this is an unpredictable period for healthcare, anytime there’s uncertainty, there’s also opportunity. The strides and changes we’ve made as an industry in recent years to reduce spending and increase quality are significant—and, with the right mindset, strategy, and plan, we can capitalize on key changes to keep that progress moving forward.

Topics: payment reform, Affordable Care Act, ACA, healthcare policy

Posts by Topic

see all

Subscribe to Email Updates