As healthcare delivery and reimbursement models transition to ensuring quality care versus quantity of care, some sectors of the healthcare industry will benefit more than others.
According to “Value Over Volume,” a research analysis produced by Moody’s Investors Service, medical device manufacturers will be the most vulnerable, for-profit and nonprofit hospitals will face risks and insurers will benefit the most during the transition from fee-for-service models to value models.
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"Medical device makers stand to lose the most under new reimbursement models that promote fewer hospital admissions and procedures," said Diana Lee, vice president and senior credit officer at Moody’s Investors Service and author of the report.
Medical device companies that can show that their products can help hospitals achieve better reimbursement results, including lower readmissions rates, will be less vulnerable during the healthcare transition than those that don’t, said Lee.
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“Hospitals will be in danger of eroding profits as they straddle two types of reimbursement systems – the current models, which incentivizes healthcare providers to use more services – and new models that emphasize value.”
Health insurers, which have traditionally benefitted from lower utilization trends, will be in a better position as use rates decline, Lee said. Additionally, value-based models, such as bundling or accountable care organizations (ACOs), help to place hospitals and physicians on the same page as insurers, she said. Like hospitals, insurers will increasingly focus on controlling utilization by employing physicians and entering into new collaborative arrangements, including acquisitions.
The greater acceptance of value models, such as bundled payment mechanisms and (ACOs), will help fuel the healthcare transition, Lee said.
Once the healthcare transition is complete – which will likely take several years said – larger healthcare systems that are aligned with their physicians and are successful at managing costs and risk will be in the best positions.
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