Predicting the future is always a risky enterprise. When you commit your prognostications to paper, everyone can remind you when you’re wrong.
Making forecasts about the healthcare industry is especially difficult, particularly in our current volatile economic climate. But for healthcare consultants, predictions are part of their job description. And as journalists, it’s our job to evaluate their efforts.
Late last year, the PricewaterhouseCoopers Health Research Institute published a report touting what it concluded would be the “Top Nine Health Industry Issues in 2009.” I recently spoke with David Chin, MD, the leader of the Institute, about those predictions and whether or not – halfway through 2009 – he felt that his research team’s foresight had been accurate.
“We did not anticipate the meltdown in the stock market,” Chin told me, although the PwC report did note that the economic downturn in the second half of 2008 “will reverberate throughout 2009” and that healthcare organizations needed to return to a “back to basics” approach.
“Many of our hospital clients depended on their investments for operating income, so unfortunately they have had to do more with less,” Chin said. “We have seen layoffs and hospitals are feeling the pain of Medicaid cuts.”
Indeed, PwC was prescient in highlighting the danger of the latter development.
Chin’s team at the Health Research Institute also predicted that, with a spike in the number of “underinsured” patients, self-pay would become a major part of the revenue cycle process for providers in 2009.
“Hospitals must have more sophisticated billing systems to collect cash upfront,” Chin said. “We have seen an increase in self-pay during the recession, and that puts more of a burden on the hospital. Hospitals are great at billing the big procedures, but the smaller stuff tends to get a lot less emphasis.”
Chin reiterated the point that the PwC report made last year: hospital business operations will need to leverage technology and processes from the retail, banking and credit industries to manage self-pay patients.
He also reminded me that his team accurately predicted that we would see an increasing connection between healthcare IT and pay-for-performance. Yet the massive funds directed to healthcare IT in the American Recovery and Reinvestment Act of 2009, and the reimbursement penalties associated with the failure to adopt IT, surprised even Chin.
“None of us guessed at the size of the investment in healthcare IT in the Obama plan,” said Chin. “Every hospital has over 40 percent of its revenues in Medicare. If hospitals get hit with Medicare reimbursement reductions associated with IT, it will really hurt.”
In addition to the IT adoption penalties, Medicare is also no longer paying for “never events,” and PwC says that the “never events” list will grow in coming years.
“The emphasis on ‘never events’ really spurred hospital IT adoption and quality reporting even before the Stimulus Act,” Chin said. “Consumer report cards on hospital quality have never been a real strong determinant, but payment reductions are.”
While getting many things right, the PwC report made a few incorrect calls.
The Health Research Institute predicted that providers would begin the process of conversion to the International Classification of Diseases – version 10 (ICD-10) code sets. In reality, the conversion process has stalled.
“Frankly, I don’t even see ICD-10 coming next year,” Chin acknowledged. He also noted that the PwC report was premature in predicting that direct-to-consumer genetic testing would find a mass market in 2009.
Predictive accuracy aside, Chin sees big things for healthcare in late 2009 and 2010.
“The stimulus package alone invested $150 billion in healthcare, yet even an investment like that doesn’t solve the problem of the uninsured,” he said. “There is more coming.”