Blurred Lines: Angling for Advantage in the “New Normal” of the ACA

March 10, 2016
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Would you rather get your healthcare from an insurance company or buy your health insurance from a hospital system? It may sound like a strange question, but it’s already a decision many Americans are facing. And it’s going to become increasingly common.

Why is this happening? Simple. The Affordable Care Act is changing the game for healthcare providers and insurers. Financial incentives are now skewed toward rewarding organizations for keeping people healthy (aka, population health) instead of paying them to “do stuff” to sick people (aka, fee-for-service).

Would you rather get your healthcare from an insurance company or buy your health insurance from a hospital system? It may sound like a strange question, but it’s already a decision many Americans are facing. And it’s going to become increasingly common.

Why is this happening? Simple. The Affordable Care Act is changing the game for healthcare providers and insurers. Financial incentives are now skewed toward rewarding organizations for keeping people healthy (aka, population health) instead of paying them to “do stuff” to sick people (aka, fee-for-service).

Disruption creates opportunity. The question is, for whom?

The new rules are designed to incentivize efficiency, improve care quality, encourage a proactive attitude toward health and reduce healthcare spending across the system. That means reduced revenue for hospitals. These disruptions could lead some hospitals to enter the health insurance business to better control care management, gain market share and keep any savings they generate by improving care quality and operating efficiently for themselves – instead of sharing it with the insurance companies.

Health insurance companies, on the other hand, have started experimenting with exercise centers, healthy living and nutrition classes and health clinics that offer primary care and behavioral health services. They hope to facilitate and encourage a proactive attitude, and therefore, better health among their members by making these services readily available. That will bring them increased revenue from several directions – including from reduced claims.

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Consolidation is also happening on both sides. Less-efficient and/or less well-located hospitals are increasingly closing down or merging with larger systems. Significant mergers and acquisitions could reduce the number of large health insurance companies by 50 percent over the next couple of years.

It looks like we’re going to end up with a few huge health insurance companies who dabble in providing care. They’ll be competing with dozens of medium-sized provider networks experimenting with insurance. These changes will mean improved efficiency across the system. They’ll also mean less competition and, therefore, fewer options for consumers.

So, who will win in this “new normal?” Whoever can attract enough of the right kind of customers, of course. Organizations who develop strong brand awareness and a clear position as “partners in good health” in the minds of consumers – using a combination of advertising, community partnerships, health-management programs and exceptional service – will be best positioned for success. The rest will become casualties.

Learn more about positioning your organization for success in this time of change by visiting waxcom.com or calling 305-350-5700.

 

 

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