Major legislative reform not in store for 2004

This year, the impending national election in November will play a significant role in dampening the groundswell of voter desire for some sort of legislative health care reform. And while consumers’ frustration at rising drug costs continues to grow, few politicians are likely to risk a platform that includes major cost reductions in health care. That being said, it appears that health care reform will reside with health care organizations, according to a new Cap Gemini Ernst & Young forecast.

The report, “Healthcare’s Top Business Issues and Responses for 2004,” says health care organizations will need to adopt specific strategies in response to financial pressures this year, with considerable attention paid to improving information technology — both in terms of improving internal IT systems and the use of IT to bring about better patient care and safety; striving for greater organizational efficiency and a focus on core and non-core business functions; creating a “partnership” relationship with providers; promoting new benefit models; and addressing the need for disaster preparedness.

Renewed commitment to information systems. Compared to other industries, health care is expected to spend the most on information systems in the coming year, according to industry analysts. For managed care, technology investments are expected to occur on the administrative front: claims, billing, and membership integration.

Using IT to improve patient care and safety. The managed care organization, long a transactions processor, will move toward being an information manager to better control financial and clinical resources. Some insurers will offer higher reimbursement for providers that demonstrate better outcomes that can only be achieved through improved technology.

Evaluation of administrative processes. All areas of operation will be scrutinized for opportunities to minimize costs.

Outsourcing nonessential business operations. Outsourcing provides health care organizations with a way to cut back operational capabilities in light of increasing costs and decreasing reimbursement.

Compliance with HIPAA requirements. While the deadline has passed for organizations to comply (Oct. 16, 2003), Medicare has already given itself an extension and commercial plans have put contingencies into place — all 42 Blue Cross Blue Shield plans have agreed to accept nonconforming transactions after the deadline (for an unspecified time period).

Greater collaboration between payers and providers. Managed care organizations will see the need to promulgate a “partnership” relationship with providers, but not through capitation (which was not successful). By working together, payers and providers can eliminate duplication of paperwork brought on by resubmissions, and reduce bad debts resulting from inaccurate eligibility, coordination of benefits, or claims information.

Creation of new benefit models. Benefit models that emphasize cost-sharing, tiered benefit levels, defined contribution, and savings accounts will be options offered by health plans to employers that are feeling the brunt of premium increases.

Greater use of medical management resources. Organizations will use more predictive modeling techniques to identify at-risk patients who are about to incur large claims. The idea is to reduce the amount of inpatient and acute care while increasing the amount of outpatient care, office care, nonphysician based interventions, and drug utilization. Organizations that adopt this approach are generating a 3:1 return on investment and reducing medical expenses by 2 percent to 3 percent.

More detail in financial reporting. The high-profile cases of corporate financial scandals in other industries will affect health care. CFOs must be able to clearly substantiate what makes their organizations creditworthy. And not-for-profit organizations are not immune.

10 Creating a disaster-preparedness agenda. Confronted by SARS and the threat of bioterrorism, health plans will need to provide leadership in planning and execution of community-based disaster preparedness and responses. The improvements can be used on a daily basis, despite the absence of an actual bioterrorism event.

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