LOS ANGELES, CA, January 8 / MARKET WIRE/
The Camden Group, one of the nation's
leading healthcare advisory firms, today announced its annual forecast of
major trends and challenges in the nation's healthcare industry. Previously
viewed as one of the most recession-proof sectors, healthcare has recently
come under significant pressure from the historically severe economic
downturn that is gripping the US and increasingly the world.
"Healthcare is by no means immune to the negative effects of a major
recession, and we are already starting to see this manifested in growing
job losses and revenue declines throughout the health sector," said Steven
T. Valentine, President of The Camden Group. "But even with this
challenging picture in the year ahead, we expect that a number of industry
players will seize new opportunities to make acquisitions and adopt
innovative health delivery programs that drive both growth and operational
efficiency."
The following are the eight key trends and challenges that The Camden Group
predicts will have a major and continuing impact on the healthcare sector
during 2009:
The Economy Trumps All The major economic recession is already
impacting the healthcare sector in numerous ways. More people are out of
work and having trouble paying for COBRA or other benefits, increasing the
already growing ranks of the uninsured or under-insured. Expect to see
resulting drop offs in volumes and increases in bad debt. Formerly
recession-proof hospitals are increasingly resorting to layoffs, while even
pharmaceutical sales have slowed as patients try to stretch out medication
regimens or skip filling prescriptions altogether.
The Urge to Merge The trend toward consolidation will pick up speed
in 2009 as hospitals and other primary care providers struggle with the
recessionary effects. Declining utilization and payments will drive some
hospitals out of business, creating new opportunities for mergers and
acquisitions. A major recession typically causes a freeze in growth
activities; however it also creates opportunities for other players to
capitalize on lower valuations. This "Darwinian" economic environment will
test the mettle of all industry players.
Can Technology Finally Save the Day? The adoption of the Electronic
Medical Record (EMR) is still a major technology trend impacting
healthcare, but doctors have been slow to adopt this new technology. The
economic downturn will further slow the transition to an EMR as physicians
and hospitals will be hard pressed to make the necessary IT investments in
the face of declining volumes. This, in turn, is fueling increased
skepticism about whether the expected healthcare IT changes will ever
really deliver the economies of scale and financial and operational
benefits promised.
Capital Expenditures Will Slow, But Buying Opportunities Emerge The
credit crisis has made it even more difficult to borrow money to undertake
needed capital expenditures. At the same time, lenders will use this
leverage to demand "preferred relationships" from health systems. This
tighter credit environment will make it increasingly difficult for the
weaker players to keep upor even survive. Benefiting from these emerging
buying opportunities, the stronger, better-financed healthcare entities
will pursue growth through acquisitions.
Healthcare Reform is Not a Panacea... Yet With a new Democratic
president and Congress, it is widely expected that universal healthcare is
closer than ever to becoming a reality in the US. President-elect Obama's
reform strategy is built on reducing skyrocketing costs, enhanced IT,
increased access and preventative healthcare. But even with this greatly
increased impetus for reform, there will not be anything approaching a true
sea change in the healthcare system anytime soon. Meantime, the recession
and rising healthcare costs will continue to pose serious threats to
meaningful reform in the coming years.
Silver Lining: Less Personnel Shortages The big HR trend for 2009
is that the longstanding personnel shortages in healthcare should be a
thing of the past, again a consequence of the recession and resulting lower
volumes. With their finances having taken a huge hit, recently retired
doctors, nurses and other allied health professionals, will be forced to
return to the workforce this year just to stay whole.
Physicians and Hospitals: Can't We All Just Get Along? As doctors
beat a path toward security in a challenging economy, there will be
expanded efforts to build and enhance the critical relationships between
hospitals and physicians. Now more than ever, each group needs the
other even just to survive. Look for health systems to get creative in
luring back physicians whose retirement accounts have been decimated. There
will also be a trend toward improving communication and collaboration
between hospitals and doctors, focusing on key issues such as patient flow
and procedures, EMRs and evidence-based medicine.
Driving Innovation in Care Delivery Models If necessity truly is
the mother of invention, then this recession will likely create greater
momentum for testing and adopting innovative new care delivery models. One
such model is the emerging "medical home," with the physician acting as the
coordinator. Other innovative care delivery approaches that can be expected
to gain ground in 2009 include the integrated "hospitalists" model,
palliative care, telemedicine and even outsourcing.
About The Camden Group
With offices in Los Angeles and Chicago, The Camden Group is one of the
nation's leading healthcare advisory firms. The firm provides a broad array
of healthcare consulting services in areas ranging from strategic and
business planning and financial advisory and compliance, to hospital
operations improvement and hospital/physician alignment. Since its founding
in 1970, The Camden Group has advised more than 1,000 hospitals, medical
groups, outpatient facilities, and other healthcare organizations
nationwide. For more information, visit us online at
www.TheCamdenGroup.com.
