Five big industry changes to watch in 2016
Change is in the air as a new year begins. These five trends will continue to gain momentum in the healthcare industry.
The healthcare industry has seen a whirlwind of changes in recent years, and 2016 won’t be any exception. Understanding and embracing these changes is key to a managed care organization's prosperity and, in some cases, survival. Among the trends are companies changing from nonprofit to for-profit and widespread consolidation. Meanwhile, technological advances and consumerism are taking center stage. In addition, drug prices continue to rise, forcing payers to develop new strategies for dealing with them.
The shift from nonprofit to for-profit
A fine line seems to distinguish nonprofit and for-profit insurers these days. Nonprofits benefit from tax advantages-and can build up significant reserves and pay high executive salaries comparable to for-profits-while not paying dividends. Given this, regulators are scrutinizing whether nonprofits should be exempt from taxes, says Managed Healthcare Executive Editorial Board Member Don Hall, MPH, principal, DeltaSigma, LLC.
Sarasohn-KahnJane Sarasohn-Kahn, MA, MHSA, health economist, adviser, and author of THINK-Health and Health Populi blog, cites several other reasons why nonprofits may begin converting to for-profits. Because of the increased costs of doing business in healthcare, organizations have to do more with less. Furthermore, lower reimbursements and the growing value-based payment environment (e.g., bundled payment, pay-for-performance, population health management, and other constrained financing models), have incentivized stakeholders to behave with a commercial ethos.
Hall expects the trend will get stronger, particularly with mergers of for-profits. “They will concentrate more on their efforts to put pressure on regulators,” he says. The bottom line is that nonprofits should review why they are nonprofit and make sure they adhere to those tenets. They should communicate their commitments to regulators, members, and providers; the distinction should be clear to anyone who does business with them.
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