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As projections say healthcare costs will only increase in the future, health execs need to devise strategies to cope.
It’s no secret that healthcare costs are rising, becoming a larger and larger part of the U.S. economy. That figure is slated to grow to close to 20% of total GDP in coming years, creating potential pains for patients and payers alike.
While policy makers attempt a wider fix, Edward Eichorn, president of Medilink Consulting Group LLC and general partner at Eichhorn & Hutchinson LLP, says rising costs will require changes.
“The news that healthcare costs are expected to rise by approximately 5.5% a year hitting $6 trillion by 2027 means that healthcare executives need to be vigilant and strategic as they plan the future of their companies and the markets they compete in,” Eichorn says.
He adds that there are a large number of bills (at least 10) in Congress that could potentially reshape the healthcare landscape, from Medicare for All proposals to other bills addressing smaller Medicare age expansion.
“As Democrats and Republicans move into the next election cycle,” Eichorn says, “it will be even more important for healthcare executives to know where each of the viable presidential candidates stands on healthcare issues and to learn what legislation might be proposed if either President Trump or one of the many Democratic challengers wins the presidential election.
“It is equally important to follow the congressional and senate elections. While it is unlikely that any healthcare bills will be passed into law before the next election, it is likely that the President and the congress will have to take steps to control the growth in costs because the cost of healthcare is the highest in the world, while 29 million Americans do not have health insurance and another 40 million are underinsured. If costs continue to grow faster than wages it is likely that the congress and the President will come under ever-increasing pressure to address these issues.”
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When asked about the cause of the problem, Eichorn points to the uniqueness of the U.S. healthcare system.
“We are the only major country in the world that does not have a universal healthcare system. Our costs have grown more rapidly than any other nation for the last 35 years.”
He points to a study from the Health Research Institute showing that while costs are increasing, utilization remains flat-meaning that rising prices are the key culprit in rising costs. “If that is seen by congress as the predominate cause of growth in healthcare spending then they will be forced to intervene,” he says.
So what should healthcare executives do about this?
“Healthcare executives need to carefully monitor studies of healthcare costs that relate to the products and services that their companies provide to make sure that they are price competitive and that they provide the value that consumers expect. They also need actively engage members of the administration and the congress to provide input to the many legislative initiatives that could have an impact on their companies and the patients that they serve.”