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From the President

Richard L. Clarke, DHA, FHFMA

What will the next year bring? Where will I be and what will I be doing? What resolutions will I make-and possibly break?

Looking out at the next year, as we routinely do as January approaches, is a healthy exercise. However, for healthcare finance leaders, looking forward one year isn't enough. Activities such as enterprise risk assessment and capital planning demand a broader time horizon-at least five years.

What will the next half decade bring? How will our industry change, and what impact does that have on our organizations and us?

Regardless of Washington's efforts to reform health insurance, certain changes are likely to confront us. And planning for them (even if they don't develop exactly as we envision) is an important part of our roles as strategic leaders.

Pricing flexibility likely will continue to diminish. In other words, providers will be "price takers" not "price setters." The unit price (per procedure, per case, per capita) will be determined by government, employers, and the public, not what providers of care believe is reasonable. And even though volume may continue to grow, overall revenue growth is likely to trail increases in cost inputs such as salaries, supplies, and capital costs.

Fee-for-service medical care will continue a slow retreat as the main basis of payment. It will be replaced by episode-based, bundled, and disease-specific capitation approaches. The risk will shift from the sponsor (government and employer) and from the private payer to the provider of care.

Patients and other stakeholders will continue to demand better transparency in cost, quality, and safety. Providers of care will be compared publicly against each other and national benchmarks. The customer will be firmly in control.

So if these five-year assumptions about the future are correct, what should this year's New Year's resolutions encompass?

Finance leaders should resolve to move beyond near-term financial issues and anticipate the impact of reduced revenue growth, increased risk-based payment systems, and a more transparent world where stakeholders will be able to discern differences in cost, quality, and safety.

Finance leaders also should be active participants in the key strategies that will determine who will thrive in the next five years and who will fade from the scene. The main areas of concentration should be continuous quality improvement, clinical and administrative process improvement, care redesign, and related strategies. The key is to enhance value by reducing the cost of various processes with the aim to improve quality and safety for the people we serve.

Keeping these New Year's resolutions will ensure that our organizations see many new years in the future.

Publication Date: Friday, January 01, 2010

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