Get Your Bucket: Let the Healthcare Bailouts (and Bail-ins) Begin

by Lisa Kersey

While the healthcare industry is often cited as the salmon in the proverbial stream, as health reform unfolds, many hospitals are looking for a net. And many venture capitalists, commercial insurers and even stronger health systems have their buckets ready.

Historically, when the economy took a nose dive, healthcare industry employment trends were still heading north. Similarly, when the general contractors and real estate agents were singing the blues due to the screeching halt in new construction, they realized that healthcare renovations were the only sign of life. As a result, healthcare organizations found they were receiving 12 eager bidders rather than three, for even their smallest projects.

As economic pressures and healthcare reform legislation impact hospitals and health systems across the nation, some new trends are beginning to emerge.

1. Physicians are knocking on the doors of the C-suite asking to be employed. In the previous wave of mass physician employment during the 1990’s, hospitals were begging for and paying premiums to physicians to sign employment contracts so they would have appropriate coverage by specialists and sufficient primary care base to attract and retain specialists. With health reform and the multi-generational physician workforce physicians are asking hospitals to buy their practices: the older physicians wanting to slow down for retirement and the younger physicians looking for work/life balance. According to management consultant Accenture, less than one-third of physicians are expected to remain in private practice by 2013.
2. Hospitals and health systems are consolidating at a rapid pace. From the acquisition of ailing hospitals to unsolicited offers for profitable hospitals, mergers and acquisitions have become everyday headlines in the healthcare industry. Whether it’s the non-profit world of Catholic Healthcare, the for-profit world of Tenet and HCA, or the few independent hospitals remaining in the U.S., every corner of the industry is in the game. According to Richard Foster, chief actuary for CMS, 40 percent of hospitals will become unprofitable by 2050 under a provision of the healthcare reform law, which will cause them to drop out of the program or go bankrupt. Hawaii Medical Center has already filed bankruptcy. And without Highmark willing to purchase West Penn Hospital, Pittsburgh would have become a one-horse town. Competitors are becoming friends, and hospitals that had no intention of even dating are finding themselves entertaining marriage proposals. Lawyers, consultants and PR/marketing professionals rejoice! The healthcare provider landscape is changing so rapidly that you should have job security well into this century.
3. Healthcare financing reform and healthcare delivery reform are finally coming into alignment. Like the Phantom of the Opera, health reform has two faces: 1) the mechanics of reform that deals with who pays for what and 2) the health of reform that is concerned with access to care and the health status of communities. Past attempts to overhaul healthcare have skewed more toward the former, while the current sea of change is focusing on connecting people to healthcare, to improve health and lower costs. Despite your physiological response when you hear the phrases “accountable care organization” and “value based purchasing,” these concepts will have major implications on how the healthcare industry. If all goes well, the nation’s healthcare system will be able to transform itself from being the country with the most costly health system and some of the least healthy people to a model that we can proudly leave to our children.

So grab you buckets–we will all need to contribute to this bail out.

About Lisa Kersey:

VP, Health PR @CRTtanaka. Have lived in Virginia, North Carolina, Utah and Hawaii. Inspired by nature, good books and good wine. Enjoy singer/songwriters and art shows. #UVA and #UNC alum.