Last month some of the leading names in the healthcare finance industry announced an urgent meeting in the wake of the new Healthcare Reform in Arizona at the CFO Healthcare summit (hosted by GDS International) . So what happened and how will this affect the industries Future?
Nearly two-thirds of the US CFO’s believe that it is of utmost importance for congress to address the cost of healthcare over security issues. Very few times has the American Government become so involved in private business? Executives at the CFO Healthcare Summit on the whole in agreement with the reform but openly discussed their concerns over the rising cost of healthcare.
"I can certainly see the benefits of making health-care more readily available to everyone, but as of yet we are still to see the real issue being addressed, a continued increase in healthcare costs”.
If we look at the performance of healthcare stocks over the year and the consensus of the CFO Healthcare committee, the chance that the reform will cut into profits is still regarded as “very possible”.
“to lower costs requires a combination of both fewer treatments or lower cost per treatment, neither of these solutions offer the same profit margins we have become accustomed to”……….
The committee was not all doom and gloom, they discussed in detail the indirect effects of the reform which could lead to increased cost savings. One such discussion looked at how hospitals will see less ‘bad debt’ from the services provided to those people who are not insured, they could see their rates fall from anywhere from 5% to 20%. Not to mention the reconciliation bill which was mentioned several times by the CFO committee, this allows for a greater variation in premiums for people who refuse to take part in ‘wellness programs’ and ultimately lead to a healthier population.
Hospitals have promised to cut more than $150 billion in costs over the next decade, and the implication is that they will need to pressure suppliers to lower costs to do so. Drug manufacturers have agreed to contribute $80 billion over the same time period to helping fund Medicare benefits. This was backed by representatives from such as Vince Schmidt SVP and CFO of Multicare Health System, Mark Spafford CFO and VP of Health Management Associates, Robert Booth CFO of Summit Medical Group, and Larry Dupper CFO of Valley View Hospital.
Can costs be managed or is the diagnosis terminal?
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