Skip to content
Exit Search

    What the C-Suite Needs to Know about US Healthcare

    Posted by: Nancy Pakieser | May 16, 2012

    I recently had the opportunity to hear a presentation by Brandi Greenberg, Managing Director at The Advisory Board and the Healthcare Supplier/Provider Institute in Las Vegas. Brandi presented research findings that are packaged for the C-Suite. I found it very enlightening and wanted to share my notes with you.

    Please provide comments, or contact me directly with questions!

    Opening Premise: No matter the legislative, political or legal activities around healthcare and healthcare reform, there are other key market and business factors looming that are dictating the need for change.


    • Patients still deferring/forgoing procedures due to cost
    • 2010 report on median hospital operating margins: 2.4%
      • Banks are still tight on lending funds, so it is hard to get capital for investments
      • The margins are too slim for hospitals to self-finance capital investment


    1. The first wave of the “Silver Tsunami” is hitting; impacts margins in two ways:
      • Payer mix shift: from private insurance to Medicare, which means lower reimbursement to hospital, lower margin for services delivered
      • “Market basket” of delivered services is shifting  from surgical to medical procedures
      • Medical treatment has lower reimbursement levels and uses more resources
      • High revenue surgical procedure volume will trend down, as a percentage of delivered services
    2. Hospitals/IDNs cannot depend on private pay insurance reimbursement to cover gaps of Medicare-led reimbursement cuts, as they have historically
      • The squeeze on margins is only going to get worse
    3. Payment Reforms
      • Still very much a project in development, but it is already in action
      • Mandatory projects: Value-Based Purchasing; Hospital Readmission Reduction Program
      • Pilot Programs: Bundled Payments (5 models); Shared Savings; Accountable Care Organizations (ACOs)
      • Will tie into comparative effectiveness and quality of outcomes initiatives
    4. RAC (Recovery Audit Contractor Program) and CMS Utilization Reviews
      • Builds on RAC fraud investigations was created by legislation in 2003 and 2006 (
      • Setting stage for more scrutiny of “formularies of care”, appropriateness of therapies/care delivered and utilization of therapies/procedures
      • Can have a big financial/legal impact on organizations


    • Need to drive down healthcare cost growth
    • Need to deliver high quality, coordinated care
    • Need to engage patients to be active participants in their healthcare to improve outcomes


    • Migration to Regional Purchasing Coalitions and self-contracting
      • Driver: e-sourcing
      • Advisory Board survey found 88% of the hospitals surveyed are looking into self-contracting
    • Shift to delivery of care to ambulatory and other settings outside acute care facility
    • Mergers and acquisitions continuing, but in more disruptive manner
      • Payers or private equity firms buying healthcare organizations
    • Expanding emergence of patient-centered “Medical Home”
      • Comprehensive primary care delivery
      • Currently led by commercial payers

    Favorite Quote: “Do not need innovation in products, but innovation in the processes.”


    Back to List View

    Related Content