Here it is: February 2017. We have a new President, a reinvigorated Congress and new Cabinet officers lining up for their roles in the administration. As I discussed in my previous post, only time will tell how President Trump and this new administration will impact healthcare. For instance, the likely appointment of Representative Dr. Tom Price to head the Department of Health and Human Services (HHS) will have an immediate, direct impact on the delivery of healthcare in the U.S.
With Dr. Price’s assumed confirmation, he will be stepping into a bureaucracy that is riddled with regulations that can often impair the ability to deliver care in a cost-efficient manner. Many hope that Dr. Price, a former practicing orthopedic surgeon, can see through the volumes of regulations and lead the HHS into an environment that puts the safety of patients and families first.
Simultaneously, the collective “we” involved in the delivery of care, through either hands-on patient care or constructing the safe environment of care, can become part of the solution to drive the investment required for the overall cost of healthcare in the U.S. downwards as a portion of the U.S. GNP.
The Patient Protection and Affordable Care Act in 2017
Like most of you, I’ve been attempting to keep up with the forecasts, the pundits, the market research data and the experts as to what may happen to Patient Protection and Affordable Care Act (PPACA or ACA), aka Obamacare. Whatever occurs, it will impact each of us as a patient, a family member or consumer of care, and it will also affect the way we design and build for healthcare delivery.
Here’s my summary from a compilation of many sources:
- Repealing and replacing the ACA on a piece-by-piece basis. This is the most likely scenario, and one of the first things to change will involve coverage and the state mandates. The second most likely things to change are the recently enacted bundled payment plans by Centers for Medicare and Medicaid Services (CMS). And finally, the third areas where change can be expected are home care, long-term care, ancillary services, etc. – most of the non-acute care programs. Acute care is the toughest to tackle and will likely be the last to be dealt with, perhaps into 2018 and 2019.
- The rise of activity in the mid-market will continue. This is good news for those who are involved with free standing emergency departments, urgent care centers and micro hospitals. There is a mix of opinions on the long-term viability of these delivery models; however, these are the facilities in the second ring of our Hub and Spoke model. They will be built, consolidated on a regional basis and find a delivery “home” in the U.S. system.
- The financial markets for healthcare facilities, only for a moment, are in a pause mode. As the new administration begins, policies and expectations will be worked out, and we’ll see a return to confidence and the market will return.
- Consolidation of health systems and organizations continues. The pace has slowed, but the underlying market forces are still in play and necessary as a means to gain efficiencies in overlapping systems, reduce overall costs and increase utilization of resources. Don’t be surprised by states or municipalities looking at a modified Certificate of Need (CON) process where they do not presently exist. The foundation of the CON process is to attempt to somewhat regulate unnecessary overlap of resources and services; e.g. why have two diagnostic MRI centers a block apart when the patient volume doesn’t warrant it? This will cause a good deal of dialogue.
- Design contracts help us foresee a good deal of future build activity. In most major U.S. metropolitan statistical areas, what is being designed can be described as small- to mid-size projects. Footprints that are 100,000 sq. feet or less are dominating. Large-scale projects are taking place, but not at the pace and scale once projected. Most of these larger scale efforts are replacement type projects: in-place or scrape and replace.
- The financial dividing lines between non-profit and for-profit are widening. The financial reports can make you dizzy trying to figure out if the system is healthy, profitable or just trying to hold on. Combining numbers shows that actual net margins are below 2% for the larger non-profits; most critical access and rural hospitals are suffering. The exceptional ones are operating in the black but most are operating in the red. For-profit systems seem to be the wild-card for the moment. Two of the largest have reported very healthy 2016 figures while the rest seem to be have 1.5 to 10% margins.
Impact on the Design and Construction of Healthcare Business
My belief is this reinforces the need for each of us to be aware of our client’s business requirements before we launch with them into a program. They deliver healthcare. It is our responsibility to ensure that we are assisting them in that mission by providing them a safe, cost-efficient environment to accomplish that.
Thus we begin Healthcare 2017.
There is much to be seen this year and much will change, that’s a certainty. What is up to us in the design and construction industry is how we respond to the changing environment of care. More importantly, how we respond to what is within the grasp of our day-to-day involvement in this delivery system.
The march to a system of wellness and outpatient-centered treatments will not stand still. That much has become clear in the seven years since PPACA was passed. While we don't have all the data from the future, we do have plenty to go on in the present. Download our data and trends reports from Oldcastle Business Intelligence today.