Price gouging, treatment rationing, and data falsification are signs that the Anthropocene Epoch
has arrived in healthcare and extinction
lies ahead for those that cannot adapt.
As a result of revolutionary changes
in the reimbursement system that the
Center for Medicare and Medicaid
Services (CMS) is implementing, the
U.S. healthcare system is in a process
of change akin to the Industrial
Revolution that began 200 years ago.
As providers, lenders, patients, payers,
consumers, and investors watch the
old world of fee for service disappear
and a new world of value-based
purchasing take hold, organizations
that cannot adapt will perish while
those that can adapt will thrive.
However, entities that cannot adapt,
to misquote Dylan Thomas, are not
likely to go quietly into that good night.
Instead, they have already begun to
show their hand through price gouging,
treatment rationing, and falsification
of clinical and financial data.
Based on all that is happening, the
authors categorically predict that in
the next 24 months all stakeholders
will see challenges, including:
• Lenders will discover that more
of their debtors than expected
will default on loans, especially
in the post-acute care space.
• Real estate investment trusts
(REITs) will find that more of their
tenants than expected in the
post-acute care space will seek
to renegotiate their rents, thereby
lowering expected returns.
• Investors in all kinds of healthcare
companies, including investments
“not in the direct care of patients,” will
find that cash flows they projected
based on future reimbursement
expectations will fall short, forcing
write-downs of their investments.
• Patients will find that some
clinical performance claims made
by their providers are false.
• Post-acquisition disputes will
increase significantly. Hospital
systems and other health providers
that merged and acted in an
oligopoly-like manner will be broken
up by the Federal Trade Commission.
• Executives who treat clinicians
like disgruntled members of labor
unions do so at their peril and
will realize the impact of their
behavior as clinician productivity
falls short of expectations.
• Entities that dismiss their “five-star
ratings” as unimportant will soon
be rejected by consumers and
excluded from narrowing networks,
severely curtailing their revenue.
• Healthcare information technology
(IT) will prove far more vulnerable to
cybersecurity threats and intrusions
than banks and the military, and
healthcare providers are less prepared
to deal with the problems. The
vulnerability can be even more
dire when a hospital’s IT system
crashes and it becomes practically
impossible for doctors and nurses
to take care of patients. Privacy
concerns will escalate, and integrated
health systems and networks will be
severely challenged in integrating
their data systems. And every one of
these digital relationships presents a
new set of cyber vulnerabilities and
challenges. A recent cybersecurity
event on a medical center resulted
in the shutdown of the center’s
computers and connected medical
devices for more than a week.
• Many hospitals are about to
become permanently cash-flow
negative, while others are only
cash-flow positive because they
won the geographical lottery of a
strong payer mix. With payer mix
deteriorating over time, hospitals
will be increasingly incentivized
to remain profitable by providing
lower standards of patient care that
create the need for costly additional
surgical services and longer
intensive care unit (ICU) stays.
A study of tax-exempt hospitals
in the U.S. conducted by RVH
Analytics suggests that more than