cut even further, this would almost
certainly exacerbate the problem.
In addition, and this impacts hospitals
and communities of all sizes,
independently employed physicians
are leaving private practice in favor
of hospitals and healthcare systems.
Larger entities offer the technology,
equipment, and economies of scale
that private practice does not. This is
also a way for independently employed
physicians to relieve their own financial
obligations, especially since the growth
of retail clinics has severely hampered
their ability to remain profitable.
These retail clinics, which are found
in pharmacies such as CVS, Rite Aid,
and Walgreens, meet the needs of the
consumer in ways that private practices
cannot. The clinics are usually closer,
have extended hours, and are staffed by
nurses and nurse practitioners like those
that a patient would see at a physician’s
office. They also typically offer greater
financial incentive for most patients
in the form of lower cost flat-rate
care. In fact, according to Accenture,
there will be more than 2,800 retail
clinics by 2018, a 47 percent increase
over the number operating in 2014.
Competing with this model will prove
difficult if traditional service providers
don’t make changes in the way in
which they provide care. The expansion
of clinic offerings and the creation
of partnerships with retail clinics are
two options to counteract this trend.
Surviving the Uncertainty
So what’s the best way to ensure
survival in a time when there is no
clear indication of what’s next? There
are multiple considerations, of course,
but none is more important than
an honest and careful evaluation of
the business plan. At a minimum,
healthcare providers must make sure
their core services are supported and
the business model provides room
for continued growth and sustainable
margins. Disposing of nonessential and
nonstrategic facilities or expansions
that don’t make practical or financial
sense is a given, especially if they don’t
support the provider’s long-term vision.
At the same time, providers should
consider expanding service line
offerings and specialty programs,
especially those that generate long-term
revenue streams. For some, that could
mean treating cancer and other serious
illnesses or injuries. Given the nature of
the illness or condition, these types of
services require extended outpatient care
and/or rehabilitation in a hospital setting.
While not all providers are equipped to
deliver all potential service lines, they
should consider those that they’re best-suited to handle and that help them avoid
relying on competitive streams that go
head to head with low-cost retail clinics.
Bob Maroney is president of Gordon Brothers’
commercial & industrial practice. With extensive
disposition and valuation experience, he works with
clients to design and implement comprehensive
global solutions across a range of sectors. Prior to
joining Gordon Brothers in 2005, Maroney served
as chief appraisal officer at Bank of America. He is a
senior member of the American Society of Appraisers,
Machinery and Technical Specialties, and is a
licensed and certified general real estate appraiser.
Rick Schmitt is president of Gordon Brothers’
valuation practice. Prior to its acquisition by Gordon
Brothers in 2015, Schmitt was president and CEO
of AccuVal-Liqui Tec, which he co-founded. He
has more than 30 years of experience appraising
businesses, intangible assets, machinery, real estate,
and inventory across a wide variety of industries.
He holds both the Certified Valuation Analyst
(CVA) in business valuation and the Accredited
Senior Appraiser (ASA) designations.
Providers might also consider taking
advantage of less common and
nontraditional avenues, such as asset-based lending facilities, especially
since hospitals are asset-intensive
and typically have major investments
in machinery and equipment.
One way or another, the coming
months will reveal more about the
future of healthcare in America.
Outside of the new administration’s
approach to policymaking and
regulatory matters, which everyone
is watching closely, there are certain
indicators that may provide clues
on where the industry is headed.
Some of these signs include
bankruptcies, reported cash flows
from major hospitals and clinics,
reports from major manufacturers
and industry associations on
reinvestments in equipment, and
hospital facility expansion.
Questions about reimbursements,
incentives, and the insured pool will
persist. And healthcare providers
will continue to face pressure
from consolidation. One thing
that can be controlled, however, is
education on the issues and working
with trusted advisors to plan and
prepare for next steps in the face
of change, wherever that change
takes the healthcare industry. J
Providers should consider expanding
service line offerings and specialty
programs, especially those that
generate long-term revenue streams.