Financial winners are often those, who by luck or design, have managed to be best prepared for the circumstances they find themselves in.
As we head into a new year and a new way of billing and being reimbursed by Medicare, there are perhaps more than ever, many reasons to be apprehensive about 2011. As has often been said, when it comes to financial issues related to healthcare, the only constant is change. The better we predict and manage change, the more we are able to benefit from the new and unique opportunities which always accompany change.
However, the more practical question is: How do we balance our day-to-day revenue cycle challenges with the more abstract task of predicting the future? I don’t know if there is any magical formula, but I suggest you at least ask yourself this question: How can I best forecast the next five years in terms of both clinical and financial trends that are going to have significant impact on the business of dialysis. Specifically, I believe there are a few dominant indicators for the future which can be cast as questions.
1. What type of ownership structure will become more dominant in the market?
Ownership structure, especially for new units, often is a metric for future profitability and operational trends. I suggest you try to predict shift in ownership structure at both on a national and a regional level because, as we saw with ESRD PPS, national trends may differ from regional trends.
As January freezes on, those of us in the frozen north often are enticed by the thought of moving/retiring in the warmer states. I suggest that those of you considering a move, focus on both your present region and any region you may wish to relocate to. Be specific in this respect; pick a metro area and do some research as to which dialysis providers exist now, what the ownership structure is, how new the units are, and what the future may hold. Also look at regional employment and age-related trends, this may provide insight.
2. What clinical factors are likely to change in the next five years?
Looking back to 2005, at that point in time, would you have expected a resurgence of home modes? Would you have expected a reduction in the use of ESAs? Which mergers would you have foreseen? Looking forward to 2015, are there any emerging drugs, technologies, or practice pattern shifts that will alter the clinical landscape?
3. What regulatory factors are likely to change by 2015?
With ESRD PPS and QIP, we are experiencing a massive redesign of the regulatory environment, but can we look even beyond this and predict what other further major changes might be coming our way? Keeping in mind that 2014 ends the phase-in process for ESRD PPS, do we really expect from CMS only minor tweaking of payment systems but no more major changes? Put another way, if we knew for a fact that further major regulatory changes are definitely going to occur, what are the first three items come that to mind?
4. Putting this all together and forming a plan.
Clearly, it is not easy to see into the future, but if we simply take a few moments to write down our best guesses with respect to the preceding questions, and develop an action plan based on our limited knowledge, two benefits immediately accrue. First, we become much more aware of information indicating trends, we start to listen and read with a more discerning mind. Secondly, our plan of action, even if it seems very basic, is a basis for an evolving upgrade which inevitably greatly increases our chances of being one step ahead of shifts in the clinical, regulatory and market environment.
Positioning ourselves for the future takes time and is a work in progress, but it is also what ultimately separates those who succeed from those who live in reaction. So give future planning a try, keep it simple and design your best path to personal and corporate success.
As always, I invite you to send me your comments at jahern@ahernconsulting.com and let me know what you think! RBT
With offices are located in Chicago and Washington, D.C., Jack Ahern provides cutting edge financial and management consulting services to major academic medical centers, large national dialysis organizations, independently owned dialysis facilities, nephrology groups, as well as to legislators, institutional investors, pharmaceutical companies and medical device manufactures. He and has an MBA from the University of Chicago, and undergraduate degrees in both Chemistry and Engineering from Dalhousie University. He can be reached at (312) 997-2177, ext. 701
