Issue link: https://nebusinessmedia.uberflip.com/i/474766
Health Care 26 2014 Economic Forecast www.wbjournal.com Worcester Business Journal 26 2014 Economic Forecast www.wbjournal.com Worcester Business Journal In 2014, here's what you can expect: A Leaner UMass Memorial UMass Memorial Health Care announced in October that it was facing an estimated $57 million operating loss — a number expected to be finalized at the end of the year — that was brought on by a number of factors. When that loss was announced, UMass Memorial spokesman Robert Brogna said the number of admit- ted patients was declining, while the number of patients being observed without admission was climbing, and the latter generates less revenue than the former. At the same time, the Centers for Medicare and Medicaid is reducing reimbursements to UMass and other hospitals that readmit too many patients. UMass Memorial was candid about the implica- tions of an operating loss, which it had forecasted several years in advance. Hospital executives told the system's 13,000 employees that layoffs were ahead, and the first round of 40 was announced earlier this month at UMass Memorial Medical Center. The cuts came in non-medical positions, and Brogna said there are more to come. The system has also said it will reduce programs and services to become more efficient, but UMass has not revealed which other areas are on the chopping block. And last week, UMass Memorial announced it's selling Wing Memorial Hospital and Medical Centers in Palmer to Baystate Health of Springfield for an undisclosed sum. Earlier in the year, UMass Memorial and Baystate said they're exploring ways to collaborate, such as pooling patient populations to take advantage of opportunities like grants, research, and clinical collaborations. Provider Alliances In October, Texas-based Tenet Healthcare bought Vanguard Health Systems, owner of Saint Vincent Hospital in Worcester and MetroWest Medical Center in Framingham and Natick, for $4.3 billion. The deal, designed to save both systems money through admin- istrative efficiencies, may have been the most notable hospital acquisition based on size: Post-acquisition, Tenet now operates 77 acute care hospitals and 173 outpatient centers in 15 states, and is the second-largest for-profit health care system. Hospital system mergers have become common- place in recent years, given the need to reduce costs as federal reimbursements from the Centers for Medicare and Medicaid decline under the ACA. But Lisa Phillips, editor at Irving Levin Associates, Inc. in Connecticut, which publishes data on the health care industry, said it's unlikely it will see another large- scale acquisition in 2014. That's because there are few large health systems that have yet to merge. But that doesn't mean new alliance opportunities don't exist. "There are all different flavors (of alliances)," Phillips said, noting that many systems will opt to share the administration of certain services while maintaining separate administrations. For example, a hospital with a well-run laboratory business may be contracted to provide lab services for another hospi- tal, saving money for both. "Survival of the biggest is really what they're going for," Phillips said. New Challenges For Home Health Care Yet another result of the ACA is a greater emphasis on providing in-home care to patients to reduce costs to hospi- tals. Health care providers also look to home-based care to reduce the rate of readmissions after patients have received treatment or undergone surgery. Meanwhile, the aging population is creating unprece- dented demand for home care. All this has given rise to a home health boom, in which many agencies are opening their doors, though not all are successful. "There's already a lot of competition and there's probably going to be a lot more. People see there's an aging population, and they see the preference that they 5 Things To WaTch Reform's Long Reach: ACA Also Means 'Alliances, Cuts and Adjustments' By emily micucci Worcester Business Journal Staff Writer T he landmark Affordable Care Act was the subject of much scrutiny throughout 2013 as health care stakeholders pre- pared for major parts of the law to take effect next year. Perhaps most notable is the mandate that individuals buy health insurance or pay penalties. Some ACA components have been postponed due to technical and administrative issues, but the perva- sive impact the law has had on just about the entire industry cannot be denied. 1 2 3 Mass. Health Care Spending Health care spending in the Bay State more than tripled from 1991 to 2009. 0 10 20 30 40 50 60 $70 1991 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 (In billions of dollars) $20B $61.2B Source: Kaiser Family Foundation >> Continued On Page 38