There are many healthcare management challenges in the U.S. today. Some of these problems have evolved slowly overtime as a result of growing, complex, and diverse healthcare offerings. Rising costs in almost every area have been impacting hospitals and other healthcare providers as well as patient willingness to seek care.
Regulatory changes have also introduced issues for providers. Other economic challenges in the healthcare industry have appeared more recently as a result of political fighting, economic changes, and technology innovation. Cybersecurity and the protection of patient records are also growing concerns.
The following section will focus on three impacted areas starting with general healthcare issues followed by financial and economic problems.
General Healthcare Management Problems
It is important to note the impact of fraud, waste, and abuse created by providers. The Washington Health Alliance found that 46% of low-cost services in the state were considered unnecessary (Luthi, 2018). This can be compounded by the problem of providers ordering extra tests and procedures to avoid liability issues.
Patients are also a part of the issue, according to the American Institute for Preventive Medicine,”25% of physician visits and 55% of emergency room visits are unnecessary,” (NAHU, 2015). Filtering out these unnecessary visits and waste will help control costs and better manage valuable outcomes.
IT Management Problems in Healthcare Organizations
While information technology (IT) opens the doors for resolving some healthcare management issues, it also raises issues of security and regulatory compliance to patient protection laws such as the Health Insurance Portability and Accountability Act (HIPAA). The past years have seen an increase in cyber attacks on IT systems and the “largest number of data breaches in 2015 took place within health services, comprising 39 percent of all breaches,” (Gomes, 2016). From 2009 to 2015, 135 million compromised health records led to an estimate cost of $50.6 billion (Hayes, 2015).
A healthcare issue of growing concern is the focus on behavioral and lifestyle choices of patients to better manage their health. Adherence to treatment plans and prescription usage are helpful but patient choices such as diet and exercise also play a large role in their health. “Mental health conditions cost U.S. businesses more than $440 billion annually,” (Cocchi,2016). Preventive methods and medicine are much more affordable than managing chronic problems resulting from poor health habits.
Another health management issue is the change to value-based care in an attempt to incentivize lower cost improved care for patients. Quality over quantity is the goal and providers that can resolve this issue stand to receive increased funding over competitors. Such an organizational problem will require providers to rethink standard practices and billing.
Financial Issues in Healthcare Organizations
A key financial issue facing Healthcare managers is offering affordable healthcare rates despite rising costs. Parts of these rising costs are due to increased costs in pharmaceuticals, insurance premiums, and healthcare spending.
Pharmaceuticals have been under public scrutiny following repeatedly large price hikes for vital drugs. The Centers for Medicare & Medicaid Services have noted an increase in prescription drug spending to $328.6 billion in 2016.
Improvements in healthcare also allow for a larger aging population and the “number of people over the age of 60 is projected to grow to as many as 110 million, or 27.4 % of its total population by 2025,” (NAHU, 2015).
Those over 60 require increased use of healthcare under tighter budget restrictions. In addition, healthcare spending is projected to “grow 1.0 percentage point faster than the gross domestic product (GDP) per year over the 2017-2026 period,” (Centers for Medicare, 2016). Financial Healthcare management issues can also include components such as handling payroll, patient data entry, processing insurance claims or leveraging medical coding services, medical billing and denial management, and negotiating repayment.
For some providers the payment for services rendered can be delayed over long periods. Dealing with these internal cost considerations for healthcare revenue cycle management and healthcare accounts reveivable can detract from a focus on value centered patient care. Part of the problem is the complexity of patient billing which is something that many patients cannot easily understand.
Regulatory issues in healthcare also impact financials in several ways. The introduction of the Affordable Care Act (ACA) and subsequent upcoming repeal will impact providers as they pay to adapt to these changes each time. In another example, providers were required to upgrade to a uniform coding system referred to as ICD10. This coding change introduced complex issues that required extensive and possible costly training to update providers to the new system.
Economic Challenges in the Healthcare Industry
Healthcare management issues are also being mitigated by mergers between providers of all levels. These merged organizations can benefit from economies of scale and other cost benefits such as interoperability and consolidated healthcare leadership. “Success will come through tactical growth delivering what consumers value – greater access, improved outcomes and lower costs,” (Health Research Institute, 2015). One issue with these mergers is that is that larger corporations become more resistant to change in an industry marked by constant change and innovation.
Disruptive technology is promising the potential for amazing advances in healthcare administration. First is the use of medical devices to gather health information directly from patients such as pulse, blood pressure, and blood sugar monitors. These “connected devices” are part of the growing Internet of Things (IoT) and “Internet-connected healthcare products are estimated to be worth $285 billion by 2020,” (Cocchie, 2016).
The prevalent use of smartphones by patients offers a unique opportunity to manage healthcare problems with mobile applications. Providers can offer services like appointment scheduling, billing, as well as records and test result communication. In tandem with increased communication with patients, telemedicine offers the benefit of long-range communication between patients and doctors and appears to be well received by both healthcare organizations and millennial patients.
Technology innovations also allow providers to set up cloud storage for medical files allowing quick and convenient access from any location. Providers must address the security concerns here including those created by organizational problems such as improper employee training. While some health records were compromised due to malicious activity, a large portion was due to unintentional disclosures by staff.
Finally, providers have the option to use big data and artificial intelligence analytics in many areas to improve efficiency and identify problem areas.
Staffing is expected to become problematic in future years with a “deficit of 3.5 million health care providers by 2030 as current providers retire, with a projected shortage of 91,500 doctors by 2020,” (NAHU, 2015).
While it is possible to do more with less and leverage solutions to these problems in order to efficiently utilize a decreased provider pool, too much of a deficit will impact the cost of receiving care. This is especially true considering the length and cost of educating and training medical providers. Healthcare staffing services are available to mitigate the effects of project needs.
Final Note on Management Problems in Healthcare Organizations
There are many issues arising within this complex healthcare system. Providers are facing increased costs, regulatory changes, coding updates, inefficiencies, security issues, and disruptive technology.
A key challenge is increasing interoperability between disconnected providers and leveraging technology to make up for decreasing staff and an improved focus on value-based care over quantity treated. This includes improving preventative approaches to managing population health.
One interesting option to reduce costs is to outsource vital tasks to a trusted third-party healthcare service organization. While there are many problems facing the healthcare industry, the future is bright and improving daily.
Contact Nearterm today for more information about our services.
Centers for Medicare & Medicaid Services (CMS) (2018) National Health Expenditure Fact Sheet 2016. Centers for Medicare & Medicaid Services. Retrieved from: https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/nhe-fact-sheet.html
Cocchi, R (2016) Top 10 issues impacting healthcare industry in 2016. Healthcare Business & Technology. Retrieved from: http://www.healthcarebusinesstech.com/issues-impacting-hospitals-2016/
Gomes, N. (2016) 8 Health Tech Challenges and Opportunities in 2017. Physicians Practice. Retrieved from: http://www.physicianspractice.com/ehr/8-health-tech-challenges-and-opportunities-2017
Hayes, T. (2015) Are Electronic Medical Records Worth the Costs of Implementation? American Action Forum. Retrieved from: https://www.americanactionforum.org/research/are-electronic-medical-records-worth-the-costs-of-implementation/
Health Research Institute (2015) Top Health Industry Issues of 2016: Thriving in the New Health Economy. Health Research Institute. Retrieved from: https://www.pwc.com/us/en/health-industries/top-health-industry-issues/assets/2016-us-hri-top-issues.pdf
Luthi, S. (2018) 4 takeaway questions as the Senate looks at healthcare costs. Modern Healthcare. Retrieved from: http://www.modernhealthcare.com/article/20180717/NEWS/180719917/4-takeaway-questions-as-the-senate-looks-at-healthcare-costs
National Association of Health Underwriters (2015) Healthcare Cost Drivers White Paper. National Association of Health Underwriters. Retrieved from: https://nahu.org/media/1147/healthcarecost-driverswhitepaper.pdf