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by Center for American Progress Action Fund

Wal-Marting of Healthcare

Physician groups, hospital corporations and any portion of their supply chains are going to get pretty thrifty this year; a trend healthcare experts say will leave an industry many believe is currently fraught with waste and wealthy executives with a more Wal-Mart-like, economizing public perception.

According to consulting firm PriceWaterhouseCoopers, no stone will be left unturned in the quest to squeeze more costs out of healthcare. After bidding good riddance to a year that saw its industry suddenly spread across the public microscope and bounced across the aisles of Congress, all facets of healthcare will look from within to find ways to cut spending.

“Squeezing everything out of their supply chains, renegotiating everything from purchasing agreements and contracts with suppliers on everything from food services to medical devices and pharmaceuticals,” will become standard healthcare practice, as the firm points out its annual report, Top Issues Facing Healthcare for 2010.

Such a prognostication takes a significant page from Wal-Mart’s corporate handbook, which prides itself on strong-arming its suppliers into at- or below-cost arrangements so the nation’s largest retailer can in turn cut costs for its customers. But for healthcare providers, this means insurance companies will essentially become more like Wal-Mart when their contracts are up for renewal.

States like Tennessee, that are already rolling out pilot projects like mandating electronic prescriptions from doctors before such mandates become federal law, will become more common among employer groups and insurance carriers themselves. We can expect heavy fines, too, for not complying. Hand-in-hand with the Obama administration’s electronic medical records provision, the so-called ePrescriptions initiative is expected to drive down labor costs associated with manual paperwork while reducing prescription fraud.

“This new carrot and stick model of accelerating change represents a shift in the government’s role as a “passive payer” to an “active buyer” of healthcare and its move from volume-based payments to value-based purchasing,” claims the PWC report.

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For small business owners, many of whom are already struggling to provide affordable healthcare to their employees, employers of all sizes will begin auditing their individual group policies to find new ways to shrink their annual premiums. PWC claims this trend will also include efforts to “weed out” dependents of their no longer eligible for health insurance under their group plans due to age or other factors.

In Déjà vu style, the PWC report also suggests an emergence of odd business bedfellows to emerge this year as healthcare providers work to maximize cost savings. Physician practices, once strongly aligned with individual hospitals until the HMO/ managed care insurance model fell out of consumer and employer favor, will once again create partnerships for the sake of eliminating duplicate business expenses while caring for the same patients.

As healthcare consumers grow more accustomed to alternative means of healthcare delivery (paperless records, electronic prescriptions, etc.), look for healthcare companies to audit their own patients to find potential candidates for electronic healthcare delivery; consultations by e-mail, in-home electronic monitoring of patient vital signs and conditions from remote call centers, and other technologically based systems will become mainstream in the hospitals of the future.

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