8/13/2019 Us Chs MondayMemo 2013Healthcare 5Cs 021313

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The 5 Cs of 2013 for Health Care2013 will be the most important year in the U.S. health care industry in modern history

thus far. Our nations fiscal challenges and the health care industrys bulk are on a collisioncourse. The story line about health care in 2013 will center on five themes: Clarity, Costs,

Compliance, Consolidation, and Consumers.

Clarity

Implementation of the Affordable Care Act requires every

stakeholders attention.

This year, well know whether states expand their Medicaid

programs or not, and how theyll navigate their health

insurance exchange (HIX) requirements either with or without

federal help. Well learn the success of the first wave of

medical homes and accountable care organizations (ACOs)

created by providers and plans to assume risk and share in

savings; and well get additional guidance about essential

health benefits, how actuarial values and guaranteed issue

will be regulated, and how the federal government will

implement its federal HIX hub.

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Consumers

No longer patients, health care consumers will

set the stage for the new normal.

The U.S. health system has traditionally paid lip service

to the notion of consumers because it deems every

element of our system too complex for comprehension

by the general public. This notion is changing. In 2013,

the transition from patient orientation to consumerismin health care will come full circle. The reason:

consumers are demanding more value from the system

due to its ever-increasing costs and poor service. 62%

say that at least half the money spent on health care

is wasted, according to the Deloitte Center for Health

Solutions 2012 Survey of U.S. Health Care Consumers.

Radical cost reduction across the system is necessary to survival.

The gap between the growth of health spending and the

growth of gross domestic product (GDP) is problematic: it is

not sustainable long term, notwithstanding the benefits of

employment growth and innovation it produces as an industry.

Health costs will be the focus in 2013 because consumers,

employers, and policymakers believe it necessary to reduce costs

and possible to do so without compromising quality and safety.

But reducing costs in a system where incentives reward doing

more, and where each sectors expense is anothers revenue,

means likely skirmishes wherein each asserts their costs are

appropriate and the others excessive.

Costs

Consolidation

Go big or get out.

The health care industry in the U.S. will consolidate

at a pace in 2013 thats unprecedented. Whats

driving the flurry of deals and consolidation: reality

for most to survive, its a choice to go big or get

out. Access to capital to be competitive, attract

talent, invest in infrastructure, and grow requires

scale. Most sectors in health care are smaller

compared to other industries. And in 2013, success

of consolidations will be measured against value

a standard that might be tougher to meet than

most anticipate.

Compliance

The rules are complex, forthcoming, and massive.

Proceed with caution.

As incentives change from volume to value, as financial

risk is shifted to doctors and hospitals for quality andcost, and as report cards provide scores for necessary

care in each community, the issue of adherence to

evidence-based care will be widely discussed. And in

all likelihood, this issue will become the centerpiece for

regulatory oversight and compliance in coming years.

The U.S. health care system is highly regulated already.

Theres no end in sight. Compliance is a big deal and

will continue to be a moving target.

These 5 Cs are excerpted from a longer article in the Deloitte Center for Health Solutions Monday

Memo of January 7, 2012. Visit www.deloitte.com/us/mondaymemohealthcare5cs

The Deloitte Center for Health Solutions works each year to identify global, national, and local trends.We survey consumers, physicians, and employers to examine market responses and develop insightsthat help companies understand whats happening what will happen next and what to do about it.Learn more at www.deloitte.com/centerforhealthsolutions.

As used in this document, Deloitte means Deloitte LLP. Please see www.deloitte.com/us/aboutfora detailed description of the legal structure of Deloitte LLP and its subsidiaries.

This publication contains general information only and Deloitte is not, by means of this publication,rendering accounting, business, financial, investment, legal, tax, or other professional advice orservices. This publication is not a substitute for such professional advice or services, nor should it beused as a basis for any decision or action that may affect your business. Before making any decisionor taking any action that may affect your business, you should consult a qualified professional advisor.Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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