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Healthcare Really Is Unique

Today’s healthcare industry is so fragmented and devoid of standardization that you might notice that our authors on occasion even use different acronyms from each other for the same commonly used terms and that articles overlap a bit, just as complicated healthcare regulations do. As a commercial and industrial trained consultant, I view healthcare from an evolutionary standpoint as being in the same place as manufacturing was in the 1980s, before the Japanese revolutionized the manufacturing world.

Healthcare will continue to be one industry where those of us in the distressed and turnaround world will see strong activity for many years to come because changes in the industry will likely be dramatic. That’s especially true because of some very basic structural issues that, in my opinion, are unique to healthcare:

  • The U.S. government, which through the Medicare and Medicaid programs is by far the largest payer of healthcare costs, has only recently started legislating tactics to control healthcare costs. These efforts will continue for years, because the government is unlikely to accomplish its goals quickly due to political pressures being brought to bear.
  • Healthcare regulations are so extensive and complicated that, generally speaking, only large healthcare providers can afford the legal advice necessary to understand their impact.
  • Only recently have patients become concerned with the cost of healthcare, due to the higher co-pays and deductibles they are required to pay under Medicare or private insurance provided by their employers. In the past, they simply accepted without challenge the referral advice of their physicians. Given their newfound interest in quality care at a reasonable cost, patients are now availing themselves of greatly improved access to healthcare information on the Internet and increasingly starting to self-refer themselves to physicians. This is a big, important issue because historically cost/benefit analysis has rarely been part of U.S. healthcare decisions.
  • Because a patient’s death is a normal potential outcome in healthcare, liability risks for those involved in the industry are much greater than in other sectors.
  • Physicians, who have always enjoyed a privileged position at the center of the healthcare universe, are experiencing dramatic changes in their worlds. They are being asked to do more, primarily in recording patient data; face increased risk of lawsuits over treatment results that patients don’t like; increasingly find themselves working for large hospital groups, which in general gives them less control over their work life; and are generally making less money. The financial and personal incentives that drew many to the field are now pretty much under attack.

Our authors are experienced healthcare professionals who have agreed to share their expertise on some of these issues. They are:

  • Aaron Murski of VMG Health in Dallas, who explains how an independent healthcare valuation is critical to establishing a sale price that complies with federal law.
  • Shawn Riley and Rick Hindmand of McDonald Hopkins in Cleveland, who discuss the trend of hospitals acquiring group practices and employing physicians, explain why this is happening, and point out how hospitals and physicians need to manage regulatory compliance issues.
  • Bobby Guy of Frost Brown & Todd in Nashville, who details four key areas of federal healthcare regulation that impact all healthcare providers.
  • Andrew Masini and Patricia Hennelly of CohnReznick in Edison, New Jersey, who describe the complexities of what’s called the revenue cycle (i.e., billing and collections), which is a process unique to healthcare.
  • Finally, I share thoughts on my experiences with healthcare operations and workouts, and some peculiar factors that make the healthcare industry truly unique.

Though “unique” means one of a kind and is an often misused word, as you will learn in this issue of JCR, it certainly applies to the healthcare industry.

Daniel F. Dooley, CTP

Daniel F. Dooley, CTP is principal and CEO at MorrisAnderson and has served as CRO, CEO, COO, and CFO for publicly and privately owned companies nationwide. He is a past TMA Global board member and vice president, and a past president of the TMA Chicago Chapter. He holds a bachelor’s degree and an MBA from the University of Minnesota’s Carlson School of Management.

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