According to the latest projections from the Centers for Medicare & Medicaid Services, U.S. health spending will rise nearly 6% for the next 10 years. That’s not necessarily directly due to healthcare-industry developments – in fact, a significant portion of the uptick will stem from economic growth and population aging – but with health spending poised to increase at a pace 1.3% greater than the gross domestic product, external forces will certainly play a role in rising costs.
What problems are putting spending on the rise to come? At NCG Medical Billing, we see the following three as having the heaviest impact in the years ahead – and we suggest you utilize an outsourced medical billing service to keep them from wreaking havoc on your practice’s bottom line.
Rising Drug Costs
In addition to pinpointing America’s economic growth and aging populace as cost drivers in its report, the CMS also acknowledged the problematic role of “faster growth in medical prices.” The most rampantly (and rapidly) growing of those prices: Prescription drugs rose a whopping 12.2 percent last year – marking the highest increase in more than 10 years.
As newsworthy incidents, like last year’s Turing Pharmaceutical scandal – in which the company rose the price of an obscure 62-year-old drug by more than 4,000 percent – show, the healthcare industry lacks well-regulated price protections that could help reign in costs for both organizations and their patients. Hopefully, increased acceptance of new-to-market drugs by the FDA will increase competition among pharmaceutical companies and help lower prices over the long-term.
Unlike many other industries, the U.S. healthcare system has invested in creating programs that incentivize doctors to undertaking steps to embrace technologically-driven operational enhancement (via Meaningful Use), alternative approaches (via the Patient Centered Medical Home or Accountable Care Organization approaches), and quality improvement initiatives (via the Physician Quality Reporting System, Value-Based Payments, and the Medicare Access and CHIP Reauthorization Act).
But what the industry hasn’t done is incentivize practitioners to embrace lower-cost care delivery efforts. Telemedicine and retail-clinic approaches to care are seeing widespread interest among consumers as more convenient, and less expensive, ways to interact with providers than the traditional office (or hospital) visit. But since traditional medical establishments are not incentivized to embrace such approaches, many aren’t going out of their way to explore how to make them part of their operations.
At the time this post was written, the Department of Justice had just moved to block two healthcare mega-mergers among insurers – proposed unions between Anthem and Cigna, and Aetna and Humana – arguing that were the mergers to take place, the competition among large insurers that has “pushed them to provide lower premiums, higher quality care and better benefits would be eliminated,” according to Attorney General Loretta Lynch.
The Big Five may not become the Big Three (just yet), but ongoing mergers between insurers, hospital groups, and other large healthcare-industry entities will continue to raise costs for providers across the sector: In 2015, 112 hospital mergers were announced nationwide – 18 percent more than the year prior and a 70 percent increase over 2010. With competition remaining key to keeping down costs, all healthcare providers can do is stay independent when they can and keep an eye out for healthcare trends and smart ways to increase revenue in their own practices.
Use outsourced medical billing to mitigate your medical practice’s overhead costs. Contact NCG Medical now.
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