The 2021 Healthcare Financial Forecast: What to Expect, How to Prepare

2020 was full of unbelievable statistics and powerful events. No one predicted the year we experienced—one that jolted the entire world and will impact healthcare institutions for years to come. We need to thank the workers in our industry and acknowledge the burnout many have felt. At the same time, we need to emerge from crisis mode and plan for uncertainty. Our industry proved we could respond quickly and meet our communities’ healthcare needs, and the COVID-19 vaccine development and distribution will strengthen our effort in 2021.

Every year, I create lists on topics and lead healthcare stories. In 2020, COVID-19 topped all the lists. In my review ofHealth Affairs’ top ten blogs, COVID-19 made the title of all ten entries.

随着大流行在2020年全球意识中的突出地位，我们可以预计2019冠状病毒病意识将持续到2021年，影响医疗保健政策、交付和行业财务状况。TheWall Street Journalarticle “Economists Expect Tough Sledding in Winter, then a Rebound“为我们目前的情况提供了一个合乎逻辑的例子，包括在刺激和疫苗产生结果之后病例激增。Goldman Sachs expects our gross national product to grow5.8 percentin 2021, which contrasts with a contraction of 3.5 percent in 2020. The next-normal 2021 economy will look different, including work options, travel, digital shopping, andtelehealthmedical appointments.

The Healthcare Financial Forecast: Five Top Areas of Impact for 2021

Looking at healthcare financial topics in 2021, I’ve chosen five prominent areas of impact for healthcare finance teams to monitor and take action:

Election Impact

President-elect Joe Biden campaigned on supporting theAffordable Care Act(ACA), managing the coronavirus pandemic, and lowering drug costs. While Trump and Biden agree on policies for lowering drug costs, sweeping healthcare policy changes will face hurdles and most likely will not be on top of the list. Both theAmerican Medical Association(AMA) and theAmerican Hospital Association(AHA) rank ending the pandemic as job number one. In the first 100 days of the new administration, the AHA has requested the enactment of 28 specific priorities to ensure hospitals have resources in the areas of relief, recovery, and rebuilding.

Biden and his administration will provide a federal leadership role—a more centralized approach and guidance—for the coronavirus. Key areas of action include more rigorous guidelines to stop pandemic surges, strengthening the role of public health, and a demand for reporting transparency that shows COVID-19 impact on all populations.

A likely flurry of executive orders will rescind Trump administration policies. Additionally, the new administration would like to expand the ACA by building on health insurance exchanges. The Biden campaign did not support theMedicare-For-All虽然拜登已经讨论过提供类似医疗保险计划的公众选择，但更进步的民主党人一直提倡这项计划。其他可能发生变化的领域包括将享受医疗保险的年龄降至60岁，以及支持扩大医疗补助计划。Healthcare consolidations will likely be of high interest to the incoming Secretary of Health and Human Services,Xavier Becerra.

As the new administration unveils and discusses more comprehensive policies, providers must be aware of these policies’ potential impact. The cost of healthcare has not been a focus area, but theCongressional Budget Office(CBO) estimates healthcare will exhaust Medicare’sHospital Insurance Trust Fundin 2024. This pending urgency will force national-level discussion on healthcare for the Biden administration. All providers and beneficiaries will need to be stakeholders in this discussion.

While hospitals and clinicians are currently working at full capacity on the pandemic, organizations must also consider these actions to prepare for the new administration:

• 接受care资助超过1万美元的组织需要准备2021年2月15日之前的报告要求。
• 提供者需要与他们的协会合作，继续倡导他们的需求。随着新政府接管各办事处，到期日期和报告要求可能会有所改变。

Price Transparency

The hospitalprice transparency ruleswent into effect as of January 2021, after attempts from various hospital associations to prevent thenew legislation没有成功。CMS believes price disclosure will help the public make more informed decisions about their care, increase market competition, and drive down costs of care.

Each hospital must provide transparent, accessible pricing on its website to comply with the regulations. The organization must post the charges in two ways:

• A machine-readable file.
• 消费者友好的购物服务展示(至少300项消费者可以提前安排的服务)。

For the above postings, hospitals must provide the discounted cash price, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges. CMS announced aggressive plans to monitor the enforcement of this regulation. The organization plans to audit websites starting in January 2021 and investigate all complaints. Meanwhile, The AHA has sent a letter to the Biden administration asking for relief from this regulation.

The second transparency bill, theTransparency in Coverageproposed rule, involves thesecond stimulus bill, which includes a provision to stop surprise billing. A surprise bill occurs when an out-of-network provider is involved in a patient’s care (e.g., an emergency department physician employed by an out-of-network provider). The Republican and Democratic parties and consumer groups supported this legislation. The changes will take effect in 2022 and apply to doctors, hospitals, and air ambulances, with ground ambulances excluded. Health providers and insurers will work through an arbitration process to settle on a fair price.

Health systems must perform the following to navigate the above price transparency rules:

• Review for accuracy and branding all pricing materials posted to the organization’s website.
• 准备好回应消费者和媒体关于上述张贴。
• Search online and see if price postings are easy to find and understandable from a consumer perspective.
• Regarding surprise billing, review out-of-network providers at all system facilities and plan for a 2022 response in conjunction with payers and providers.
• Develop materials for consumers to explain the implication of the surprise billing regulations including dates, intent, and how to find support within the healthcare organization.

Financial Forecasting

In a January 2021 Wall Street Journal article, “CFOs in 2021 Will Keep an Eye on 10 Things,” CFOs stated their priorities for the upcoming year. The top of the list includes economic recovery, corporate taxes, and mergers and acquisitions. CFOs are scrutinizing spending plans for both operating and capital expenses. The remote work environment may lead to additional reductions in office space. CFOs are eyeing essential healthcare functions, like keeping therevenue cycleand supply chain running smoothly with world-class goals.

The following factors make projecting futuretrends制定预算具有挑战性。There are massive volume changes, new consumer trends, and payer shifts:

• The AHA estimates the projected loss to hospitals in 2020 at $323 billion. Revenue dropped due to elective shutdown and volume declines with higher costs for staff, supplies, equipment, and buildings. TheKaufman HallNational Flash Reportfor December 2020 shows 2020 volume decreased from 2019 with emergency department (ED) visits down by 16 percent and adjusted discharges down by 11 percent. Margins withoutCARES Act美元下降了5.1个百分点，与care资金的利润下降了1.9%。
• Additionally, visits in the ambulatory setting fell by60 percentin April. These visits climbed higher but remained 10 percent below pre-pandemic baselines at the end of 2020. The insurance sector reflects this decline in healthcare spending in its rising margins, which are approximately 20 percent higher in the third quarter of 2020 compared to the previous year.
• Altarumreported the overallhealthcare spendingwas up .8 percent in October, with hospital, nursing home, and dental spend all lower. Meanwhile, spending increased on home health and prescription drugs.
• In August 2020,Medicaid enrollmenthad increased by 7.4 percent or 5.3 million enrollees compared to February 2020. The increase has been steady across the months.
• 2020年，远程医疗就诊激增。In April 2020,43 percentof all primary care visits for Medicare occurred via telehealth—compared to a pre-pandemic telehealth share of .1 percent. Medicare and other payers revised regulations (e.g., reimbursementparity) on these visits, which helped prompt this dramatic growth.

Healthcare finance teams need to take the above dynamic factors into account as they develop healthcare financial forecasts. They must rethink old processes, timeframes, and assumptions. Many healthcare organizations are using shorter timeframes and re-forecasting quarterly. War rooms taught us a lot about crisis management and our organizations. We need to bring those learnings forward to create new models of care. For example, collaboration with partners and population health can help our patients and members with preventative care.

The following actions will help finance teams account for the dynamic factors in healthcare today as they forecast for 2021:

• Start with a dynamic and frequently updated forecasting model and test its drivers.
• Have the patience and flexibility to accommodate multiple iterations of the model.
• Develop a communication plan for actions and follow-up in which all levels of management must sign-off on the latest version of financial projections.
• Remember the basics of revenue cycle and cost management and review existing processes.
• Review and update the existing planning process to consider organization knowledge of backlog
• Teach the forecasting concepts and learn from clinicians on operations.
• Develop contingency plans for various financial scenarios.

基于价值的保健

The ACA initiated many new programs forvalue-based care(VBC), which have gained some traction but not what legislators expected. According to theHealth Care Learning and Action Network, in 2018,35.8 percent包括政府和商业支付者在内的APMs涉及的医疗保健支付。基于价值的护理涉及到替代支付模式(APMs)，这种模式从零零碎碎的支付方式转变为对捆绑服务或一名成员的更全面的支付方式。我们的主要目标是奖励提供高质量和负担能力的供应商。

The pandemic has shown that VBC represents thepotential调整激励措施，提供收入流，并管理人口。By covering the entire continuum of care and focusing on patient health, providers canimprove carequality and cost. The VBC model incentivizes industry entities to work together and with their communities.

However, despite VBC benefits, transitioning from the fee-for-service (FFS) model has been challenging. Various models shiftriskto the provider, including bundled payment for a condition and ACOs with upside and downside potential. CMS introduced theShared Savings Program2012年作为一个自愿项目。In November 2020, theNational Association of ACOspresented evidence this ACO model has shown improved performance over the seven years with a combined gross savings of$7 billion. In 2019, ACOs were covering 11.4 million members. Only 35 organizations joined the National Association of ACOs in 2020, and the organization didn’t accept new applications for 2021 due to the pandemic.

CMS continues to pilot and test payment models in addition to VBC. In December 2020, CMS announced theGeographic direct Contracting Model称为地理。该模式将允许直接签约实体对某一地理区域内的FFS医疗保险受益人的所有医疗承担全部财务责任。申请截止日期为2021年4月2日。Geo将是CMS向完全按人头计算模型转变的最激进举措，因为它将风险转移到了直接签约实体。One of Geo’s most interesting parts is the two-page application guide that includesbest practices and a checklist. The scoring template can help healthcare leaders survey their organizations and to see their projected score.

While CMS is trying to test and pilot new models, the complexity and overlapping of programs are becoming overwhelming for the average healthcare provider. Health systems know they need to provide care in the right setting, even if it’s outside the hospital. Organizations understand care management can improve health for a population, but how can they get paid to do the right things for patients and members?

Resolving healthcare’s financial complexity daunts even high-powered projects. For example, for three years,Haven(a joint venture of Amazon, JPMorgan, and Berkshire-Hathaway) tried to find innovative healthcare solutions, but Haven has announced they will close as of February 2021.

While healthcare hasn’t found the perfect model, the industry can continue in the journey. Leaders and innovators must acknowledge there will be changes in payment and that VBC is here to stay. The mechanisms of payment and risk may change, but the need for affordable, quality care is fundamental.

Organizations can continue to navigate VBC with the following actions:

• Review all VBC contracts based on COVID-19 and determine where risk has increased?
• Determine the impact of reduced utilization and the potential increases in volumes.
• 评估质量度量过程。
• Work with partners, such as payers and other providers, to communicate contract status.
• 使用前面提到的最佳实践和geo的清单完成对组织的诚实评估——优势和劣势在哪里?

Health Equity

COVID-19 has exposed equity gaps in our healthcare system. Communities of color face adisproportionate impactfrom the disease, including higher rates for cases, hospitalizations, and death among Black and Hispanic Americans and American Indians (Table 1).

Ratios compared to White Person	美国印第安人	Black	Hispanic
Cases	1.8x	1.4x	1.7x
Hospitalizations	4.0x	3.7x	4.1x
Deaths	2.6x	2.8x	2.8x

Health equity madeForbes’and the联邦基金的top ten lists of healthcare predictions for 2021.McKinseylisted the need to upgrade our public health infrastructure, including broader use of telemedicine and virtual health, in its forecast for the next normal. Major healthcare organizations are also addressing the equity gap. For example, in January 2021, the Mayo Clinic posted a leadership position inhealth equity and community engagementand has committed $100 million over ten years to support the growth and development of diversity, inclusion, and equity programs.

The following actions support sustainable health equity improvement:

• Participate in all reporting that includes diversity metrics.
• Support efforts to expand health equity programs.
• 与其他关注社会决定因素的社区组织合作，如食品库和住房资源。
• Include awareness of community diversity needs in COVID-19 vaccine distribution.
• 在战略规划中纳入健康的社会决定因素。

Change and Progression in 2021

As we focus on a future of change and progression, concepts such as reshape, retool, and reimagine come to mind. Events planned in 2021 in healthcare and beyond are looking forward with these themes in focus. For example, the conference theme for the2021 AHA Leadership Summit and Virtual Conferenceis “Lead, Connect, Transform—Reimagining Health Care.” Also, in the Washington Post January 3, 2021, article6 Things Disney Fans Can Expect from the Parks in 2021, Disney announced plans for the 50^th佛罗里达迪士尼世界的周年纪念。虽然由于疫情的影响，庆祝活动有所缩减，体验也将有所不同，但迪士尼正在迎接下一个常态。该公园重新设计了其中一个游乐项目“白雪公主的可怕冒险”，加入了新的场景、故事细节、科技，还有一个不那么可怕的新名字“白雪公主的魔法愿望”。如果迪士尼能够重新想象一个新世界，我们所有人都可以在医疗保健领域做同样的事情。

I would challenge you toan exercise我在2021年初的《纽约时报》上看到的。想象并画出(不仅仅是写出来)2021年你最想看到的和最想少看到的。在我们重塑、重组和重新想象更可持续、更具包容性的医疗服务时，请为您的个人和职业生活做这些练习。

Additional Reading

Would you like to learn more about this topic? Here are some articles we suggest:

1. Value-Based Purchasing 2020: A 10-Year Progress Report
2. The 100-Percent Solution to Improving Healthcare’s Operating Margins
3. Healthcare Price Transparency: Three Opportunities for Transformation
4. Six Strategies to Navigate COVID-19 Financial Recovery for Health Systems
5. Today’s Top Five Healthcare Payer Financial Opportunities

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