Matthew Bassett
Senior Vice President, Revive
The not-so Super Committee pretty much lived up to expectations (zero progress), and conventional wisdom says the provider community really dodged a bullet…for now. It’s true that a 2% Medicare cut in 2013 (and beyond) could significantly erode operating margins, but providers need to understand that this was only the starting point for the committee. The committee, with Republican and Democrat member buy-in, was then going to go industry-by-industry to find the real savings that would begin to approach this summer’s “grand bargain” territory that was rumored to be in the ballpark of $4 trillion over 10 years. That’s quite a leap from just 2% a year.
2012 is expected to be a year of gridlock, with both parties putting forth competing campaign themes leading up to the November election. Save a robust economic recovery, which virtually no one is forecasting, many providers will enjoy a good year with decent margins that will then be used as the justification for even larger proposed cuts in 2013. No long-term sustainability plan will leave funding for Medicare or Medicaid unaddressed. And on the state side, there is no more help coming in 2012 from the federal government, and state lawmakers of all stripes know this to be the case.
In this environment it will be imperative for providers to know and practice the three P’s when attempting to influence government – policy, positioning, and pursuit. Never has this been more true than in the current health care environment. To develop the thought further, the 3 P’s all lead to one overarching goal: differentiation.
If your health care organization has not fully developed or is not currently implementing your 3 P’s, think of the committee failure as a gift, the gift of time. In many ways, 2012 will be the year of waiting. Waiting for budget and tax certainty. Waiting for the Supreme Court to rule on the health reform overhaul. Waiting for debate followed by the rejection of competing proposals for the $1.2 trillion in cuts set to begin in 2012. Waiting for order to emerge from the confusion and uncertainty.
With the failure of the Super Committee, the likelihood of any significant agreement next year given the backdrop of a Presidential election is essentially nonexistent. So, now is a good time to evaluate where you are today and to plan how your organization will differentiate itself from the other competing budget interests going forward.
Not sure exactly where you stand on your organization’s or industry’s three P’s? Might further guidance and advice be warranted? Stay tuned.