Healthcare executives have a generally positive outlook for the industry over the coming year, according to an April 2016 study from CIT Group, and are optimistic about mergers and acquisitions, increased revenue and advances in healthcare technology.
In February 2016, CIT Group commissioned a study of 164 middle market healthcare executives. These executives represented industries throughout the healthcare sector –areas like biotechnology, primary care, nursing, home health, hospice, medical supplies, behavioral health facilities and more.
CIT commissioned the study, but it was conducted online by the Harris Poll. All executives polled were at companies with revenue between $25 million and $1 billion.
“The majority of the surveyed healthcare executives remain optimistic, expecting similar growth to last year in revenue, prices, volume and capital spending,” said William Douglass, Group Head and Managing Director, CIT Healthcare Finance. “With a promising financial outlook, it is not surprising that nearly half of executives surveyed also believe that capital spending will increase in the coming year. Moreover, the need for financing is expected to hold steady or increase.”
CIT published a press release which condensed the study down into 12 succinct pages, with nine major findings detailed within.
Key Findings
The findings touched on everything from expected revenue to government involvement.
- Executives will build on favorable outlook from the 2015 survey – Most healthcare executives are optimistic about revenue, price growth and volume growth when they reflect on fiscal year 2016. About half of them think that capital spending will increase along with revenue, and the priorities for financing include IT, new hires and acquisitions.
- Mergers and acquisitions is on the rise – About 53% of executives surveyed believe this is true. There are pros and cons to this trend, but most advantages (like greater efficiency and higher revenue) are on the company side of the equation, while the disadvantages tend to affect the consumer side.
- There’s an anticipated increase in investments and financing for acquisitions – More than 60% of executives in the survey said they have personally participated in a merger or acquisition in the last 12 months (more than half as the purchaser, instead of the ones being purchased). Executives are considering mergers more than ever before.
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- Executives demonstrate support for Electronic Health Records – According to the survey, 70% of executives said they are already using an electronic health records (EHR) system. These systems, they say, have improved communication with other providers, and communication beyond their own networks seems like a priority moving forward. Security of these systems is a primary concern, however.
- Costs continue to overwhelm customers – Most executives believe healthcare costs are too high. Eighty percent of them believe consumers are avoiding follow-up visits (or avoiding healthcare visits altogether) to avoid spending money. This trend, they agree, cannot continue without serious repercussion to the healthcare industry.
- Many executives take action to reduce costs – To lower costs, more than half of executives have tried to negotiate with insurance companies, updated their technology and streamlined procedures so consumer don’t have to spend as much money.
- Some government involvement is increasingly welcomed by executives – Most executives think that the government should maintain some authority over healthcare. They are generally supportive of the Affordable Care Act, and 20% indicated they believe it should remain in place with no further changes. More than 50% of participants said they like its structure but would improve some of its finer points.
- Most sectors are in line with industry standards on outcomes – More than 70% of executives think their sector is on track compared to the rest of the industry. But they can’t agree on how to measure success. There’s argument as to whether metrics like satisfaction, profit, customer retention or clinical outcomes should be the barometer, but there hasn’t been any agreement.
- Expectation for third party involvement is on the rise – Most executives think that third party authorizations, claim remittances, claim denials and collection costs will either stay the same or increase. Almost no one anticipates a decline.
Comparing to Previous Years
How do these numbers compare to previous years? For starters, executives believe that mergers and acquisitions benefit consumers more than they did in 2016. They think M&A allows companies to focus on customer care instead of business operations.
Secondly, more than half of executives have been on the purchasing side of a merger. Last year, that number was only 38%.
As far as healthcare costs, most executives think they are too high. But the majority is shrinking. In 2015, nearly 70% were disappointed with the cost of healthcare. A year later – 63%.
