"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Monday, July 29, 2013

A Brave New World

Last Friday, the WMHS board met for their annual strategic planning meeting.  We were honored to have Anirban Basu as our guest presenter. Anirban is the CEO of the Sage Policy Group in Baltimore; he is an attorney as well as an economist.  He specializes in economics of economic development, health care and government.  The primary purpose of inviting him to present at the meeting was to gain valuable insight on where health care is going and to assist the board in deciding as to whether or not the proposed alliance with Meritus Health and Frederick Health System is in the best interest of WMHS and the region that we serve. 

According to Anirban, the Accountable Care Act has created a land of giants resulting in a diminishing role for smaller to medium sized hospitals and health systems.  He said that bigger is better in delivering care at a lower cost and with greater efficiency.  He said that the Accountable Care Organization of which we would pursue with this proposed alliance requires a larger network formation.  There is far too much risk to be taken and smaller organizations can't handle that amount of risk nor the cost of forming an ACO. 

In 2010, there were 72 hospital consolidations; that number grew to 92 in 2011 and 94 in 2012.  The number is expected to grow to well over 100 in 2013 and the trend is expected to continue.  In Maryland, WMHS is one of 15 independent health systems left out of 46.  That number continues to shrink with University of Maryland Medical System, Johns Hopkins and MedStar in discussions with some of the 15 independents as well as those hospitals in DC.  Anirban discussed the cost pressures on hospitals that are coming from every direction.  These pressures include technology, physician recruitment, retention and employment, depreciation, rate regulatory challenges, Medicare, Medicaid, declining revenues and growing competition just to name a few. 

In this Brave New World, there are a lot of changes occurring now as well as on the horizon.  We have to be ready to not only continue to exist in this community but to thrive; it is clearly in the best interest of our patients, this health system and the community.

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