Execs say planning is critical, they just haven't gotten to it yet
First, the good news: Managing the multitude of changes that resulted from healthcare reform legislation is seen as a critical business issue by U.S. executives.
Now, the really good news: The majority of those executives haven't even begun a full analysis of the financial impact of the law on their business and have no clear roadmap of where or how to begin. That's a big opportunity for the consulting profession and Ernst & Young, says John Distefano, leader of the Advisory Services Group's healthcare practice.
Distefano points to the new E&Y report: "Moving Forward: Companies Speak Out on Health Care Reform," as ample evidence of the opportunity. According to the report, which is the result of an online survey conducted last fall of 381 C-level executives in finance, human resources and tax, some 84 percent of executives say planning is critical to making sure their companies are in compliance with the new legislation. However, more than 40 percent haven't gotten to that point, or even finished an adequate evaluation of the financial impact.
Distefano says the marketplace is just now getting to the end of the first stage of a multi-stage process. "Clients are just now getting to the point of understanding the healthcare law," Distefano says. "They're beginning to move out of the first phase and transitioning into to the next ones—implication and execution. There are so many opportunities right now. This will be a front-burner issue for organizations for years to come."
Another perpetual front-burner issue, it seems, is cost. According to the report, the rising costs associated with healthcare and compliance with the new law are top of mind, with 34 percent saying their company's biggest challenge or risk arising from the law will be the impact of healthcare costs on profitability, and 31 percent cited the impact of added expenses associated with complying with the law.
"The fundamental question that every client is asking themselves right now is: What elements do we want to do and what elements do we have to do?" Distefano says. "The legislation is so far reaching that it opens up all sorts of new dialogues about how firms can find radical costs reductions and competitive advantages." And some 61 percent of companies have not evaluated what the full effect of the costs of the new healthcare law will be.
"Healthcare is on a cost trajectory that's unsustainable and the new law gives us new models," he says. "The intended effect is truly to impact the costs of healthcare for a generation and beyond. Quarter to quarter, it's difficult to see how this impacts the way healthcare is delivered in the U.S., but 20 years from now I do think we'll see a big difference. The end game is higher quality outcomes and greater access to the system."
—J.K.
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