Is Your Healthcare Organization Ready for Obamacare Changes?

Across industries, many business leaders are in a wait-and-see mode about how the new presidency will affect their companies. Healthcare is one of the sectors that could potentially be most affected by changes over the next four years, and leaders in this industry can’t afford to just wait around.

While we can’t predict the future, we can plan for it. Medical practices, hospitals and healthcare systems need to prepare to handle whatever changes may come their way. The big question is “What will happen to the Affordable Care Act (aka Obamacare)?” If your leadership team has not started planning for what may or may not happen and how potential changes could affect your organization, you are already behind.

In times of uncertainty, we typically advise our clients to stay lean and focus on their core services. It’s a good time to get reacquainted with your business and operating models, and confirm that your current strategies are aligned.

If the Affordable Care Act is repealed or revised, many healthcare organizations could see a decrease in revenue. You should be preparing for a possible adjustment to your revenue stream by keeping your operations lean and taking advantage of market opportunities (e.g., buying or selling real estate assets) when appropriate.

There are two primary ways to keep your operations lean: cutting costs and improving efficiency.

In order to control your costs, you first you need to understand them. You should have a good handle on all of your business expenses — large and small. Once you have that understanding, you can take action.

Cost-cutting tactics could include:

• Renegotiating vendor contracts
• Putting major expenses out for bid again
• Reducing facility or office rental costs, including downsized or renegotiated leases
• Re-evaluating your equipment and supply needs
• Improving cash management and optimizing your cash flow cycle
• Talking to your CPA about potential opportunities for tax savings

Efficiency-improving tactics could include:

• Using technology to improve or automate processes where appropriate
• Reassessing staffing needs, identifying redundancies and considering a shared-services approach
• Consolidating and/or outsourcing some functions

As you look for ways to cut costs or increase efficiency, you should consider the delicate balance of risks and returns. For example, consolidating functions in some areas could introduce internal control issues and increase your risk of fraud.

While no one knows what will happen with pending and existing healthcare regulations in the new administration, you can’t afford to ignore potential changes. Keep watch over the next few months to see what changes may be coming down the pipeline, and if you haven’t already done so, start talking with your leadership team about how your organization plans to manage those changes. A CPA  and advisory firm with expertise in healthcare consulting can help guide you through the changes that may affect your organization in the months and years ahead.