Healthcare Inflation: What You Need to Know
Published: May 20, 2022
AUSTIN, Texas — In almost every industry you look, prices are going up. Sadly, there is no sign of them coming back down anytime soon and healthcare is about to join the pack unless proactive measures are taken.
The essence of a free market economy is the ability for companies to freely increase prices of their goods and services at any point in time based on market supply and demand. There is a small exception for healthcare since labor contracts and reimbursement rates are negotiated with private insurance plans or set by government programs two to three years in advance.
The proof is in the numbers. Consumer prices for retail goods and services are increasing faster than they have within the last 40 years. Yet inflation in healthcare remains between 2% and 3% since the beginning of the COVID-19 pandemic.
How healthcare inflation will happen:
It is important to note that the same factors which are driving inflation in the traditional marketspace—such as supply chain issues and labor shortages—also exist in healthcare.
According to the U.S. Department of Labor, healthcare staffing shortages are forcing hospitals and other medical facilities to pay higher wages for temporary staff and travel nurses—a cost that could soon be passed on to the patient.
Medical facilities and healthcare providers are indicating they will include higher staffing costs when the time comes around for reimbursement negotiations with health insurance plans.
To offset those higher reimbursements, health insurance plans will likely pass the higher costs down to employers and consumers with premium rate hikes in 2023.
Why medical credentialing software can help:
Innovative, long-term strategies are crucial to mitigate large price increases for patients and a big slash in revenue for medical facilities and their providers.
It is time for the healthcare industry to implement a fundamental reset and adopt advanced administrative workflows, modern digital health technologies, and effective communication strategies.
All of this can be accomplished with efficient medical credentialing software.
The United States spends more than $4 trillion on healthcare every year—approximately 25% of which is used for administrative tasks. This extraordinarily high cost could be greatly reduced with innovative digital solutions to handle healthcare administration workflows. Aside from medical credentialing, healthcare facilities must seize the opportunity to take part in the inevitable industry reset and rethink how they handle provider roster management, payer enrollment, and any other task involving paper documents.
The next few years will without a doubt be difficult for medical facilities and their providers as they cope with inflation that is working its way through the system and healthcare not far behind.
It is crucial for healthcare providers, medical facilities, and insurance networks to confront the fallout of inflation and its impending effects on the healthcare industry. All parties involved must work together in order to construct an establishment that accentuates optimal operational execution and flexibility with a focus on maintaining workplace satisfaction.