According to a survey released recently by the consulting and advisory firm, BDO, healthcare providers have a negative outlook about how to pay for healthcare. The survey, which was released by the BDO Center for Healthcare Excellence & Innovation and entitled Treating Healthcare in Distress, polled 100 CFOs at mid-market provider organizations with revenues ranging from $250 million to $3 billion. It found that providers fear a near-term recession, and have significant concerns about reimbursement concerns and liquidity challenges.
Key findings of the survey also include:
- Overall, 2020 financial projections are positive, but most forecast only modest increases (1-9%) in both revenue and profitability.
- 55% of healthcare organizations expect a recession in the next two years, and 76% of providers have 60 days or less cash on hand.
This tight liquidity comes at a particularly inopportune time, as variables like instability around the Affordable Care Act, technology expenditures, and uncertainty around incoming payments, have made it necessary to have greater levels of cash on hand.
Healthcare organizations are increasingly relying on outside sources of capital, including bank loans and lines of credit (42%), specialty financing (25%), private equity (14%) and joint ventures (13%). In addition, 36% expect to undergo restructuring in 2020.
Healthcare CFO’s most-cited strategies for growth include digital transformation (51%), geographic expansion (37%), restructuring/ reorganization (36%), private equity investment (28%), mergers and acquisitions (22%), and IPO (12%).
Over the next 3 years, providers are planning to increase investment in value-based care, including in primary care (51%), virtual health (45%), home care (43%), ambulatory surgery centers (40%) and retail properties (38%).
BDO’s Life Sciences practice also released a report, entitled Sustaining Life Sciences, detailing a survey of 100 CFOs at mid-market US life sciences organizations with revenues ranging from $100 million to $3 billion. The results show that those organizations are moving towards outcomes-based arrangements amid growing pressure to curb product prices and declining return on investment from R&D. The organizations are also significantly investing in prevention and personalization.
Other key findings from the life sciences survey include:
Organizations are pursuing outcomes-based contracts with providers (53%) and payers (33%), in an effort to move towards sustainable industry models.