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Where narrow networks are going to take the healthcare industry

September 18, 2014


Few industries are as regulated as healthcare, and as a provider, you know the challenges of balancing quality care with turning a profit. However, that goal can be even harder as new trends emerge, requiring a comprehensive and adaptive response from your organization.

One of those trends is narrow networking. This is how many customers are being offered insurance – from smaller groups of providers, chosen by the payers, and picked based on performance indicators and financial results. In these narrow networks, providers can be caught on the outside looking in if they don’t know how to attractively position themselves. The trend is popular as well, and in all likelihood narrow networks are going to rise in prominence for some time to come.

So then, what can you do to ensure you aren’t left out of narrow networks, thus out of reach for patients interested in care? Thankfully, you have options for adapting to the narrow networking trend.

Prepare your organization for upcoming changes
In addition to those steps, you can also prepare for the future of the healthcare industry. Narrow networking has taken hold, and it will continue to shape this sector for some time. Take note of potential shifts, and ready your organization to withstand the changes – and position yourself for long-term success.

As you know, the healthcare industry is rapidly evolving, and it takes a keen eye and dedication to stay on top of all these trends. At Clark Schaefer Hackett, we have spent decades working with organizations just like yours, so we know what you need to grow and prosper. Our professionals are committed to the industry, and we closely monitor the current climate and upcoming developments, so you have in-depth access to the best possible consulting and accounting services.

Looking at the future can get ready now
The fact of the matter is that narrow networking is changing the healthcare industry. If you want to remain at the forefront, you must not only look at what’s coming, but make decisions based off of that information. At its core, narrow networks alter which doctors consumers have access to – and for what price. For providers, staying in the mix will require a balance of cost-effectiveness and quality care. Inclusion into such a network will increase the number of potential patients.

Early in 2014, the Henry J. Kaiser Family Foundation conducted a study of a number of Americans regarding their opinions on the Affordable Care Act. The results showed that the people who are most likely to use the ACA’s exchanges prefer less costly plans. In addition, the study found that narrow network coverage is harder to sell to people with employer-sponsored plans, since their costs are often partly paid for by the companies they work for.

These results illustrate a shift in who is interested in narrow networks – and why. The uninsured and the self-insured like to use exchanges to find narrow-network plans, since they tend to be cheaper. On the other hand, employer-covered Americans lean toward broad-network and more expensive coverage.

Opinions vary on narrow networks
Not everyone is a fan of narrow networks. In an article for National Review Online, Callie Gable wrote while narrow networks have plenty of detractors, their existence remains a positive.

For example, Gable explained that the removal of narrow networks via regulations may do more harm than good. Without these networks, costs would likely increase. Far from perfect, narrow networks still provide a measure of cost-control without wholly sacrificing quality care. At the moment, many patients lament the idea that narrow networks tie limited access with lower premiums, but increased regulations could cause costs to surge. If this occurs, that may cause a similar level of discontent.

Guidelines form to help navigate narrow networks
It is understandable that consumers have different views on narrow networks. Even so, healthcare organizations will still have to take this trend into account moving forward, and some new guidelines may help ensure that consumers’ – and the company’s – best interests are addressed.

According to the media outlet Healthcare Dive, the National Committee for Quality Assurance recently released its Health Plan Accreditation 2015, focused on narrow networks. The new HPA 2015 outlines transparency requirements and quality measures that improve value and outcomes.

Healthcare Dive explained that HPA 2015 helps providers figure out how to proceed when working with narrow networks. The goal is to work with these tailored networks in a transparent manner without sacrificing consumers in the process.

Changes can help providers adapt
These recent developments in the healthcare industry, from consumer opinions toward narrow networks to new guidelines for providers, all provide insights into why adapting to this trend is a smart move. In response to all the changes in healthcare, many providers are beginning to alter their approach to the industry.

A survey conducted by the National Business Group on Health found that healthcare benefit costs are expected to climb 6.5 percent at large employers, with many companies shifting their benefit plans to curb expenses. Furthermore, the poll learned that only 26 percent of employers turn to narrow networks in any plan they offer. Only 13 percent of that group provide a plan that uses incentives directed at narrow networks.

That could change soon, as employers are beginning to see the value of cost-effective plans such as narrow networks.

“Our survey shows that many employers are, in fact, taking necessary steps to rein in costs,” said Brian Marcotte, president and CEO of the National Business Group on Health. “This includes partnering with workers to engage in health care decisions and educating them to be better health care consumers, as well as sharing more costs with workers and narrowing their benefit options.”

Narrow networks evolve healthcare
Thanks in part to narrow networking, the healthcare industry is evolving. Changes are happening at all levels, from how consumers choose health plans to what employers offer and how providers are included in networks. Keeping track of all these shifts can be tricky, which is one reason why working with a trusted advisor can make things simpler.

With a team of experts in place, you will be able to better gauge the direction of the industry and make smart choices. Advisors will help you manage all aspects of your business, from accounting to plan administration and taxes. Since this industry is so unique, it is vital that you work with a team of advisors that has first-hand experience in this sector.

Clark Schaefer Hackett’s professionals understand what you face on a daily basis, and we can offer the advice you need to grow your business. Our experts work with healthcare industry members across multiple states year-round, providing consulting, plan administration, tax and valuations services, just to name a few. Contact us today to learn more.

© 2014

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.


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