New York, November 12, 2018 – Healthcare service providers are confronting significant challenges with reimbursement and payments, staffing shortages, and the cost and complexity of technology implementation as the industry heads into 2019, according to a new survey by investment bank Carl Marks Advisors.
Reimbursements and payments were cited by 72 percent of respondents to the Carl Marks Advisors survey as the biggest challenge for middle market healthcare service company management teams. More than 61 percent cited staffing shortages as a significant and continuing problem, while 56 percent said the cost and complexity of technology implementation remains a source of pain for these organizations.
The need to upgrade technology has been felt most acutely in limitations around billing and sub-optimal conversion of receivables to cash, the survey showed. Healthcare services organizations may be delaying or shelving needed technology investments in part because of concerns about return on investment. More than 76 percent of survey respondents said that the ROI from these upgrades is not commensurate with the associated cost and disruption.
“The results of our survey mirror the experiences we see with our clients,” said Mark Claster, Founding Partner of Carl Marks Advisors. “When we are brought in by owners or management teams, we often see firsthand the challenges of competing in today’s modern healthcare marketplace, and the difficulty of increasing margins when you rely on legacy information systems that were not intended to be used to manage current demands.”
Other findings in the Carl Marks Advisors survey include:
“In the middle market, we see companies that are constrained financially to undertake the necessary improvements to financial management and IT systems,” said Jonathan Killion, Managing Director of Carl Marks Advisors. “The efforts to gain efficiency in order to offset reimbursement and other pressure are proving to be risky and disruptive, and that often means the bias is to the status quo even though over time that drains the company of necessary resources and competitive insights. The trade-off is a return-on-investment horizon that doesn’t justify the incremental capital expenditures and potential disruption risk.”
Carl Marks Advisors compiled these findings through a national online survey taken in October 2018 by 125 participants in the U.S. who work for or advise healthcare services providers, in such sectors as hospitals and clinics, home health and nursing facilities, physician practices, and laboratory and financial services providers.
Find out more about the Carl Marks Advisors survey here.