How's Your Health?

Trends in the Health-Care Industry

Collective Negotiating
Small employers are anxiously watching their health insurance premiums rise 15 to 20 percent every year. And a good chunk of this money--roughly 20 to 25 percent--is going toward administrative costs, according to a recent General Accounting Office report. This opens up another potentially profitable avenue of opportunity for would-be entrepreneurs.

"There are going to be coalitions of small businesses to buy plans in bulk and spread the risk," Root says. Products and services that help employers manage cost will be hot.

Alternative Care
Managed care as we know it is changing. Consumers now want more choice. Providers, too, are getting frustrated about denying patients. "Plans have started to quickly move away from a strict managed-care model in order to offer a greater degree of choice for the patient," explains Victor Tabbush, adjunct professor of business economics at The Anderson School at the University of California, Los Angeles.

But choice comes with a price tag, because more cost will ultimately shift to the consumer. "Pricing is going to be an issue with patients," Tabbush says, adding that businesses that continue to meet the need for patient information about cost and treatment options have a real future.

For doctors, few things are more annoying than a returned claim that wasn't processed correctly the first time. Not surprisingly, there's increasing pressure on insurance companies to process claims correctly.

A growing number of states are setting time limits on insurance companies that engage in "takebacks"--when they come back months or years later to collect from health-care providers on claims the insurance company thinks were overpaid. There's always room for small firms that can help both sides spot and resolve claim snafus quickly.

HIPAA compliance is expected to cost hospitals an average of $4 million this year, according to Gartner Research. At the same time, hospitals are struggling with Medicare and Medicaid reimbursements while also competing against a growing number of specialized physician-owned private clinics, Root says. There's room for entrepreneurial consulting companies to help hospitals run like a traditional business and maximize revenues.

New Technology
In a post-September 11 world, health-care organizations now want to improve their intranet systems and backup servers in case of a catastrophe. At the same time, HIPAA's privacy standards are also creating software requirements that are new to the health-care industry, not to mention vendors and self-insured employers. There are companies that "aren't even in the health-care industry that HIPAA now applies to," says Jody Root, a partner in the San Diego office of law firm Foley & Lardner and chair of its health law department.

  • How to Start a Medical Claims Billing Service:Entrepreneur's start-up guide #1345 tells you all about this profitable business. Log on to or call (800) 421-2300 for more information.
  • The online edition of American Medical News includes the latest about health-care industry issues.
  • Links to the government's Health and Human Services Web site, with information about Medicare and Medicaid issues, grants and more.
  • Offers the latest HIPAA news and compliance information, links to federal and state legislative events and more.
  • The National Association of Home Care site targets home-health and hospice providers.

Chris Penttila is Entrepreneur's "Staff Smarts" columnist.

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Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog,

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This article was originally published in the July 2002 print edition of Entrepreneur with the headline: How's Your Health?.

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