J.P. Morgan: Healthcare Industry Grapples with Change as Optimism Wanes
FEB 7, 2019 - 6:45 am
U.S. healthcare organizations maintained a positive outlook for the national economy, with 71% reporting optimism, yet industry performance optimism waned at 41% amid major industry changes, according to J.P. Morgan’s Healthcare Industry Outlook survey.
When it comes to their own individual organization’s performance, survey respondents were more upbeat (62%).
“Healthcare industry leaders are operating in a challenging environment, but they’re taking the necessary steps to plan for success,” said Will Williams, managing director and industry executive for the Healthcare Middle Market Banking group at J.P. Morgan. “The industry is seeing a shift to value-based care and navigating a changing regulatory environment. Despite uncertainty, executives are planning to make strategic investments to capitalize on potential growth opportunities.”
Most healthcare organizations plan to grow over the next year by attracting new patients (61%) and/or expanding target markets or lines of business (53%) – but it won’t be without its challenges:
The top challenges facing healthcare organizations include revenue growth (52%), rising expenses (38%) and managing labor costs (37%).
Despite these challenges, more than three-quarters (77%) of healthcare organizations expect to see increased revenue, as well as capital expenditures (56%) and profits (44%).
The majority of healthcare organizations expect to increase hiring for physicians and nurses, while facing a significant challenge in finding talent – 58% are extremely or very concerned about finding candidates with the right skill set.
This could be good news for workers, as more than three-fourths (76%) plan to increase compensation for the next 12 months.
The most common reasons for the talent shortage are a lack of applicants (55%), unique skills needed (41%) and high compensation expectations (37%). Healthcare organizations are making efforts to address the physician shortage through aggressive recruiting (30%), medical school collaboration (17%) and increasing compensation (13%).
Information Technology is the #1 area where healthcare organizations plan to invest over the next 12 months – more than half report they will invest in IT (51%). This is followed by physician recruitment (44%) and new or replacement facilities (36%).
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