The Camden Group Outlines Major Healthcare Industry Trends and Challenges for 2009

Severe US Recession Already Having Major Effect on the Healthcare Sector, but Opportunities Exist Even Amidst the Challenges

• Press Release
• Source: The Camden Group
• On 7:00 am EST, Thursday January 8, 2009

LOS ANGELES, CA--(MARKET WIRE)--Jan 8, 2009 -- The Camden Group, one of the nation's leading healthcare advisory firms, today announced its annual forecast of major trends and challenges in the nation's healthcare industry. Previously viewed as one of the most recession-proof sectors, healthcare has recently come under significant pressure from the historically severe economic downturn that is gripping the US and increasingly the world.

"Healthcare is by no means immune to the negative effects of a major recession, and we are already starting to see this manifested in growing job losses and revenue declines throughout the health sector," said Steven T. Valentine, President of The Camden Group. "But even with this challenging picture in the year ahead, we expect that a number of industry players will seize new opportunities to make acquisitions and adopt innovative health delivery programs that drive both growth and operational efficiency."

The following are the eight key trends and challenges that The Camden Group predicts will have a major and continuing impact on the healthcare sector during 2009:

 
--  The Economy Trumps All -- The major economic recession is already
    impacting the healthcare sector in numerous ways. More people are out of
    work and having trouble paying for COBRA or other benefits, increasing the
    already growing ranks of the uninsured or under-insured. Expect to see
    resulting drop offs in volumes and increases in bad debt. Formerly
    recession-proof hospitals are increasingly resorting to layoffs, while even
    pharmaceutical sales have slowed as patients try to stretch out medication
    regimens or skip filling prescriptions altogether.

--  The Urge to Merge -- The trend toward consolidation will pick up speed
    in 2009 as hospitals and other primary care providers struggle with the
    recessionary effects. Declining utilization and payments will drive some
    hospitals out of business, creating new opportunities for mergers and
    acquisitions. A major recession typically causes a freeze in growth
    activities; however it also creates opportunities for other players to
    capitalize on lower valuations. This "Darwinian" economic environment will
    test the mettle of all industry players.

--  Can Technology Finally Save the Day? -- The adoption of the Electronic
    Medical Record (EMR) is still a major technology trend impacting
    healthcare, but doctors have been slow to adopt this new technology. The
    economic downturn will further slow the transition to an EMR as physicians
    and hospitals will be hard pressed to make the necessary IT investments in
    the face of declining volumes. This, in turn, is fueling increased
    skepticism about whether the expected healthcare IT changes will ever
    really deliver the economies of scale and financial and operational
    benefits promised.

--  Capital Expenditures Will Slow, But Buying Opportunities Emerge -- The
    credit crisis has made it even more difficult to borrow money to undertake
    needed capital expenditures. At the same time, lenders will use this
    leverage to demand "preferred relationships" from health systems. This
    tighter credit environment will make it increasingly difficult for the
    weaker players to keep up--or even survive. Benefiting from these emerging
    buying opportunities, the stronger, better-financed healthcare entities
    will pursue growth through acquisitions.

--  Healthcare Reform is Not a Panacea... Yet -- With a new Democratic
    president and Congress, it is widely expected that universal healthcare is
    closer than ever to becoming a reality in the US. President-elect Obama's
    reform strategy is built on reducing skyrocketing costs, enhanced IT,
    increased access and preventative healthcare. But even with this greatly
    increased impetus for reform, there will not be anything approaching a true
    sea change in the healthcare system anytime soon. Meantime, the recession
    and rising healthcare costs will continue to pose serious threats to
    meaningful reform in the coming years.

--  Silver Lining: Less Personnel Shortages -- The big HR trend for 2009
    is that the longstanding personnel shortages in healthcare should be a
    thing of the past, again a consequence of the recession and resulting lower
    volumes. With their finances having taken a huge hit, recently retired
    doctors, nurses and other allied health professionals, will be forced to
    return to the workforce this year just to stay whole.

--  Physicians and Hospitals: Can't We All Just Get Along? -- As doctors
    beat a path toward security in a challenging economy, there will be
    expanded efforts to build and enhance the critical relationships between
    hospitals and physicians.  Now more than ever, each group needs the
    other -- even just to survive. Look for health systems to get creative in
    luring back physicians whose retirement accounts have been decimated. There
    will also be a trend toward improving communication and collaboration
    between hospitals and doctors, focusing on key issues such as patient flow
    and procedures, EMRs and evidence-based medicine.

--  Driving Innovation in Care Delivery Models -- If necessity truly is
    the mother of invention, then this recession will likely create greater
    momentum for testing and adopting innovative new care delivery models. One
    such model is the emerging "medical home," with the physician acting as the
    coordinator. Other innovative care delivery approaches that can be expected
    to gain ground in 2009 include the integrated "hospitalists" model,
    palliative care, telemedicine and even outsourcing.

About The Camden Group

With offices in Los Angeles and Chicago, The Camden Group is one of the nation's leading healthcare advisory firms. The firm provides a broad array of healthcare consulting services in areas ranging from strategic and business planning and financial advisory and compliance, to hospital operations improvement and hospital/physician alignment. Since its founding in 1970, The Camden Group has advised more than 1,000 hospitals, medical groups, outpatient facilities, and other healthcare organizations nationwide. For more information, visit us online at www.TheCamdenGroup.com.