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USA Country Risk Climate: Health Care Industry

Concerns over the cost to businesses of offering insurance to every American haven’t gone away, nor has the debate become any less peppered with vitriol.  That is especially the case among lawmakers, and it isn’t likely to change soon, said NACM Economist Chris Kuehl, PhD. That notwithstanding, the fact that a myriad of problems were unearthed at the time when Americans were supposed to be able to initially enroll for health care plans online has pushed the timetable back, and will continue to do so. That’s dangerous for product and service providers, according to Kuehl and Deborah Thorne, Esq., a partner in the Chicago office of Barnes & Thornburg LLP.

“There have been a lot of complaints,” Thorne said. “Hospitals and institutions thought it would be all organized by now. They made decisions on things like expansion, thinking it would be up and running. I’m hearing people say ‘maybe we shouldn’t have done that,’ right now.” That said, the problems haven’t shown up in companies’ respective bottom lines yet. However, Thorne believes the numbers could start to bear out by the next quarter.

Additionally, there is the possibility that companies will be exposed to fraud as a result of the new health care effort.  Thorne put it simply: much higher demand could mean more fraud.  “Things fall through the cracks,” she said. “With all these people eligible that didn’t have access before, there may be people who take advantage of the system. I think it opens the door. There certainly will be opportunities for fraud with the increased volume.”

In short, if selling on terms to a doctor’s group, hospital, manufacturer or service provider where the business is highly dependent on stability within the health care industry, credit professionals need to know who these customers are, how they are faring and what their future prospects look like, at least until some clarity about various aspects of the law emerge.

Courtesy Brian Shappell, CBA, CICP, NACM staff writer

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