Consumer Directed Healthcare

Download image PwC’s Private Company Trendsetter Barometer tracks the business issues and standard industry practices of leading privately held US businesses. It incorporates the views of 224 CEOs/CFOs: 125 from companies in the product sector and 99 in the service sector, averaging $256.7 million in enterprise revenue/sales, and including large, $300 million-plus private companies.

NEW YORK, Oct. 14 /PRNewswire-USNewswire/ — As private company CEOs review the provisions of the federal Patient Protection and Affordable Care Act (the “Act”), nearly half (47%) of executives surveyed for PwC’s Private Company Trendsetter Barometer say the Act may have a notable financial impact on their business. However, nearly one-third (31%) of respondents believe it’s “too soon to tell” how the Act’s provisions will impact their companies. Twenty percent don’t anticipate a notable financial impact; 2% were unreported. Companies that don’t anticipate a notable financial impact are forecasting above-average revenue growth, compared with the other companies surveyed.

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Although the majority of Trendsetter CEOs (70%) have begun reviewing their healthcare benefit plans in light of the Act, 55% have not yet determined what changes need to be made to their companies’ plans. Only 15% have started to take action.

“In helping our clients assess the effect that healthcare reform will have on their organizations, we’ve been looking at their overall healthcare benefit packages to evaluate whether they’re in compliance with the Act, as well as considering strategies for managing the expected increase in healthcare costs,” says Ken Esch, a partner in PwC’s Private Company Services practice. “In light of current economic conditions, it’s imperative that companies begin assessing their healthcare plans and cost-containment strategies soon rather than later.”

Overall Impact Unclear

When asked which of the Act’s provisions were likely to have a moderate or significant overall impact on their company (including an impact on costs, benefits, strategy, operations, systems, employee recruitment, wellness programs, etc.), Trendsetter CEOs’ responses varied a good deal. “Although we’re seeing CEOs begin to review their options and healthcare strategy, on the whole they’re uncertain about how significant an impact the provisions will have on their organization,” says Esch.

This is evident, for instance, in the Trendsetter CEOs’ response to the Act’s tax provisions. Although a fair number of private companies expect the tax provisions (starting in 2013) to have a moderate to significant effect on their business (31 percent say this about the Medicare tax increase and 26 percent about the net investment income tax), the overall response to those provisions was mixed.

“This is an interesting time for Trendsetter CEOs, when you consider they’ll be implementing new healthcare requirements in tandem with increasing tax rates,” says Esch. “It’s possible this could create a cash flow issue as CEOs look to continue reinvesting in their business. Every company is different, of course, but we’re seeing clients consider accelerating income or deferring deductions now at the lower tax rate, which should provide a permanent tax benefit when rates go up.”

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