Healthcare was built for stability, so it often fails to keep up with change—especially the volatility and uncertainty facing the industry today.
While the COVID-19 pandemic forced providers to respond to day-to-day needs, sparking more workforce shortages and burnout, payers, private equity firms, new entrants, and other innovators invested in digital health, primary care, and additional network growth strategies – not just to close gaps in care but to meet heightened consumer expectations.
This has created a strategy gap, where the consumer-oriented playing field for payers and other companies with the means to invest in these services may yield more complete data and more satisfying healthcare experiences than health systems can undertake.
Demand has Shifted
As opportunities for in-person care abruptly shrunk with the onset of the pandemic, consumers demanded digital access to providers, and the industry responded with rapid-fire telehealth implementation, virtual innovation, care-at-home ecosystems, and advancements in technology. New ambulatory care and wellness options continue to proliferate alongside digital medical records and other virtual services, further empowering consumers to take control over their health, wellness, and treatment.
These fundamental changes are contributing to unpredictability in the demand for emergency room visits, inpatient volume, ambulatory surgery procedures, outpatient visits, length of stay, case mix index, virtual care, and more. In turn, almost universally, hospitals and health systems are facing financial and operational instability like never before.
Meanwhile, enterprise risks like cybersecurity have ascended to a record high, hospital workforces are fragile, and price transparency regulations are elevating the need for reputation management and user-friendly, data-driven pricing tools. Moreover, the need to address social determinants of health (SDoH) has risen exponentially as many people experienced hardships due to the pandemic and as virtual care gave providers greater visibility into the factors that affect health.
Care Model Redesign is Happening
Startups are gathering seed funding for wellness apps and tech-enabled primary and specialty care based on consumers’ desire for on-demand access and more robust tools to manage their health. Some startups are tightly focused on underserved areas, such as rural communities. Others are exploring concierge-like approaches to primary care that build stronger connections with consumers. The common thread of success for these organizations is their ability to manage total cost of care and steer patients to preferred health system partners that meet their clinical, financial, and operational expectations.
With the ability to provide care at a lower cost than legacy providers, new entrants and payers are making big moves in primary care and Medicare Advantage (MA). For instance, they are capitalizing on MA economics by shifting CMS expenditures from Part A and B to rebate and bonus pools, largely achieved through provider performance, to fund enhanced customer benefits that will drive enrollment growth.
There is also a notable rise in consumer-oriented companies partnering with payers and each other to strengthen access to urgent or primary care. This includes partnering with Uber and Lyft to address disparities in care by providing non-emergency medical transportation to target populations in metro cities.
Consumer and Employee Experiences are Paramount to Future Growth
For success amid the volatility, hospitals and health systems will need to further invest in meeting or exceeding consumer and employee expectations to garner their loyalty and trust. Here are five opportunities to consider for future growth.
1. Market Essentiality
Systems must acquire the comprehensive skills necessary for success in all care delivery and payment models. This includes incorporating an active private equity element within their investment strategy to expand care settings. Health systems are increasingly seeking adjacencies with other industry organizations, including pharma, home health, disease management, post-acute care, etc. Doing so will add the core proactive competencies needed to establish essentiality in the market with consumers, payers, purchasers, and clinicians and other critical workforce – optimizing performance under any payment model while hardwiring care coordination to improve patient experiences.
2. Physician Strategy
Consumers are choosing innovative primary care providers and disease management companies over their traditional health channels, resulting in material revenue leakage to other providers. A physician strategy that is in sync with the market dynamics of the new healthcare economy–emphasis on primary care; virtual care options; integrated behavioral care; digital sophistication; consumer and caregiver convenience and efficiency; competitive with new market entrants; willing to assume risk with those willing to share it—and completely aligned with an organization’s overarching strategic objectives is required.
3. Workforce and Change Management
Labor is the root cause of delays in care delivery innovation. Fundamental changes in culture, work redesign, and workforce development are essential. The characteristics of that new work environment include a culture of innovation, team-based care, and listening to multigenerational expectations, as well as a culture that prioritizes diversity, equity, and inclusion. This calls for an employment structure that offers a variety of work models such as remote and shared jobs, a clinical staff with an innovative mix of skillsets and licensures, and technology-enabled, streamlined workflows to increase productivity and retention.
4. SDoH Infrastructure
Where and how a health system strategically engages with consumers leads to greater opportunities to coordinate care in their network, resulting in enhanced access, experiences, and outcomes. Highly challenging and negative Medicaid economics have put nearly every health system “at risk” for their Medicaid patient populations, no matter their payment model. Coordinating care and engaging patients in the right settings of care can mitigate this challenge. To do so, health systems need a SDoH-enabled infrastructure that understands community vulnerabilities, establishes strong relationships with community partners, and evaluates technologies with consumer equity in mind. Moreover, these strategies need to be embedded within health system workforce expectations to ensure all stakeholders are satisfied.
5. Technology Investments
Purposeful digital care and health IT investments are key to ensure they improve efficiency and the consumer experience while streamlining corporate and non-clinical services. This means using technology to make life easier for consumers and staff. For consumers, give people greater control in managing their healthcare experience. Consider how easily consumers can connect digitally with their primary care physician or a nurse. Then, examine the potential to close gaps in functionality or service using existing tech or with new solutions. On the clinician side, the right technology, support, and processes for electronic health records (EHRs) and other technologies can help keep physicians and other clinicians from feeling disenfranchised, give them time back in their day, and promote an atmosphere of high reliability.
Health systems cannot rely on their enterprise’s EHR platform to create differentiation in user and patient experiences. Functionality built into EHRs is inherently a commodity, available to all users of the platform. Beyond ensuring they fully use their EHR's capabilities to avoid falling behind, the application layer needs to be managed on top of the EHR to create differentiation. This requires adhering to a more agile and rapid lifecycle than the norm and deploying a margin-accretive digital strategy based on an objective understanding of the organization’s opportunities and the emerging, but real, capabilities available in the market.
Guidehouse helps healthcare organizations build community relationships that last while driving financial stability and long-term growth. Learn more.