Mergers and acquisitions, generative AI and outsourcing were some of the factors cited as those that will reshape the healthcare industry in 2024, according to Deloitte's annual healthcare outlook survey.
Here are the factors that will continue to reshape the healthcare sector in 2024, according to the Dec. 6 survey:
- M&A, consolidation and convergence: Hospital and health system merger-and-acquisition activity witnessed a significant decline during the COVID-19 pandemic but has since experienced a substantial resurgence. The momentum is expected to persist into 2024, with numerous large mergers in progress. A survey of health system executives revealed that 86% anticipate M&A will exert a considerable influence on their 2024 strategy.
- Generative AI and digital transformation: Healthcare organizations are approximately midway through their adoption of digital technologies, including cloud computing, data analytics, natural language processing and virtual health, according to the survey. A majority of respondents said the increased adoption of digital tools will affect their strategy in 2024. Surveyed healthcare executives also said generative AI holds significant potential in addressing challenges such as access, patient wait times, claims and staff burnout.
- Workforce talent challenges: According to the report, 57% of health system executives anticipate that talent shortages and workforce challenges will affect their organization's strategy in 2024, compared to 68% who said the same of 2023. The focus for many health system executives remains on recruiting and retaining clinical staff while addressing clinician burnout. Notably, several health systems across the country have implemented layoffs affecting executives, administrative staff, management, and other nonclinical personnel in 2023. By contrast, surveyed health plan executives expressed less concern about workforce issues, with only 37% expecting an effect on their 2024 strategy, down from 43% the previous year.
- Outsourcing and offshoring: Healthcare organizations are facing financial challenges due to tight margins, increasing labor expenses and high interest rates. To help alleviate this pressure, Deloitte advised these organizations to identify their core competencies and explore outsourcing for functions that can be performed more efficiently and cost-effectively. Some entities are contemplating the outsourcing of back-office functions, considering overseas options where labor costs are substantially lower. According to the report, areas such as revenue cycle, billing, claims, finance, human resources, clinical administration and supply chain management could be fully or partially outsourced.
- Affordability and empowered consumers: The combination of medical inflation and escalating coverage costs may result in higher out-of-pocket expenses for consumers in 2024, according to the report. Affordability issues were highlighted by 50% of surveyed health plan executives as the most probable factor affecting their strategy in the coming year.