2018 Healthcare Trends: Tough Challenges, Innovative Solutions

8 January, 2018

2018 Healthcare Trends: Tough Challenges, Innovative Solutions

New Opportunities to Control Costs, Improve Care, and Enhance the Patient Experience

By Laura Jacobs, MPH, Managing Principal, GE Healthcare Partners

Another year of unprecedented challenges lies ahead for the healthcare industry. Healthcare systems will grapple with continued financial performance pressures, while addressing an ongoing commitment to consumers and care delivery and experiencing opportunities to retool for the future.

Changing payer and consumer dynamics, along with an uncertain landscape will continue to present unprecedented challenges to the nation’s healthcare organizations. At the same time, innovation and technological advances present new approaches to tackle issues and move forward.

Trends and solutions expected to have greatest impact during 2018 include:

Financial Performance Pressures

Continued Payment Challenges. One of the greatest challenges to healthcare systems will continue into 2018: the unpredictability of health insurance and payment models. Uncertainty exists everywhere -- at the federal and state levels and with the Health Insurance Marketplace, as well as ways to fund Medicaid and manage Medicare costs. With rising prices and fewer products on the Exchange, some markets could experience a rise in the number of the uninsured. Additional dynamics, such as the high deductible plans and health savings accounts, mean that organizations need to carefully examine pricing practices and revenue cycle management processes. With 19 million people enrolled in Medicare Advantage programs (33 percent of total Medicare enrollment), the 8 percent growth experienced between 2016 and 2017 is expected to continue.

Evolving Payer Dynamics. Multiple factors will continue to put the squeeze on healthcare systems in the coming year:

  • The movement away from fee-for-service models will continue even though the Centers for Medicare and Medicare Services (CMS) has tapped the brakes on some value-based payment methods.
  • Pressure to reduce base rates on commercial contracts, coupled with success in Medicare’s value-based payment program, will require health systems to continue to find efficiencies through patient care redesign, utilizing high-value supplies and outsourced services, and considering performance-based contracts with vendors.
  • At the same time, many physicians will seek to participate in CMS alternative payment models, including ACOs, bundled payment and CPC+ that provide preferred treatment under the Medicare Access & CHIP Reauthorization Act of 2015 (“MACRA”).
  • The trend for health plans to utilize tiered provider networks will steer members to more cost-effective physician groups and hospitals.
  • Due to start-up costs and financial challenges, providers will be more cautious about starting their own health plans. Instead, they will seek co-branded health plan partnerships on insurance products to create greater consumer loyalty and market growth, and leverage the population health infrastructure of larger insurance companies.
  • As utilization is reduced, another consideration will move to the forefront: health systems can expect top-line revenue to decline unless a concerted effort is made to expand outpatient services and geographic presence.

Optimizing Capital Resources. Volume and price pressures will continue to strain operating margins and outstrip available resources due to organizations’ demands for capital to fund information and clinical technology, as well as expansion of outpatient facilities and replacement of aging facilities. Creative asset management could include evaluating leasing options, utilizing development partners and optimizing existing facilities. Additional solutions to explore:

  • Repurposing underutilized or older facilities to meet demand for post-acute, rehabilitation or behavioral health services.
  • Creating capacity command centers to leverage data and analytics to assure that health systems are effectively utilizing inpatient and outpatient facilities are becoming more common.
  • Using philanthropy to support capital needs for programs and facilities that may have minimal or no immediate financial returns, but are critical to improve health outcomes or provide a more patient-friendly environment.

Commitment to Consumers and Care Delivery

Focus on Seamless Patient Care. Managing transitions of care will continue to be a top priority for healthcare organizations in 2018. Rather than reviewing retrospective trends, there will be a move toward advanced analytics that predict potential disruptions in care delivery -- a journey that requires re-engineering and recalibrating the care team and the underlying support structure. Teams will be able to take real-time action to prevent issues and streamline the patient care experience. When properly executed, this results in a single care plan that follows the patient from ambulatory to inpatient setting; integrated care management systems to facilitate smooth transitions from the hospital to home or a post-acute venue; and next generation contact centers that assure that intra-health system referrals and transfers are efficient and user-friendly. In the end, patients truly become the focus of the healthcare delivery system.

Expanding Access through Technology. With companies like Apple, Google, and Amazon, as well as thousands of start-ups focused on innovative disruption, technology will continue to change the delivery of healthcare services and the way providers interact with patients. Virtual technology and telemedicine have made inroads, reducing the need for patients to be seen in a facility. Healthcare can now be provided at home, at work, across long distances and in traditional settings. These developments dovetail with consumer trends focused on mobile solutions, convenience, and on-demand services. To position organizations for future success and compete with emerging players, healthcare systems need to embrace innovation and consumer-centric service delivery and explore alliances with non-traditional partners.

Adopting the Next Wave of Technology. With robots, precision medicine, and 3-D printing coming of age, the future has arrived as these technologies leap from the academic environment into community healthcare settings. Robot-guided surgical procedures and bedside robots are no longer in the realm of science fiction. In addition, genetic advances are leading to precision or personalized medicine, based on an individual’s genetic profile. Targeted cancer therapy based on a tumor’s genetic make-up is increasingly available, and systems are expanding genetic profiling to provide early preventive treatment in a population health environment. An innovation in the manufacturing world, 3-D printing, is making headway into the healthcare arena through prosthetics and implants. While this innovation holds promise in the area of organ replacement, implementation is still remote.

Enhancing Community Connections. To produce better patient outcomes and gain greater control of utilization, health systems will look beyond the walls of their facilities into the communities they serve. There is increasing recognition that social determinants of health, such as socio-economic status, housing and nutrition, impact health status as much as or more than medical care for the general population. Behavioral health initiatives and forging relationships with community resources to help manage critical needs is becoming mandatory, particularly for organizations with high Medicaid and other underserved populations.

Opportunities to Retool for the Future

Continued Growth and Integration. With ongoing merger and acquisition activity expected through 2018, health systems will continue seeking ways to create greater efficiencies and demonstrate value to consumers. Solutions involve simplifying decision-making and governance, developing system-wide clinical operating structures, streamlining operations, and leveraging assets and information technology investments. Leaders will put mechanisms in place to instill best practices across the organization and management accountabilities will shift to emphasize system-wide performance. Many health systems will continue to coalesce the cultures, governance, and management of employed physician practices to create a more unified physician enterprise.

Optimizing Delivery through Digital Technology. Tremendous potential exists to optimize investments in digital technology. Organizations can leverage their digital ecosystem through advanced analytics and applications that can pull relevant, real-time, actionable data from all sources, leveraging it to make smart decisions about patient care and operational improvements. In addition, artificial intelligence and machine learning will provides ways to improve the productivity and focus of care teams. Continual innovation means that healthcare systems must determine where and how much to invest while maximizing applications across the enterprise.

Protecting People; Focusing on Joy. Unrelenting change creates stress for employees. To combat burnout and enhance recruitment and retention, organizations will focus on initiatives to provide support and demonstrate value to their most precious resource: the people who work for the system. Besides an integrated approach to recruitment, training/development, performance and productivity management, and cultural development, many organizations will redesign the roles of care teams to put “joy” back into the profession. Leadership development also will be crucial, particularly for clinical leaders to accelerate change and support succession planning.

2018 Healthcare Trends

Jacobs.jpgMs. Jacobs is managing principal at GE Healthcare Partners. She has more than 30 years of experience in the areas of integrated delivery system development, payer strategy, population health management, healthcare strategic and financial planning, transactions, and governance/ management systems. She is a noted speaker and industry resource on the impact of healthcare trends, most notably the requirements for success in value-based payment models, clinical integration, and creating successful integrated delivery systems. She may be reached at laura.jacobs@ge.com.