Q4 2020 Healthcare Industry Trend Highlights: Health Systems & Provider Organizations

As part of our internal healthcare industry market analysis, we’re sharing some notable provider space highlights that might inform your strategy decisions or priorities for the near-term. Feel free to reach out to our healthcare services team if you’d like to discuss what we’re seeing inside these healthcare trends. Read our recent payer research recap as well.

Healthcare Recovery - Covid

Healthcare Must Transform During Recovery

While COVID is expected to depress healthcare earnings by $25B-$75B, high-growth segments still expect an increase of 10% over the next five years. By 2028, $280B-$550B of that growth will be achievable through productivity gains, highlighting “the productivity imperative for healthcare delivery in the U.S.”

Definitive’s 2020 Healthcare Trends Survey revealed that 36.5% of hospital executives saw loss of revenue the most crucial change. And, they expected recovery to take an average of 12 months, ranging from 3-24 months.

However, the general impression from research pulled between August to November, 2020 is that healthcare provider organizations and systems must transform as they recover.

Healthcare - Virtual

Digital Health and Virtual Care

The pandemic accelerated the entire virtual care space – from coverage, regulations, technology, and operations to patient experience. Telehealth adoption increased 4,000% in 2020 and the expectation is that, for 2021, 40-70% of post-pandemic visits will be virtual, depending on reimbursement policy extensions or permanent coverage laws.

For historical context, pre-pandemic telemedicine was increasing, albeit slowly:

  • Telehealth claims increased by 53% from 2016-2017
  • 76% of hospitals used telehealth
  • 23.2% of hospitals were already expecting increased use
  • 85% of CFOs say virtual health is a priority post-pandemic

While many provider organizations see fluctuating use as pandemic waves ebb and flow, organizations agree that virtual has staying power with expected growth of 23.4% CAGR through 2026.

Healthcare - Hybrid

Virtual Brings Opportunity for Hybrid Model of Care

While big tech – Microsoft Teams, MDLive, Amwell, Teladoc — is integrating tools with EHRs for telemedicine, virtual care is driving a new model of care and consumer engagement. Many see managing chronic disease and the convenience factor as a major focus of telehealth.

In our payer research recap, we cited the 2020 Digital Health Consumer Survey. It suggests that marrying digital or virtual care with physical care could provide an effective, trusted, and reliable combination. And, that the future of healthcare will rely on “seamless, coordinated care that provides people with the right attention, services, therapies and products anytime, anywhere, to instill confidence, safety and respect across all moments.”

A recent AHA conference reflected a clear agreement that not only is telehealth here to stay, but it’s also going to be at the heart of care delivery going forward. Organizations, like the Cohen Veteran Network, are planning drastic changes to its physical spaces, reducing their footprint by 50% and opening new markets through telehealth. They will combine online screening tools, virtual care, and physical clinics for a hybrid approach to providing mental health services to veterans and military families.

There is a push for provider organizations to address competition – retail, digital care, telehealth vendors – as technologies disrupt and the integration of payer, provider, experience, and telehealth becoming tighter.

Healthcare - Alternative

Alternative Models for Care

Combined with PCP visits declining by 24.2% from 2008-2016, the pandemic and telehealth/virtual care use is accelerating another trend. Patients are seeking care from alternative models and locales.

Medical Districts

Cities across the country continue to establish and grow medical districts. Chicago’s medical district, Aurora, Colorado’s “Medical City,” and New Orleans’ “BioDistrict” are all strategies to bring more access and jobs to medical deserts.

Retail

Retail as a location for expanding healthcare services isn’t a new trend, but it’s ramping up quickly and in a variety of configurations. Walmart recently completed the one-year pilot of its first health superstores in Georgia and Arkansas. The locations include primary and urgent care, dental and therapy, and on-site diagnostic services. The first Georgia store, at least, charges a flat $40 for an adult primary care visit, $50 for an adult dental checkup, and $45 for an eye appointment. Therapy services are $1 per minute.

The retail basic care market is in its formative stages. CVS Health and Walgreens have been particularly active, capitalizing on extensive brick-and-mortar footprint, using partnerships and acquisitions to build out clinic chains. Along with bringing in revenue from services themselves, retail clinics have also been shown to lead to higher script-writing and front store sales.

Consumer Orientation & Value-Based Care/Contracting

Some believe that the provider and integrated delivery market will bifurcate into two veins, taking a consumer-driven approach or a risk-contracting strategy. The consumer side will see acceleration across technologies for demand aggregation, transaction and navigation, as well as consumer engagement. “Health systems and IDNs are going to have to become very consumer friendly in their digital footprint. Those very economically valuable customers are going to move to things they’re familiar with such as simple self-service, online scheduling and telehealth.” This will be particularly evident with cash customers who’ve fallen out of coverage.

CFOs are rethinking consumer engagement, work, and care delivery as well:

  • 83% say that consumer engagement is an increased priority for their organization after the pandemic
  • 55% say consumer trust is a top driver right now
  • 78% of healthcare systems/providers expect increased spending on digital technologies

Health systems and IDNs of all stripes must master the full consumer experience across digital, virtual, and in-person care.

The second approach is to go after more risk. The pandemic’s effect on healthcare revenue, like elective surgeries, showed reliance on fee-for-service can cripple organizations and necessitate VBC more than ever. COVID gave a wake-up call for VBC. Contracts will seek a 10% lower cost trend over five years using telehealth, preventive, and coordinated care strategies. Physicians are starting to see the light of VBC from a pandemic perspective.

Here, again, taking on more risk comes back to improving consumer experience to stay competitive with disrupters.

Healthcare - Automation

Automation

According to Gartner[i], automation in healthcare is a major opportunity. Automation, including RPA, can save up to 50% on IT services like application management. Automation can also drive digital business optimization as a tool to increase standardization, productivity, and accuracy, as well as a transformation enabler as automation that can free up resources and provide a foundation for new business models.

By 2028, $280-550B could be achieved in savings from productivity gains. Examples of automation projects for providers include back-end and front-end operations like CoxHealth’s use of Robotic Process Automation (RPA) within human resources and recruitment. “The goal was to capture efficiencies, improve ROI, reduce errors, and get recruiters working at the top of their license rather than doing endless amounts of paperwork.”  Their project included several practical use cases:

  • On-Boarding Questions and Documentation
  • Fill Rates in Medical Group
  • COVID-19 Negative Result Notification
  • Accounts Receivable Status Check
  • Pharmacy Pricing Updates
Healthcare - Cybersecurity

Cybersecurity

Only 44% of healthcare institutions met national cybersecurity standards in 2019, indicating a worsening trend with 47% in 2018. Four of the five core functions outlined in the National Institute of Standards and Technology’s framework for companies to protect themselves against cyberattacks were sub-par with most — identify, protect, respond and recover.

Cybersecurity in healthcare is more important than ever as telehealth and remote work have become the norm, and the value of healthcare data on black markets continue to soar.

What Do These Trends Mean for Your Health System, IDN, or Provider Organization?

SDLC Partners has provided guidance, technology, and execution support to healthcare since our start in 2004. Tap into our trusted and proven talent to determine how these trends affect care delivery, patient experience, operations, and revenue cycle.

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[1] Gartner. Healthcare Payer CIOs Scale RPA to Achieve Cost Optimization. Published 12 August 2020 – ID G00730750.

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