Recap of Major 2021 Trends and Thoughts on 2022 Implications to Payers and Providers
This year started with a lot of hope; however, COVID-19 continued to dominate healthcare news in 2021, challenging a return to normalcy. Last year, the healthcare industry was busy with M&A activities and planning large-scale digital transformation. There was also a re-enforcement from policymakers to make healthcare more transparent, consumer-centric, and value-driven. In this insight, I will look back on the year’s most salient healthcare developments and try to understand the future implications.
Digital Patient Engagement
Patient-centricity is more important than ever before. Patients are becoming more involved and looking to increase their role in enhancing and controlling their care journey. More than 75% of patients today want to know more about health programs. On top of that, providers are looking to push more care out of hospital settings. Empowering patients and caregivers with simple tools to help them navigate this journey will be extremely important. The future is really about making collaboration intuitive and straightforward. This is where digital comes into the picture.
Platforms and Integrators, not just point solutions
As health plans and health systems define their strategy of keeping patients, providers, and caregivers at the center, it is becoming clear that systems and solutions that can connect all the dots and provide a consistent experience are far more critical than closed point solutions. The Digital Front Door framework promises to solve this problem, and there will be an increased uptick in digital front door investments. There is still confusion on who (payer, providers, or employer) should be owning this. Given the scale of investment needed and access to patients’ data, payers are best positioned to stamp their authority on digital front doors.
Employers are on the Edge. Health Systems are too!
Large employers predict that their healthcare costs will go up by an additional 5% in 2022. This is on top of a similar 5% increase in 2021. It is becoming increasingly unaffordable for employers to sustain the cost. On the other hand, health systems have had their business model under threat from transparency mandates and continued a push to move care out of hospital settings. Overall, critical players in the healthcare continuum are under tremendous pressure and will need to transform to sustain.
Increase in direct-to-employer models
Price transparency threatens health systems’ business models by exposing commercially negotiated rates with payers, enabling employers to ask for fair pricing. This, on top of the continued increase in employer-sponsored healthcare costs, will push health systems to explore new business models, and we may see growth in direct-to-employer models (DTE) like Northwell Direct in New York. Solutions like Teladoc and Livongo will target these DTEs to make them more lucrative to employers.
Health systems will have to get efficient
According to a 2018 study, hospitals waste $24.5 billion annually because of an inefficient supply chain. Cost pressures will push health systems to become leaner and cost-conscious. In addition to improving their processes, we will see this expanding into the usage of cost-based accounting and re-organizing the practice of organizational designs within hospitals to align towards value-based delivery. Hospitals may also look at specializing instead of generalizing, so they can participate effectively in risk-based arrangements. Smaller health systems that don’t have the means to transform may get consolidated. We’ve seen some already close this year.
Value-based care, quarterbacked by Primary Care and PCPs:
A patient’s PCP is uniquely positioned to “quarterback” and monitor clinical care for efficiency. According to a recent McKinsey study, 61% of the healthcare decisions, referring to specialists, is made by PCPs, and 54% of the facility decision comes from PCPs. They represent just 5% of the overall care cost and they aren’t influenced by the demand pressures that large health systems face.
Technological advances that have spurred the trend toward in-home care have increased focus on the PCP; telemedicine and coordinated services from nurses, physical therapists, and other lower-cost providers position the PCP as “captain” of a team-based care approach. CVS is betting big on primary care to get the most out of its acquisition of Aetna. Over 100 Minute Clinic locations are located in CVS Pharmacy and Target stores.
Outside of these big retailers, sophisticated PCP organizations may take charge and build their network across the value chain. These networks will leverage technology, nurses, and lower-cost resources to increase patient engagement and preemptive care. They will also part with home healthcare agencies and build specialty networks, thereby appealing to employers who are getting crushed by increased costs.
Great Resignation, Automation of the Clinical Journey
The U.S. healthcare industry is facing a significant staffing shortage. According to the U.S. Department of Health and Human Services, about “16% of American hospitals had critical staffing shortages” as of October 1, 2021. Nurses, providers, and even call center agents are in short supply.
Digital assistants and apps are increasingly guiding patients to their next best actions, and we will see a continued increase in the adoption of automation across the care continuum. We may also see end-to-end automation solutions that guide patients through the clinical journey (check-in details, administrative details, and post-discharge activities). Plans and health systems that are thinking ahead will have to ensure that these solutions are part of their digital front door platform and not operating in silos.
Enabling Better Access, Quality & Lower Costs in 2022
To sum it up, the momentum of change brought in by 2020 continued in 2021. These changes may have paused momentarily as healthcare leaders assess them strategically and begin to pull together all the pieces of the puzzle they need going forward. Now, as we get into 2022, we will start seeing early signs of digital transformation enabling better access, quality, and lower costs to patients and employers.