Q4 2020 Healthcare Industry Trend Highlights: Health Plans
As part of our internal healthcare industry market analysis, we’re sharing some notable payer 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.
Notable Health Plan Industry Trends
The U.S. HIT market was $61B in 2017 and is projected to grow at 11.7% CAGR, reaching $149B by 2025. The Global HIT market is expected to grow at a CAGR 15.5% between 2020-2028 and is valued at $200B as of 2020 with the payer sector the largest.
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.”
Payers are investing in telesales, at-home and in-community offerings, digital capabilities, and omnichannel approaches to care delivery. The future is at the intersection of and integration between digital and physical care as evidence of virtual care during the pandemic.
According to Gartner’s 2020 Hype Cycle for U.S. Healthcare Payers[i], digitalization is an urgent survival imperative for all payers. They recommend a bimodal focus on digital optimization (IA, etc.) and digital transformation (AI, API, etc.). This approach looks at two aspects of creating a digital business strategy.
- Digital Business Optimization: Includes improving productivity and existing revenue or creating a better customer experience. Gartner lists several technologies to consider:
- Digital Business Transformation: Includes creating net new revenue products and services or creating new business models. Gartner lists several technologies to consider:
- AI strategy for healthcare payers
- API management for healthcare payers
- Digital healthcare payer platform
- Community resource network management
- Health value product design
Technology-enabled relationships and interactions across the health ecosystem will drive member health improvement and will be the engine for transformation.
New Revenue Streams:
U.S. healthcare payer CEOs, CFOs and boards of directors are pushing CIOs to develop net new revenue streams from administrative services for other payers along with healthcare technology offerings for payers, providers, and consumers. These adjacent opportunities might include business process outsourcing [BPO] services to a healthcare payer or accountable care organization [ACO]. Gartner[i] recommends, first, cultivating IT staff flexibility and client services, remembering that excess administrative capacity and low cost of claims processing do not, by themselves, ensure market success.
According to Gartner[ii], automation for payers is a major opportunity as most have not deployed enterprise-wide. Automation, including RPA, can save payers 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 can free up resources and provide a foundation for new business models. Gartner notes that payer CIOs spend more on IT operations than peers in other industries on IT operations. And, that payers tend to limit RPA to IT services, HR, and claims processing services, but the opportunities are enterprise-wide.
Digital Health and Virtual Care:
According to the 2020 Digital Health Consumer Survey, payers have commonly cited various reasons to incentivize virtual care. “For example, digital and virtual care, specifically telehealth solutions, could play a significant role in lowering member healthcare spending and, by extension, payer spending.” Key to long-term virtual care success, however, is “maintaining a quality of care level that meets member expectations via digital and virtual healthcare.”
It suggests that marrying digital or virtual care with physical care could provide an effective, trusted, and reliable combination. The report suggested 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.”
Value-Based Contracts and Care:
The pandemic highlighted the shortfalls of fee-for-service and could expedite value-based contracts and care models. Some payers are creating partnerships that seek to achieve 10% lower cost over the next five years through telehealth, preventive care, and coordinated care strategies.
What Do These Trends Mean for Your Health Plan?
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 your membership, operations, and revenue.
[i] Gartner. Hype Cycle for U.S. Healthcare Payers, 2020. Published 5 August 2020 – ID G00444809
[ii] Gartner. U.S. Healthcare Payer CIOs Grow Profits by Becoming Health Industry Vendors. Published 10 August 2020 – ID G00730681.