John Fryer, Vice President, Market Strategy & Growth
The COVID-19 pandemic is disrupting the current healthcare industry in unprecedented ways. How can health systems prepare for the future, developing strategies for the short, medium and long-term? The excerpt below highlights several key areas where healthcare will likely need to change as the industry adjusts to a new normal—and continues its march toward value-based models. To read the full discussion around the trends impacting the need for healthcare innovation, click here.
Preparing for the Future – Now, Near and Far
While no one knows with certainty what the post-COVID reality will look like, there are telling signs from a pre-COVID world that changes across the industry will almost certainly be accelerated by the pandemic. Healthcare leaders need to recognize these looming trends and determine how they might prepare their organizations to adapt.
Now – A business model challenge exacerbated by the pandemic
- Demographic change (growth of Medicare, Medicaid, and Uninsured) will strain the existing financial and clinical resources of the already tapped healthcare delivery system
- New entrants will carve away the most profitable segments of the existing business capitalizing on the inefficiencies of the status quo
- Competition will increase as vertical and horizontal integration activity consumes distressed organizations
- True physician alignment (beyond a simple employment-based model), empowerment, and engagement will be paramount to creating significant value (quality, economic, and intrinsic), which will be table stakes for an organization’s medium/long-term success
Near – Shifting Care Delivery and Payment Models
- The three payers (i.e., government, employers, consumers) will reach a breaking point and will demand value-centric funding models
- Revenue for provider organizations will be uncoupled from “patients walking in the door,” requiring organizations to develop new capabilities to capture and manage these potential profit centers
- An “at-home” model of care will be adopted more broadly by consumers, payers, and providers as low-acuity care rapidly moves away from the four walls of the hospital
- The definition and provision of primary care services will change forever with increasing prioritization of virtual medical homes
- Robust predictive analytics/decision support and “liquidity” of patient information will weaken the role of the personal relationship between patients and their respective providers
- The digital “front-door” and the ability to provide a marketplace for healthcare services (with transparent pricing) will become the primary access point for new patient volume
Far – Exerting Control of the Complete Value Chain
- The “hooks” from federal grants (bailouts) to address COVID-19 impacts will further ingrain the government’s role and influence in US healthcare delivery
- Reimbursement models will necessitate and encourage provider entities to take direct financial responsibility for the populations they care for, cutting out “middlemen” (aka payers who are not providers)
- Payers and provider organizations will continue to converge
- Health system and provider networks will have mature “population health services organizations” that have the resources to succeed as the care delivery and insurance provider
- Payers will shift away from their traditional administrative/back office model and create virtually integrated delivery networks that compete with traditional health systems by providing care outside the acute setting
- Most interactions with patients will occur via digital platforms vs. face to face (e.g., texting, telehealth, remote monitoring)
- Brick and mortar assets will be focused around centers of excellence; gone is the “do-it-all” mentality that exists in today’s healthcare systems
Moving Forward
With its far-reaching impact, COVID-19 will forever change society and our broad healthcare ecosystem. As the fog begins to lift, healthcare leaders will have hard choices to make. Do we double down on investing in the old and broken business/delivery model of the past or do we invest our finite resources to reshape what our organization needs to look like in the future? I’d be willing to bet that the healthcare delivery system of five years from now will look drastically different from the healthcare delivery system of today. Organizations and leaders who prioritize disrupting themselves as they make decisions in the now with a vision for the reality of the far will be much better positioned for sustainable success in the future.
