https://www.managedhealthcareexecutive.com/news/five-healthcare-industry-changes-watch-2020
Industry experts expect significant changes to shake up the healthcare landscape in the next few years, which will affect both health insurers and providers. Many are the result of a shift toward value-based care, a move toward decreased care in hospital settings, technological advances, and other forces.
Here’s a look at what can payers and providers can expect to occur, why each change is occurring, and how payers and providers can prepare for each change:
1. A shift in healthcare delivery from hospital to ambulatory settings
Healthcare delivery will continue to move from inpatient to outpatient facilities. “More surgeries and diagnostic procedures that historically have required an inpatient hospital stay can now be performed more safely and efficiently in an outpatient setting,” says Stephen A. Timoni, JD, an attorney and partner at the law firm Lindabury, McCormick, Estabrook & Cooper, in Westfield, New Jersey, who represents healthcare providers in areas of reimbursement and managed care contracting. A growing volume of outpatient care will be provided in ambulatory surgery centers, primary care clinics, retail clinics, urgent care centers, nurse managed health centers, imaging facilities, emergency departments, retail clinics, and patients’ homes.
This change is occurring as the result of clinical innovations, patient preferences, financial incentives, electronic health records, telemedicine, and an increased focus on improving quality of care and clinical outcomes. “The upward trend in value-based payment models is also influencing this shift, with the goal of reducing the cost of care and improving the overall patient experience,” Timoni says.
Payers and providers can prepare for this shift by analyzing and forecasting the cost and reimbursement implications of providing care in outpatient settings compared to inpatient settings. They should continue to analyze changing patient demographics, consumer preferences, and satisfaction trends, Timoni says. Collecting and analyzing data regarding quality and clinical outcomes as the result of changes in delivery of care from inpatient to outpatient is also key. Healthcare providers should develop effective strategies to grow capacity and infrastructure for outpatient services and invest in innovative mobile technologies, diagnostic tools, and telemedicine systems.
2. Consolidation will continue industry wide
More healthcare entities will continue to merge together. “Even though the number of available partners for transactions is shrinking, new deals pop up all the time because smaller entities are being targeted or entities that had been holding out are now changing their position,” says Matthew Fisher, JD, partner and chair of the Health Law Group at Mirick O’Connell, a law firm in Westborough, Massachusetts. Increased consolidation will result in higher healthcare prices as larger sized institutions use their size to their advantage. Another impact will be narrowing the field of contracting options, which will result in greater dominance by fewer entities in a market.
This change is occurring because industry stakeholder believes that consolidation is the way to survive in a healthcare landscape still being shaped by the ACA. “The belief is that value-based care models require single unified entities as opposed to more contractual-based ventures to succeed,” Fisher says. Another factor is that momentum for consolidations across the industry has continued to build and no player wants to be left behind.
Along these lines, Timoni says that consolidation has been motivated by the evolving and challenging commercial and government reimbursement models which include lower fee-for-service payment rates, value-based payment components, and incentives to move care from inpatient to outpatient settings. “Basic economic theory suggests that consolidation of hospitals and physicians enables these combined providers to charge higher prices to private payers as the result of a lack of competition,” Timoni says. “Likewise, combined insurers are able to charge higher premiums to their subscribers.”
Payers and providers can prepare for this change by evaluating their operations and determining whether consolidation with another entity is advantageous. “This requires assessing an entity’s operations and the risks of consolidation,” Fisher says.
Timoni advises payers and providers to monitor the consolidation landscape and develop effective merger and acquisition strategies. These strategies should focus on optimizing economies of scale to reduce costs and finding the best partners to achieve improved quality of care and effectively manage population health.
3. Protecting data privacy
Ongoing attention will be given to protecting the privacy of healthcare data. New laws, at both the federal and state levels, will be considered that could introduce new regulatory requirements, Fisher says.
While a federal law in an election year may be doubtful, individual states are proceeding. The California Consumer Protection Act (CCPA), intended to enhance privacy rights and consumer protection, will become effective in 2020, for example. Even though the CCPA doesn’t cover all healthcare data, healthcare organizations will still collect additional information that could be subject to CCPA, which means more compliance obligations, Fisher says. Other states are considering how to jump on the privacy legislation bandwagon, which means that regulatory requirements will increase. “Even in the absence of legislation, payers and providers can expect individuals to assert concerns and use public pressure to drive increased attention to privacy issues,” Fisher says.
Meanwhile, debates around what is meant by privacy continue to evolve, Fisher continues. A backlash against the non-transparent sharing of healthcare data and arguable profiteering is creating anger among patients and other groups. Simultaneously, data breaches continue to be reported on a daily basis. Add in that healthcare is a prime target, and all of the factors point to healthcare needing to do more to protect data.
Payers and providers can embrace increased data privacy by focusing on existing compliance efforts, which will require taking time to better understanding HIPAA. “Ignoring or only making superficial efforts to respect data privacy is insufficient,” Fisher says. “Merely doing what is legally permissible may not be good enough.”
4. Consumerization of healthcare
As patients assume more financial responsibility for their healthcare costs due to higher premiums, co-pays, co-insurance, and deductibles, they have become more concerned with the value of the care they receive as well as cost. Patients will likely demand improved access to clearer benefits, billing, and network information to improve transparency, says Brooks Dexter, MBA, Los Angeles-based managing director and head of the healthcare M&A advisory practice at Duff & Phelps, a global consultancy firm.
“Healthcare providers must follow suit to meet value expectations and deliver more consumer-friendly services or may risk losing market share to innovative new healthcare arrangements, such as direct primary care, which offer convenient and quality care with simplified medical billing,” Dexter says. Some ways to do this are to offer better patient portals, expanded hours, improved access, and clear procedure pricing. Despite the trend, payers and providers will most likely continue to resist CMS’ efforts to force greater cost transparency by requiring hospitals to post payer-specific negotiated charges for common services that can be shopped.
Furthermore, Peter Manoogian, principal at ZS, a consulting firm focused on healthcare in Boston, says that the voices of older adults will become comparatively louder as this rapidly growing segment becomes more tech-savvy. The Trump Administration supports increased use of Medicare Advantage and expanding consumer choices. Plan options will reach a record high this year and create an unprecedented amount of choices for this population. The average number of plans a beneficiary has access to this year will be 28, up by a whopping 50% from 2017. What’s more, new entrants that boast a customer-driven approach such as Oscar Health are entering the fray in major markets such as New York and Houston.
Health plans need to be laser focused on improving their understanding and engagement of their customers—who are evolving themselves. “To stay ahead of the change, health plans need access to the right data coupled with leading-edge analytics and technology to continuously mine insights on what members are seeking in their healthcare experience, how patients and providers interact throughout their healthcare journey, and how to meet the needs of future healthcare customers,” Manoogian says.
Health plans will need to take more of a retail focus than what they’re accustomed to, Manoogian says. The bar for providing a great experience and retaining members will also increase.
5. More technological innovations will emerge
Technological innovation will continue to dramatically and rapidly change the manner in which healthcare is delivered, resulting in more personalized care, improved clinical outcomes and patient experience, and overall quality of life. “Information systems, mobile technology, high-tech digital devices, and electronic medical records will allow payers and providers to accurately measure clinical outcomes and effectively manage the continuum of medical care and their population’s overall health,” Timoni says.
One specific way that care will change is that providers will start seeing telehealth play a more critical role in care delivery as the brick-and-mortar, in-person care model becomes less common. “Telehealth will grow past a nice-to-have tool into a standard of care, particularly for low-risk and predictable appointments,” says Cindy Gaines, MSN, RN, clinical leader, Population Health Management, Philips, a company focused on transforming care through collaborative health management in Alpharetta, Georgia. This transformation will enable providers to better tailor their care to patients’ unique needs, while increasing patient autonomy and engagement.
Technological innovations are occurring due to booming private sector interest and investment in medical technology innovation. “Patients are demanding real-time health information, personalized medicine, higher quality of care, and convenient treatment options,” Timoni says. “Payers are demanding more detailed and expansive outcomes data to scientifically manage the reimbursement system to lower costs and improve their subscribers’ health. The medical and information technology fields are attracting more high-skilled workers, who will continue to drive innovation to new levels as long as investor interest is sustained.”
Regarding the increased use of telehealth, Gaines says that many appointments that occur in a hospital today can take place outside of the hospital. And, as the healthcare industry increasingly moves toward value-based care, providers need to extend their line-of-sight outside of a hospital’s four walls. For example, a low-risk follow-up appointment after an operation is usually mostly dialogue and has a predictable outcome—it could be conducted electronically. “By filling up hospitals with visits that could occur virtually, it makes it harder for patients who need face-to-face healthcare access to get it,” she says.
A lack of insurance coverage is a major impediment to telehealth adoption for most health systems. Therefore, providers should pair guaranteed reimbursement opportunities with change management workflows to advance these efforts, Gaines says. They would also be smart to leverage their patients’ everyday devices to manage their care, whether it’s on their smart phone, a fitness watch, or voice assistant.
To embrace technological innovation, payers and providers must continue to be educated and aware of the expanding medical technology landscape and develop technology investment and deployment strategies. “Consider investing and participating in technology venture capital funds and partnering with private sector technology manufacturers and research institutions,” Timoni says.
HENRY KOTULA 
CAMBRIDGE – Aristotle was right. Humans have never been atomized individuals, but rather social beings whose every decision affects other people. And now the COVID-19 pandemic is driving home this fundamental point: each of us is morally responsible for the infection risks we pose to others through our own behavior.
In fact, this pandemic is just one of many collective-action problems facing humankind, including climate change, catastrophic biodiversity loss, antimicrobial resistance, nuclear tensions fueled by escalating geopolitical uncertainty, and even potential threats such as a collision with an asteroid.
As the pandemic has demonstrated, however, it is not these existential dangers, but rather everyday economic activities, that reveal the collective, connected character of modern life beneath the individualist façade of rights and contracts.
Those of us in white-collar jobs who are able to work from home and swap sourdough tips are more dependent than we perhaps realized on previously invisible essential workers, such as hospital cleaners and medics, supermarket staff, parcel couriers, and telecoms technicians who maintain our connectivity.
Similarly, manufacturers of new essentials such as face masks and chemical reagents depend on imports from the other side of the world. And many people who are ill, self-isolating, or suddenly unemployed depend on the kindness of neighbors, friends, and strangers to get by.
The sudden stop to economic activity underscores a truth about the modern, interconnected economy: what affects some parts substantially affects the whole. This web of linkages is therefore a vulnerability when disrupted. But it is also a strength, because it shows once again how the division of labor makes everyone better off, exactly as Adam Smith pointed out over two centuries ago.
Today’s transformative digital technologies are dramatically increasing such social spillovers, and not only because they underpin sophisticated logistics networks and just-in-time supply chains. The very nature of the digital economy means that each of our individual choices will affect many other people.
Consider the question of data, which has become even more salient today because of the policy debate about whether digital contact-tracing apps can help the economy to emerge from lockdown faster.
This approach will be effective only if a high enough proportion of the population uses the same app and shares the data it gathers. And, as the Ada Lovelace Institute points out in a thoughtful report, that will depend on whether people regard the app as trustworthy and are sure that using it will help them. No app will be effective if people are unwilling to provide “their” data to governments rolling out the system. If I decide to withhold information about my movements and contacts, this would adversely affect everyone.
Yet, while much information certainly should remain private, data about individuals is only rarely “personal,” in the sense that it is only about them. Indeed, very little data with useful information content concerns a single individual; it is the context – whether population data, location, or the activities of others – that gives it value.
Most commentators recognize that privacy and trust must be balanced with the need to fill the huge gaps in our knowledge about COVID-19. But the balance is tipping toward the latter. In the current circumstances, the collective goal outweighs individual preferences.
But the current emergency is only an acute symptom of increasing interdependence. Underlying it is the steady shift from an economy in which the classical assumptions of diminishing or constant returns to scale hold true to one in which there are increasing returns to scale almost everywhere.
In the conventional framework, adding a unit of input (capital and labor) produces a smaller or (at best) the same increment to output. For an economy based on agriculture and manufacturing, this was a reasonable assumption.
But much of today’s economy is characterized by increasing returns, with bigger firms doing ever better. The network effects that drive the growth of digital platforms are one example of this. And because most sectors of the economy have high upfront costs, bigger producers face lower unit costs.
One important source of increasing returns is the extensive experience-based know-how needed in high-value activities such as software design, architecture, and advanced manufacturing. Such returns not only favor incumbents, but also mean that choices by individual producers and consumers have spillover effects on others.
The pervasiveness of increasing returns to scale, and spillovers more generally, has been surprisingly slow to influence policy choices, even though economists have been focusing on the phenomenon for many years now. The COVID-19 pandemic may make it harder to ignore.
Just as a spider’s web crumples when a few strands are broken, so the pandemic has highlighted the risks arising from our economic interdependence. And now California and Georgia, Germany and Italy, and China and the United States need each other to recover and rebuild. No one should waste time yearning for an unsustainable fantasy.