16 Things CEOs Need to Know in 2023

https://www.advisory.com/-/media/project/advisoryboard/abresearch/brand-campaigns/soi/wf8632394-ab-16-things-ceos-need-to-know.pdf#page=38

Understand the health care industry’s most urgent challenges—and greatest opportunities.

The health care industry is facing an increasingly tough business climate dominated by increasing costs and prices, tightening margins and capital, staffing upheaval, and state-level policymaking. These urgent, disruptive market forces mean that leaders must navigate an unusually high number of short-term crises.

But these near-term challenges also offer significant opportunities. The strategic choices health care leaders make now will have an outsized impact—positive or negative—on their organization’s long-term goals, as well as the equitability, sustainability, and affordability of the industry as a whole.

This briefing examines the biggest market forces to watch, the key strategic decisions that health care organizations must make to influence how the industry operates, and the emerging disruptions that will challenge the traditional structures of the entire industry.

Preview the insights below and download the full executive briefing (using the link above) now to learn the top 16 insights about the state of the health care industry today.

Preview the insights

Part 1 | Today’s market environment includes an overwhelming deluge of crises—and they all command strategic attention

Insight #1

The converging financial pressures of elevated input costs, a volatile macroeconomic climate, and the delayed impact of inflation on health care prices are exposing the entire industry to even greater scrutiny over affordability. Keep reading on pg. 6

Insight #2

The clinical workforce shortage is not temporary. It’s been building to a structural breaking point for years. Keep reading on pg. 8

Insight #3

Demand for health care services is growing more varied and complex—and pressuring the limited capacity of the health care industry when its bandwidth is most depleted. Keep reading on pg. 10

Insight #4

Insurance coverage shifted dramatically to publicly funded managed care. But Medicaid enrollment is poised to disperse unevenly after the public health emergency expires, while Medicare Advantage will grow (and consolidate). Keep reading on pg. 12

Part II | Competition for strategic assets continues at a rapid pace—influencing how and where patient care is delivered.

Insight #5

The current crisis conditions of hospital systems mask deeper vulnerabilities: rapidly eroding power to control procedural volumes and uncertainty around strategic acquisition and consolidation. Keep reading on pg. 15

Insight #6

Health care giants—especially national insurers, retailers, and big tech entrants—are building vertical ecosystems (and driving an asset-buying frenzy in the process). Keep reading on pg. 17

Insight #7

As employment options expand, physicians will determine which owners and partners benefit from their talent, clinical influence, and strategic capabilities—but only if these organizations can create an integrated physician enterpriseKeep reading on pg. 19

Insight #8

Broader, sustainable shifts to home-based care will require most care delivery organizations to focus on scaling select services. Keep reading on pg. 21

Insight #9

A flood of investment has expanded telehealth technology and changed what interactions with patients are possible. This has opened up new capabilities for coordinating care management or competing for consumer attention. Keep reading on pg. 23

Insight #10

Health care organizations are harnessing data and incentives to curate consumers choices—at both the service-specific and ecosystem-wide levels. Keep reading on pg. 25

Part III | Emerging structural disruptions require leaders to reckon with impacts to future business sustainability. 

Insight #11

For value-based care to succeed outside of public programs, commercial plans and providers must coalesce around a sustainable risk-based payment approach that meets employers’ experience and cost needs. Keep reading on pg. 28

Insight #12

Industry pioneers are taking steps to integrate health equity into quality metrics. This could transform the health care business model, or it could relegate equity initiatives to just another target on a dashboard. Keep reading on pg. 30

Insight #13

Unprecedented behavioral health needs are hitting an already fragmented, marginalized care infrastructure. Leaders across all sectors will need to make difficult compromises to treat and pay for behavioral health like we do other complex, chronic conditions. Keep reading on pg. 32

Insight #14

As the population ages, the fragile patchwork of government payers, unpaid caregivers, and strained nursing homes is ill-equipped to provide sustainable, equitable senior care. This is putting pressure on Medicare Advantage plans to ultimately deliver results. Keep reading on pg. 34

Insight #15

The enormous pipeline of specialized high-cost therapies in development will see limited clinical use unless the entire industry prepares for paradigm shifts in evidence evaluation, utilization management, and financing. Keep reading on pg. 36

Insight #16

Self-funded employers, who are now liable for paying “reasonable” amounts, may contest the standard business practices of brokers and plans to avoid complex legal battles with poor optics. Keep reading on pg. 38

Four Insights from Healthcare Reimagined: BDO’s J.P. Morgan Conference Event

https://www.linkedin.com/pulse/four-insights-from-healthcare-reimagined-bdos-jp-morgan-steven-shill/

This January, BDO hosted healthcare and life sciences leaders on the sidelines of JP Morgan’s Healthcare Conference to glean insights from those at the forefront of these rapidly evolving industries. 

In a series of intimate breakout discussions, these leaders discussed the challenges they’re seeing and what they anticipate the near future will hold. Here are four of their biggest takeaways that industry stakeholders need to know:  

·        Healthcare labor needs a makeover

One of the biggest issues we’re seeing in healthcare today is the overburdening of clinicians and other healthcare staff. This year, healthcare leaders need to prioritize enabling clinicians to practice at the top of their licenses. That means reducing their administrative burden so they can spend more time doing what they do best: working with patients and dispensing care. 

·        Healthcare valuations are moderating

In the past year, healthcare company valuations have been very high. We’re now seeing valuations moderate, which could mean a major shift in the deal landscape, with deal opportunities opening up as the price is right. 

·        Health equity is about choice

The reality is that each individual patient has unique needs that require tailored solutions. One important tool for improving health equity is technology that enables patients to choose what is right for them and their situation. That’s why capabilities like self-scheduling are so important, despite the fact that they are currently a missed opportunity for many providers

·        Life sciences leaders are looking at drug timelines differently

COVID-19 showed how quickly a drug can be safely developed when the right resources are in place. Moving forward, life sciences leaders are likely to pressure test drug timelines, which could lead to a shift in how the industry looks at drug development as a whole. 

·        While it’s impossible to know exactly what the future holds, we’re thankful that we were able to hear from industry leaders with on-the-ground knowledge of what’s happening now and what’s likely ahead. In the months and years ahead, we’ll continue to look to these leaders for their insights. 

The Impact of the COVID-19 Public Health Emergency Expiration on All Types of Health Coverage

https://www.rwjf.org/en/library/research/2022/12/the-impact-of-the-covid-19-public-health-emergency-expiration-on-all-types-of-health-coverage.html

The end of the COVID-19 Public Health Emergency will bring the largest health coverage changes since implementation of the Affordable Care Act.

The Issue

The Families First Coronavirus Response Act’s continuous coverage requirement prevents state Medicaid agencies from disenrolling people during the COVID-19 public health emergency. However, when the declaration of the emergency expires—currently scheduled for April 2023—states will resume normal eligibility determinations. This could result in millions losing access to affordable health coverage through Medicaid.

Key Findings

  • 18 million people could lose Medicaid coverage when the COVID-19 public health emergency (PHE) ends, according to a new analysis.
  • While many who are currently enrolled in Medicaid will transition to other coverage options, nearly 4 million people (3.8M) will become completely uninsured.
  • 19 states will see their uninsurance rates spike by more than 20 percent.
  • 3.2 million children will transition from Medicaid to separate Children’s Health Insurance Program (CHIP) health plans. 

Conclusion

State Medicaid officials and policymakers must continue to ensure that individuals currently enrolled in Medicaid are aware of the approaching end of the public health emergency, and that they have a plan to maintain or find new health coverage through their employer, the federal healthcare Marketplace, or Medicaid

100 of the largest hospitals and health systems in America | 2023

Health systems across the U.S. are growing as more independent hospitals and small chains move to join larger organizations amid financially challenging times.

Becker’s compiled a list of 40 of the largest health systems by number of hospitals and 60 of the largest hospitals by number of beds, based on organizational data as of January 2023.

Largest Health Systems

1. HCA Healthcare (Nashville, Tenn.): 182 hospitals 

2. Veterans Health Administration: 171 hospitals 

3. CommonSpirit Health (Chicago): 140 hospitals 

4. Ascension (St. Louis): 139 hospitals 

5. Trinity Health (Livonia, Mich.): 88 hospitals 

6. LifePoint Health (Brentwood, Tenn.): 84 hospitals

7. Community Health Systems (Franklin, Tenn.): 79 hospitals

8. Advocate Health (Charlotte, N.C.): 67 hospitals 

9. Tenet Healthcare (Dallas): 61 hospitals 

10. Christus Health (Irving, Texas): 60 hospitals

11. Providence (Renton, Wash.): 52 hospitals 

12. Baylor Scott & White Health (Dallas): 51 hospitals 

13. Bon Secours Mercy Health (Cincinnati): 48 hospitals

14. Sanford Health (Sioux Falls, S.D.): 47 hospitals 

15. AdventHealth (Altamonte Springs, Fla.): 46 hospitals 

16. Indian Health Service (Rockville, Md.): 46 [24 IHS-operated and 22 tribally operated] hospitals

17. Prime Healthcare (Ontario, Calif.): 45 hospitals 

18. UPMC (Pittsburgh): 40 hospitals 

19. Mercy (St. Louis): 40 hospitals  

20. Kaiser Permanente (Oakland, Calif.): 39 hospitals  

21. UnityPoint Health (West Des Moines, Iowa): 39 hospitals 

22. Avera Health (Sioux Falls, S.D.): 37 hospitals  

23. Intermountain Healthcare (Salt Lake City): 33 hospitals

24. Ardent Health Services (Nashville, Tenn.): 30 hospitals  

25. Banner Health (Phoenix): 30 hospitals  

26. Community Hospital Corp. (Plano, Texas): 29 hospitals

27. Texas Health Resources (Arlington): 29 hospitals 

28.  Universal Health Services (King of Prussia, Pa.): 28 hospitals 

29. Great Plains Health Alliance (Wichita, Kan.): 26 hospitals

30. Adventist Health (Roseville, Calif.): 23 hospitals

31. Sutter Health (Sacramento, Calif.): 23 hospitals 

32. MercyOne (Des Moines, Iowa): 23 hospitals 

33. SSM Health (St. Louis): 23 hospitals  

34. Baptist (Memphis, Tenn.): 22 hospitals 

35. Cleveland Clinic: 22 hospitals

36. Ballad Health (Johnson City, Tenn.): 21 hospitals 

37. Northwell Health (New Hyde Park, N.Y.): 21 hospitals 

38. Quorum Health Corp. (Brentwood, Tenn.): 21 hospitals  

39. University Hospitals (Cleveland): 21 hospitals 

40. Mayo Clinic Health System (Rochester, Minn.): 16 hospitals

Largest Hospitals

1. Yale New Haven (Conn.) Hospital: 1,541 beds 

2. Jackson Memorial Hospital (Miami): 1,488 beds

3. AdventHealth Orlando (Fla.): 1,400 beds

4. Cleveland Clinic: 1,300 beds 

5. Barnes-Jewish Hospital (St. Louis): 1,278 beds 

6. Mayo Clinic Hospital-Saint Marys Campus (Rochester, Minn.): 1,265 beds 

7. UAB Hospital (Birmingham, Ala.): 1,207 beds  

8. The Johns Hopkins Hospital (Baltimore): 1,162 beds

9. Mount Sinai Hospital (New York City): 1,139 beds 

10. Northeast Florida State Hospital (MacClenny): 1,138 beds

11. Beaumont Hospital-Royal Oak (Mich.): 1,131 beds 

12. Saint Francis Hospital (Tulsa, Okla.): 1,112 beds 

13. Atrium Health Carolinas Medical Center (Charlotte, N.C.): 1,059 beds

14. OhioHealth Riverside Methodist Hospital (Columbus): 1,059 beds 

15. Memorial Hermann-Texas Medical Center (Houston): 1,058 beds 

16. Tampa (Fla.) General Hospital: 1,040 beds 

17. Christiana Hospital (Newark, Del.): 1,039 beds 

18. UH Cleveland Medical Center: 1,032 beds

19. UF Health Shands Hospital (Gainesville, Fla.): 1,030 beds

20. Massachusetts General Hospital (Boston): 1,019 beds 

21. Vanderbilt University Hospital (Nashville, Tenn.): 1,000 beds 

22. ECU Health Medical Center (Greenville, N.C.): 974 beds 

23. Duke University Hospital (Durham, N.C.): 957 beds 

24. UNC Medical Center (Chapel Hill, N.C.): 950 beds

25. Florida State Hospital (Chattahoochee): 949 beds 

26. Baptist Hospital of Miami (Fla.): 948 beds

27. Aurora St. Luke’s Medical Center of Aurora Health Care (Milwaukee): 938 beds

28. Methodist Hospital (San Antonio): 933 beds 

29. Thomas Jefferson University Hospital (Philadelphia): 926 beds 

30. Inova Fairfax Hospital (Falls Church, Va.): 923 beds 

31. Miami Valley Hospital (Dayton, Ohio): 922 beds 

32. Novant Health Forsyth Medical Center (Winston-Salem, N.C.): 921 beds 

33. Baylor University Medical Center (Dallas): 914 beds

34. MedStar Washington Hospital Center: 912 beds 

35. The University of Kansas Hospital (Kansas City): 910 beds

36. Houston Methodist Hospital: 907 beds

37. Sarasota Memorial Hospital (Fla.): 901 beds

38. Ohio State University Hospital (Columbus): 900 beds 

39. Medical City Dallas: 899 beds 

40. Orlando (Fla.) Health Orlando Regional Medical Center: 898 beds

41. St. Joseph’s Hospital (Tampa, Fla.): 897 beds

42. Northwestern Memorial Hospital (Chicago): 894 beds 

43. Cedars-Sinai Medical Center (Los Angeles): 886 beds 

44. Wake Forest Baptist Medical Center (Winston-Salem, N.C.): 885 beds 

45. Huntsville (Ala.) Hospital: 881 beds 

46. Henry Ford Hospital (Detroit, Mich.): 877 beds

47. Hartford (Conn.) Hospital: 867 beds 

48. Lakeland (Fla.) Regional Health Medical Center: 864 beds 

49. Memorial Regional Hospital (Hollywood, Fla.): 863 beds

50. NewYork-Presbyterian/Weill Cornell Medical Center (New York City): 862 beds 

51. Mercy Hospital St. Louis: 859 beds 

52. Texas Heart Institute at Baylor St. Luke’s Medical Center (Houston): 850 beds 

53. NYU Langone Hospitals (New York City): 844 beds 

54. Baptist Health-Little Rock (Ark.): 843 beds 

55. Parkland Health and Hospital System (Dallas): 836 beds 

56. Our Lady of the Lake Regional Medical Center (Baton Rouge, La.): 800 beds

57. Mayo Clinic Hospital-Methodist Campus (Rochester, Minn.): 794 beds 

58. ProMedica Toledo (Ohio) Hospital: 794 beds 

59. Brigham and Women’s Hospital (Boston): 793 beds

60. North Shore University Hospital (Manhasset, N.Y.): 738 beds 

U.S. healthcare: A conglomerate of monopolies

The Taylor Swift ticketing debacle of 2022 left thousands of frustrated ‘Swifties’ without a chance to see their favorite artist in concert. And it also highlighted the trouble that arises when companies like Ticketmaster gain monopolistic control.

In any industry, market consolidation limits competition, choice and access to goods and services, all of which drive up prices.

But there’s another—often overlooked—consequence.

Market leaders that grow too powerful become complacent. And, when that happens, innovation dies. Healthcare offers a prime example.

And industry of monopolies

De facto monopolies abound in almost every healthcare sector: Hospitals and health systems, drug and device manufacturers, and doctors backed by private equity. The result is that U.S. healthcare has become a conglomerate of monopolies.  

For two decades, this intense concentration of power has inflicted harm on patients, communities and the health of the nation. For most of the 21st century, medical costs have risen faster than overall inflation, America’s life expectancy (and overall health) has stagnated, and the pace of innovation has slowed to a crawl.

 This article, the first in a series about the ominous and omnipresent monopolies of healthcare, focuses on how merged hospitals and powerful health systems have raised the price, lowered the quality and decreased the convenience of American medicine.

Future articles will look at drug companies who wield unfettered pricing power, coalitions of specialist physicians who gain monopolistic leverage, and the payers (businesses, insurers and the government) who tolerate market consolidation. The series will conclude with a look at who stands the best chance of shattering this conglomerate of monopolies and bringing innovation back to healthcare.

How hospitals consolidate power

The hospital industry is now home to a pair of seemingly contradictory trends. On one hand, economic losses in recent years have resulted in record rates of hospital (and hospital service) closures. On the other hand, the overall market size, value and revenue of U.S. hospitals are growing.

This is no incongruity. It’s what happens when hospitals and health systems merge and eliminate competition in communities.  

Today, the 40 largest health systems own 2,073 hospitals, roughly one-third of all emergency and acute-care facilities in the United States. The top 10 health systems own a sixth of all hospitals and combine for $226.7 billion in net patient revenues.

Though the Federal Trade Commission and the Antitrust Division of the DOJ are charged with enforcing antitrust laws in healthcare markets and preventing anticompetitive conduct, legal loopholes and intense lobbying continue to spur hospital consolidation. Rarely are hospital M&A requests denied or even challenged.

The ills of hospital consolidation

The rapid and recent increase in hospital consolidation has left hundreds of communities with only one option for inpatient care.

But the lack of choice is only one of the downsides.

Hospital administrators know that state and federal statutes require insurers and self-funded businesses to provide hospital care within 15 miles of (or 30 minutes from) a member’s home or work. And they understand that insurers must accept their pricing demands if they want to sell policies in these consolidated markets. As a result, studies confirm that hospital prices and profits are higher in uncompetitive geographies.

These elevated prices negatively impact the pocketbooks of patients and force local governments (which must balance their budgets) to redirect funds toward hospitals and away from local police, schools and infrastructure projects.

Perhaps most concerning of all is the lack of quality improvement following hospital consolidation. Contrary to what administrators claim, clinical outcomes for patients are no better in consolidated locations than in competitive ones—despite significantly higher costs.

How hospitals could innovate (and why they don’t)

Hospital care in the United States accounts for more than 30% of total medical expenses (about $1.5 trillion). Even though fewer patients are being admitted each year, these costs continue to rise at a feverish pace.

If our nation wants to improve medical outcomes and make healthcare more affordable, a great place to start would be to innovate care-delivery in our country’s hospitals.

To illuminate what’s possible, below are three practical innovations that would simultaneously improve clinical outcomes and lower costs. And yet, despite the massive benefits for patients, few hospital-system administrators appear willing to embrace these changes.

Innovation 1: Leveraging economies of scale

In most industries, bigger is better because size equals cost savings. This advantage is known as economies of scale.

Ostensibly, when bigger hospitals acquire smaller ones, they gain negotiating power—along with plenty of opportunities to eliminate redundancies. These factors could and should result in lower prices for medical care.

Instead, when hospitals merge, the inefficiencies of both the acquirer and the acquired usually persist. Rather than closing small, ineffective clinical services, the newly expanded hospital system keeps them open. That’s because hospital administrators prefer to raise prices and keep people happy rather than undergo the painstaking process of becoming more efficient.

The result isn’t just higher healthcare costs, but also missed opportunities to improve quality.

Following M&A, health systems continue to schedule orthopedic, cardiac and neurosurgical procedures across multiple low-volume hospitals. They’d be better off creating centers of excellence and doing all total joint replacements, heart surgeries and neurosurgical procedures in a single hospital or placing each of the three specialties in a different one. Doing so would increase the case volumes for surgeons and operative teams in that specialty, augmenting their experience and expertise—leading to better outcomes for patients.

But hospital administrators bristle at the idea, fearing pushback from communities where these services close.   

Innovation 2: Switching to a seven-day hospital

When patients are admitted on a Friday night, rather than a Monday or Tuesday night, they spend on average an extra day in the hospital.

This delay occurs because hospitals cut back services on weekends and, therefore, frequently postpone non-emergent procedures until Monday. For patients, this extra day in the hospital is costly, inconvenient and risky. The longer the patient stays admitted, the greater the odds of experiencing a hospital acquired infection, medical error or complications from underlying disease.

It would be possible for physicians and staff to spread the work over seven days, thus eliminating delays in care. By having the necessary, qualified staff present seven days a week, inpatients could get essential, but non-emergent treatments on weekends without delay. They could also receive sophisticated diagnostic tests and undergo procedures soon after admission, every day of the week. As a result, patients would get better sooner with fewer total inpatient days and far lower costs.  

Hospital administrators don’t make the change because they worry it would upset the doctors and nurses who prefer to work weekdays, not weekends.

Innovation 3: Bringing hospitals into homes

During Covid-19, hospitals quickly ran out of staffed beds. Patients were sent home on intravenous medications with monitoring devices and brief nurse visits when needed.

Clinical outcomes were equivalent to (and often better than) the current inpatient care and costs were markedly less.

Building on this success, hospitals could expand this approach with readily available technologies.

Whereas doctors and nurses today check on hospitalized patients intermittently, a team of clinicians set up in centralized location could monitor hundreds of patients (in their homes) around the clock.

By sending patients home with devices that continuously measure blood pressure, pulse and blood oxygenation—along with digital scales that can calibrate fluctuations in a patient’s weight, indicating either dehydration or excess fluid retention—patients can recuperate from the comforts of home. And when family members have questions or concerns, they can obtain assistance and advice through video.

Despite dozens of advantages, use of the “hospital at home” model is receding now that Covid-19 has waned.

That’s because hospital CEOs and CFOs are paid to fill beds in their brick-and-mortar facilities. And so, unless their facilities are full, they prefer that doctors and nurses treat patients in a hospital bed rather than in people’s own homes.

Opportunities for hospital innovations abound. These three are just a few of many changes that could transform medical care. Instead of taking advantage of them, hospital administrators continue to construct expensive new buildings, add beds and raise prices.

Intermountain and UCHealth partner to form CIN

https://mailchi.mp/59374d8d7306/the-weekly-gist-january-13-2023?e=d1e747d2d8

 Late last week, Salt Lake City, Utah-based Intermountain Healthcare and University of Colorado-affiliated UCHealth, based in Aurora, CO, shared that they are jointly developing a clinically integrated network (CIN). It will initially comprise 700 primary care physicians working at UCHealth’s 12 hospitals and hundreds of clinics, but may expand in the future. The CIN will leverage Intermountain’s value-based care expertise and its SelectHealth insurance plans. The two health systems will remain independent and operate the CIN as a separate company. 

The Gist: This partnership continues Intermountain’s expansion into Colorado, after it finalized its merger with SCL Health in April of last year. 

It’s a smart way for Intermountain to strengthen its foothold in the state, especially as further health system acquisitions in the Denver area may raise antitrust concerns. 

Intermountain will be able to tap into a larger network of physician relationships that it can use to bolster its health plan, with significantly lower infrastructure costs compared to employment. 

These types of partnership strategies may also be bed-warming for deeper relationships, with the opportunity to demonstrate value before a full-on merger.  

A contentious time for payer-provider negotiations

https://mailchi.mp/59374d8d7306/the-weekly-gist-january-13-2023?e=d1e747d2d8

In our decades of working in healthcare, we’ve never seen a time when payer-provider negotiations have been more tense. Emboldened insurers, having seen strong growth during the pandemic, are entering contract negotiations with an aggressive posture.

“They weren’t even willing to discuss a rate increase,” one CFO shared as he described his health system’s recent negotiations with a large national insurer. “The plan’s opening salvo was a fifteen percent rate cut!”

Health systems are feeling lucky to get even a two or three percent rate bump, well short of the historical average of seven percent—and far short of what would be needed to account for skyrocketing labor, supply, and drug costs. According to executives we work with, efforts to describe the current labor crisis and resulting cost impacts with payers are largely falling on deaf ears.  
 
This scenario is playing out in markets across the country, with more insurers and health systems announcing that they are “terming” their contract, publicly stating they will cut ties should the stalemate in negotiations persist.

Speaking off the record, a system executive shared how this played out for them. With negotiations at an impasse, a large insurer began the process of notifying beneficiaries that the system would soon be out-of-network, and patients would be reassigned to new primary care providers. The health plan assumed that the other systems in the market would see this as a growth opportunity—and was shocked when they discovered that other providers were already operating at capacity, unable to accommodate additional patients from the “terminated” system. 

Mounting concerns about access brought the plan back to the table. Even in the best of times, a major insurer cutting ties with a health system is extremely disruptive for consumers, who must shift their care to new providers or pay out-of-network rates. But given current capacity challenges in hospitals nationwide, major network disruptions can be even more dire for patients—and may force payers and providers to walk back from the brink of contract termination. 

Inflation supercharging cost-sharing challenges in healthcare

https://mailchi.mp/59374d8d7306/the-weekly-gist-january-13-2023?e=d1e747d2d8

After COVID fears and shutdowns led consumers to delay care early in the pandemic, persistently high inflation over the past year has further suppressed volumes.

As the graphic above illustrates, the average deductible for individual coverage has grown by over 140 percent since 2010, exposing consumers to an increasing portion of healthcare costs, and prompting economists to reevaluate the adage that healthcare is “recession-proof”. 

This year, that trend collided with an inflation spike that outpaced wage gains by two percent. Faced with diminished purchasing power, households are making budget tradeoffs which explicitly pit healthcare against other essential household needs. 

For some, this cost-cutting impulse even extends to preventative screenings—required to be covered without cost-sharing—when consumers’ financial concerns drive them to avoid healthcare altogether. 

While the latest inflation report suggests price increases are moderating, fears of a broader recession persist, making it critical for health systems and physicians to communicate with patients, encouraging them to continue to access preventive care, educating them about lower cost care options, and helping them prioritize treatment that should not be put off. 

FTC proposes banning noncompete agreements

https://mailchi.mp/59374d8d7306/the-weekly-gist-january-13-2023?e=d1e747d2d8

Last Thursday, the Federal Trade Commission (FTC) released a proposed rule that would ban employers from imposing noncompete agreements on their employees. Noncompetes affect roughly 20 percent of the American workforce, and healthcare providers would be particularly impacted by this change, as far greater shares of physicians—at least 45 percent of primary care physicians, according to one oft-cited study—are bound by such agreements.

The rulemaking process is expected to be contentious, as the US Chamber of Commerce has declared the proposal “blatantly unlawful”. While it is unclear whether the rule would apply to not-for-profit entities, the American Hospital Association has released a statement siding with the Chamber of Commerce and urging that the issue continue to be left to states to determine.

The Gist: Should this sweeping rule go into effect, it would significantly shift bargaining power in the healthcare sector in favor of doctors, allowing them the opportunity to move away from their current employers while retaining local patient relationships.

The competitive landscape for physician talent would change dramatically, particularly for revenue-driving specialists, who would have far greater flexibility to move from one organization to another, and to push aggressively for higher compensation and other benefits.

Given that the FTC cited suppressed competition in healthcare as an outcome of current noncomplete agreements, the burden will be on organizations that employ physicians—including health systems and insurers, as well as private equity-backed corporate entities—to prove that physician noncompetes are essential to their operations and do not raise prices, as the FTC has suggested.

5 trillion-dollar questions hanging over hospitals

Big questions tend to have no easy answers. Fortunately, few people would say they went into healthcare for its ease.

The following questions about hospitals’ culture, leadership, survival and opportunity come with a trillion-dollar price tag given the importance of hospitals and health systems in the $4.3 trillion U.S. healthcare industry. 

1. How will leaders insist on quality first in a world where it’s increasingly harder to keep trains on time? 

Hospitals and health systems have had no shortage of operational challenges since the COVID-19 pandemic began. These organizations at any given time have been or still are short professionals, personal protective equipment, beds, cribs, blood, helium, contrast dye, infant formula, IV tubing, amoxicillin and more than 100 other drugs. After years of working in these conditions, it is understandable why healthcare professionals may think with a scarcity mindset

This is something strong leaders recognize and will work to shake in 2023, given the known-knowns about the psychology of scarcity. When people feel they lack something, they lose cognitive abilities elsewhere and tend to overvalue immediate benefits at the expense of future ones. Should supply problems persist for two to three more years, hospitals and health systems may near a dangerous intersection where scarcity mindset becomes scarcity culture, hurting patient safety and experience, care quality and outcomes, and employee morale and well-being as a result. 

The year ahead will be a great test and an opportunity for leaders to unapologetically prioritize quality within every meeting, rounding session, budgetary decision, huddle and town hall, and then follow through with actions aligned with quality-first thinking and commentary. Working toward a long-term vision and upholding excellence in the quality of healthcare delivery can be difficult when short-term solutions are available. But leaders who prioritize quality throughout 2023 will shape and improve culture.

2. Who or what will bring medicine past the scope-of-practice fights and turf wars that have persisted for decades? 

It is naive to think these tensions will dissolve completely, but it would be encouraging if in 2023 the industry could begin moving past the all-too-familiar stalemates and fears of “scope creep,” in which physicians oppose expanded scope of practice for non-physician medical professionals. 

Many professions have political squabbles and sticking points that are less palpable to outsiders. Scope-of-practice discord may fall in that category — unless you are in medicine or close to people in the field, it can easily go undetected. But just as it is naive to think physicians and advanced practice providers will reach immediate harmony, so too is it naive to think that aware Americans who watch nightly news segments about healthcare’s labor crisis and face an average wait of 26 days for a medical appointment will have much sympathy for physicians’ staunch resistance to change. 

The U.S. could see an estimated shortage of between 37,800 and 124,000 physicians by 2034, according to the Association of American Medical Colleges. Ideally, 2023 is the year in which stakeholders begin to move past the usual tactics, arguments and protectionist thinking and move toward pragmaticism about physician-led care teams that empower advanced practice providers to care for patients to the extent of the education and training they have. The leaders or organizations who move the needle on this stand to make a name for themselves and earn a chapter or two in the story of American healthcare. 

3. Which employers will win and which will lose in lowering the cost of healthcare? 

Employers have long been incentivized to do two things: keep their workers healthy and spend less money doing it. News of companies’ healthcare ventures can be seen as cutting edge, making it easy to forget the origins of integrated health systems like Oakland, Calif.-based Kaiser Permanente, which dates back to one young surgeon establishing a 12-bed hospital in the height of the Great Depression to treat sick and injured workers building the Colorado River Aqueduct. 

Many large companies have tried and failed, quite publicly, to improve healthcare outcomes while lowering costs. Will 2023 be the year in which at least one Fortune 500 company does not only announce intent to transform workforce healthcare, but instead point to proven results that could make for a scalable strategy? 

Walmart is doing interesting things. JPMorgan seems to have learned a good deal from the demise of Haven, with Morgan Health now making some important moves. And just as important are the large companies paying attention on the sidelines to learn from others’ mistakes. Health systems with high-performing care teams and little variation in care stand to gain a competitive advantage if they draw employers’ attention for the right reasons. 

4. Who or what will stabilize at-risk hospitals? 

More than 600 rural hospitals — nearly 30 percent of all rural hospitals in the country — are at risk of closing in the near future. Just as concerning is the growing number of inner-city hospitals at increased risk of closure. Both can leave millions in less-affluent communities with reduced access to nearby emergency and critical care facilities. Although hospital closures are not a new problem, 2022 further crystalized a problem no one is eager to confront. 

One way for at-risk hospitals to survive is via mergers and acquisitions, but the Federal Trade Commission is making buying a tougher hurdle to clear for health systems. The COVID-19 public health emergency began to seem like a makeshift hospital subsidy when it was extended after President Joe Biden declared the pandemic over, inviting questions about the need for permanent aid, reimbursement models and flexibilities from the government to hospitals. Recently, a group of lawmakers turned to an agency not usually seen as a watchdog for hospital solvency — HHS — to ask if anything was being done in response to hospital closures or to thwart them. 

Maintaining hospital access in rural and urban settings is a top priority, and the lack of interest and creativity to maintain it is strikingly stark. As a realistic expectation for 2023, it would be encouraging to at least have an injection of energy, innovation and mission-first thinking toward a problem that grows like a snowball, seemingly bigger, faster and more insurmountable year after year.

Look at what Mark Cuban was able to accomplish within one year to democratize prescription drug pricing. Remember how humble and small the origins of that effort were. Recall how he — albeit being a billionaire — has put profit secondary to social mission. There’s no one savior that will curb hospital closures in the U.S., but it would be a good thing if 2023 brought more leadership in problem-solving and matching a big problem with big energy and ideas. 

5. Which hospital and health system CEOs will successfully redefine the role? 

Many of the largest and most prominent health systems in the country saw CEO turnover over the past two years. With that, health systems lost decades of collective industry and institutional knowledge. Their tenure spanned across numerous milestones and headwinds, including input and compliance with the Affordable Care Act, the move from paper to digital records, and major mergers and labor strikes. The retiring CEOs had been top decision-makers as their organizations met the demands of COVID-19 and its consequences. They set the tone and had final say in how forcefully their institutions condemned racism and what actions they took to address health inequities. 

To assume the role of health system CEO now comes with a different job description than it did when outgoing leaders assumed their posts. Many Americans may carry on daily life with little awareness as to who is at the top of their local hospital or health system. The pandemic challenged that status quo, throwing hospital leaders into the limelight as many Americans sought leadership, expertise and local voices to make sense of what could easily feel unsensible. The public saw hospital CEOs’ faces, heard their voices and read their words more within the past two years than ever. 

In 2023, newly named CEOs and incoming leaders will assume greater responsibility in addition to a fragile workforce that may be more susceptible to any slight change in communication, transparency or security. They will need to avoid white-collar ivory towers, and earn reputations as leaders who show up for their people in real, meaningful ways. Healthcare leaders who distance themselves from their workforce will only let the realistic, genuine servant leaders outshine them. In 2023, watch for the latter, emulate them and help up-and-comers get as much exposure to them as possible.