Responding to market factors such as the move from volume toward value and an increased focus on population health, today’s forward-thinking healthcare organizations understand that change in the industry isn’t coming – it’s already here. To remain competitive and sustainable in the long term amid a constant influx of financial and other challenges, organizations should be aware of the changes in the healthcare industry. They also must assess whether they are agile enough to respond to industry disruption and successfully compete in a changing environment.
Industry outlook: What are the major disruptors?
The healthcare industry currently is experiencing a significant amount of disruption, which can be broken down into four main categories:
1. The transition to value. Today’s payers are looking to compensate healthcare providers for value or, ideally, successful outcomes – a shift from compensating providers for volume under the traditional fee-for-service landscape. This transition from volume to value requires improved data flow among providers, insurers, and patients. Additionally, many health systems are seeking partnerships, such as focused joint ventures, to expand access to knowledge and resources. These strategies are enabling organizations to deliver patient care that provides the best outcome at the most appropriate cost.
2. Consumerism. The growth of high-deductible health plans (HDHPs) and their associated high out-of-pocket costs for consumers are requiring patients to more carefully shop for their care with a focus on cost. Increased use of HDHPs also is likely to shift some expensive healthcare procedures normally performed in hospitals to outpatient facilities or even physicians’ offices. As a response to these realities, providers and insurers are working to develop improved pricing transparency, which will turn many patients into more informed consumers of care. On the downside, the increase in HDHPs also may result in more bad debt for many providers.
3. Consolidations. Consolidations among insurers and providers continue to proliferate and are expected to result in consumer benefits such as improved products and services. The transition from pay-for-volume to pay-for-value models is likely to attract capital investors and, therefore, drive mergers and acquisitions in the industry, especially for physician practices, insurers, and some post-acute providers. And, as pay-for-value reimbursement programs put pressure on physician compensation, smaller physician practices are expected to continue to join larger systems.
4. Transformative innovation. The healthcare field will continue to see technological advances in areas such as analytics, machine learning, artificial intelligence, mobile applications, biomedical engineering, and genomics. These have created new opportunities to improve the patient experience, and it is expected that investments in technology will increase patient access to care and improve treatment protocols.
Assessing risk: Is an organization ready for the new environment?
To remain viable in the healthcare space now and in the future, healthcare providers will need to verify they are ready to respond effectively to industry disruption and position themselves accordingly. Areas that today’s organizations should focus on to succeed in a new environment include:
Avoid getting left behind
To prepare to advance their organizations and thrive in a dynamic industry, healthcare providers should study the changes currently happening in the industry and prepare to move their organizations into the future. Providers should work to adopt team-based problem-solving methods, commit to making decisions based on data, and implement management systems and structures that clearly link projects and performance to overall strategies. Finally, organizations looking to get ahead of the curve also should consider seeking assistance from consultants outside of their organizations to implement these and other improvement strategies.
Healthcare is experiencing intense disruption that will fundamentally change the way care is provided. To avoid getting left behind, today’s providers need to adjust and evolve.
Industry outlook: What are the major disruptors?
The healthcare industry currently is experiencing a significant amount of disruption, which can be broken down into four main categories:
1. The transition to value. Today’s payers are looking to compensate healthcare providers for value or, ideally, successful outcomes – a shift from compensating providers for volume under the traditional fee-for-service landscape. This transition from volume to value requires improved data flow among providers, insurers, and patients. Additionally, many health systems are seeking partnerships, such as focused joint ventures, to expand access to knowledge and resources. These strategies are enabling organizations to deliver patient care that provides the best outcome at the most appropriate cost.
2. Consumerism. The growth of high-deductible health plans (HDHPs) and their associated high out-of-pocket costs for consumers are requiring patients to more carefully shop for their care with a focus on cost. Increased use of HDHPs also is likely to shift some expensive healthcare procedures normally performed in hospitals to outpatient facilities or even physicians’ offices. As a response to these realities, providers and insurers are working to develop improved pricing transparency, which will turn many patients into more informed consumers of care. On the downside, the increase in HDHPs also may result in more bad debt for many providers.
3. Consolidations. Consolidations among insurers and providers continue to proliferate and are expected to result in consumer benefits such as improved products and services. The transition from pay-for-volume to pay-for-value models is likely to attract capital investors and, therefore, drive mergers and acquisitions in the industry, especially for physician practices, insurers, and some post-acute providers. And, as pay-for-value reimbursement programs put pressure on physician compensation, smaller physician practices are expected to continue to join larger systems.
4. Transformative innovation. The healthcare field will continue to see technological advances in areas such as analytics, machine learning, artificial intelligence, mobile applications, biomedical engineering, and genomics. These have created new opportunities to improve the patient experience, and it is expected that investments in technology will increase patient access to care and improve treatment protocols.
Assessing risk: Is an organization ready for the new environment?
To remain viable in the healthcare space now and in the future, healthcare providers will need to verify they are ready to respond effectively to industry disruption and position themselves accordingly. Areas that today’s organizations should focus on to succeed in a new environment include:
- Demographics. To better prepare themselves for comprehensively addressing population health, healthcare providers should seek to understand the demographic makeup of their communities and their populations’ ongoing health needs.
- Patient safety and quality. Organizational leadership should be committed to a culture of “zero harm” with an emphasis on defining quality standards, providing care in accordance with industry quality and safety standards, and monitoring performance.
- Digitalization. The most advanced organizations in the industry have committed to maintaining up-to-date IT platforms for their clinical and business systems, with a goal of becoming entirely paperless. These organizations also work to incorporate change management principles to assist with IT acceptance by clinical and nonclinical staff.
- Technological advancements. Organizations poised to succeed in the future also have invested in the most-advanced healthcare technologies, including mobile health, telemedicine and telehealth, portal technology, remote monitoring tools, sensors, and wearable technology.
- Financial challenges. Healthcare providers positioned to respond to market disruptors are, unsurprisingly, dedicated to implementing best-in-class cost and efficiency strategies to improve revenue cycle performance.
- Commitment to performance excellence. Organizations best positioned to thrive in the industry of the future are committed to continual quality improvement. They seek to compete on value versus volume and work to implement standardized care practices. Cost and quality goals at such organizations are embedded into organizational culture.
- Lack of leadership support
- Resistance to change or skepticism from staff
- Hesitancy to spend time or money
- Shortage of internal resources to lead change initiatives
- Waning commitment to new initiatives
- Lack of accountability
Avoid getting left behind
To prepare to advance their organizations and thrive in a dynamic industry, healthcare providers should study the changes currently happening in the industry and prepare to move their organizations into the future. Providers should work to adopt team-based problem-solving methods, commit to making decisions based on data, and implement management systems and structures that clearly link projects and performance to overall strategies. Finally, organizations looking to get ahead of the curve also should consider seeking assistance from consultants outside of their organizations to implement these and other improvement strategies.
Healthcare is experiencing intense disruption that will fundamentally change the way care is provided. To avoid getting left behind, today’s providers need to adjust and evolve.
