10 trends for 2018
Health care delivery and methods of paying for it will continue to evolve during 2018 in a changing economic, political, technological and demographic landscape. Digital and other technological tools are coming of age in an increasingly consumer-driven world, and health systems will continue to seek ways to drive greater efficiency, highly reliable outcomes and more seamless care. And all this will occur with the overarching pressure from payers of all types to reduce costs.
What are your organization’s strategies for responding to these major trends?
Coverage and costs
1. Uncertainty in insurance coverage and payment models
With debates continuing at the federal and state levels regarding the future of health care insurance and payment models, expect continued uncertainty about the Health Insurance Marketplace, or exchange, as well as ways to fund Medicaid and manage Medicare costs. There could be an increase in the number of uninsured in some markets as the number of exchange products decreases or prices rise. And the continued adoption of high-deductible plans as well as health savings accounts will require attention to pricing as well as payment. Expect Medicare Advantage enrollment to continue to grow; it now represents 33 percent of total Medicare enrollment (19 million people) nationally, having grown 8 percent between 2016 and 2017.
Trustees should discuss: What legislative and regulatory changes are occurring at the federal and state levels that could affect health care reimbursement rates? What are the states of key financial indicators in our organization, and is action being taken if indicated? Is there a defined pricing strategy, especially for outpatient services for which consumer sensitivity is greatest? What is the strategy for contracting (or partnering) with Medicare Advantage Plans in our service area?
2. Payer pressure and continued evolution of value-based payment
While the Centers for Medicare & Medicaid Services has slowed the growth of value-based payment methods such as mandatory bundled payment, there is still strong support across the field for moving away from fee-for-service payment models. There are some movements to simplify the quality reporting requirements for both hospitals and physician groups, but capturing and monitoring myriad quality indicators will still be a priority.
Bottom line: There will be strong pressure to reduce base rates on commercial contracts, and success in Medicare’s value-based payment program still can make a significant difference in reimbursement for many health systems. This will require health systems to continue their efforts to find efficiencies through patient care redesign, utilizing high-value supplies and outsourced services, and considering performance-based contracts with vendors. Physician groups with significant Medicare populations will seek to participate in CMS alternative payment models — including accountable care organizations that bear risk, bundled payment and Comprehensive Primary Care Plus — that provide preferred treatment under the Medicare Access and CHIP Reauthorization Act of 2015.
Health systems may find that inpatient admissions, readmissions and emergency department visits decline as both payers and ACOs in which the health systems participate seek to reduce the total cost of care and more services can be managed on an outpatient basis. While good for overall patient care, this will have an impact on total reimbursement for your organization. Reductions in site-of-service reimbursement for some hospital-based outpatient clinics — and payer policies that encourage use of nonhospital-based outpatient services — will further impact revenue.
“Tiered” provider networks still will be utilized by health plans to steer members to more cost-effective physician groups and hospitals. Providers will continue to discuss ways to partner with health plans on co-branded insurance products as a way to create greater consumer loyalty and new customers, and leverage the population health infrastructure of larger insurance companies. Providers will be more cautious about starting their own health plans, given the startup costs and financial challenges of operating a smaller health plan and the recent experiences of some major health systems.
Trustees should discuss: What are the ways in which our organization is creating sustainable operating and patient care efficiencies that reduce operating costs while improving patient outcomes? How has the organization performed under value-based payment programs, and what are the strategies for sustaining or improving these results? Is there a clear payer strategy, and how will that impact our customer base and financial performance? Are our physicians prepared for MACRA, and how is the organization working with its physicians to coordinate care as well as payer initiatives?
3. Optimizing capital resources
With an increasing strain on operating margins due to both volume and price pressures, the organization’s demands for capital to fund information and clinical technology, expansion of outpatient facilities and replacement of aging facilities likely will outstrip available resources. This will require organizations to be creative in their asset management, including evaluating leasing options, utilizing development partners and optimizing existing facilities.
Leveraging data and analytics in innovative ways to ensure that health systems are effectively utilizing inpatient and outpatient facilities (e.g., through efficient transfer and access centers) is becoming more common. Health systems may repurpose underutilized or older facilities to meet demand for post-acute, rehabilitation or behavioral health services. When adapting facilities to new uses, hospitals must consider state licensing, building codes and accreditation body life-safety requirements as health facilities of all types are governed by higher standards to protect patient safety in the event of fire, floods and earthquakes.
Trustees should discuss: How does the organization monitor key financial ratios and performance metrics that may impact bond ratings and the cost of capital? Does the capital allocation methodology support the organization’s strategies and current financial performance? Does the master facility plan include consideration for optimizing the use of current facilities through innovative operating strategies before building new ones?
Consumers and care delivery
4. Access in more places
Health care delivery increasingly is being pushed outside the walls of the hospital and medical office building and into new settings, as consumers demand more convenient and rapid access, and new technology enables it. Through virtual technology and telemedicine, health care is being provided at home, work, across long distances and in traditional settings. All the technology giants (Apple, Google, Amazon) as well as thousands of startups have their eye on disrupting traditional health care delivery methods and providers’ relationships with their patients.
With consumers of all types becoming more accustomed to mobile, convenient, and on-demand services (even Uber provides on-demand health care), health systems will be challenged to meet those expectations unless they embrace innovation and consumer-centric service delivery. New entrants will challenge market segments across income and demographic parameters — Forward, which attracts higher-income, technophile health seekers, and Oak Street Health or ChenMed, which focus on moderate- to high-need Medicare patients.
Trustees should discuss: What is the organization’s primary care strategy and how are innovative technologies being utilized to improve access and convenience? Is telemedicine being optimized? Are there opportunities to partner with newer entrants to accelerate the organization’s ability to meet consumer demands?
5. Precision medicine, 3-D printing and robots coming of age
Precision or personalized medicine, based on an individual’s genetic profile, will continue to expand. Targeted cancer therapy based on a tumor’s genetic makeup is increasingly available, and systems are expanding genetic profiling to provide early preventive treatment in a population health environment.
Robot-guided surgical procedures as well as robots at the bedside will have expanded uses as technology improves. And 3-D printing, being utilized in manufacturing to reduce costs, also has increasing application for prosthetics and implants, although organ replacement is still a hope for the future. No longer exclusively the domain of large academic medical centers, the application of these future technologies will find their way into communities of all sizes across the country in 2018 and beyond.
Trustees should discuss: How well is our organization positioned for new-age technologies and diagnostic capabilities that will provide more precise treatment for patients? What are the new risks associated with these technologies, and how will they be mitigated? Relationships with external entities that provide these services, including academic medical centers, might be a strategy to consider for smaller organizations.
6. Seamless patient care
Whether driven by population health strategies, efforts to reduce readmissions and manage length of stay, the need to reduce unwarranted variation in clinical care or simply to improve patient outcomes, managing transitions of care will continue to be a top priority for health care organizations in 2018. Improving the patient care experience so that patients really are the focus of the health care delivery system is a journey that requires re-engineering and recalibrating the care team and underlying support structure — for example, ensuring a single care plan that follows the patient from ambulatory to inpatient setting; integrated care management systems to facilitate smooth transitions from hospital to home or post-acute venue; and new-age contact centers that ensure that intrahealth system referrals and transfers are efficient and user-friendly.
Using advanced analytics to predict potential hiccups in care delivery so that remediative action can be taken by the team will become the standard, as opposed to simply reviewing retrospective trends that only provide the story of what happened in the past. This approach can be particularly helpful in managing overburdened intensive care units, EDs or operating rooms that can cause unnecessary waits or holds that affect both the quality of care and the patient experience. In the population health space, systems are using predictive analytics to identify patients who potentially could be at risk for declining health or need immediate care intervention.
Trustees should discuss: What are the current performance indicators for readmission rates, ED-to-admit times or population health management in our organization? Is inpatient length of stay what it should be? Are referrals within the system occurring seamlessly? What strategies are in place to utilize analytics in real time?
7. Community relationships
Forming strong relationships between the health care system and the community is not just important for public relations or financial reasons. Increasingly, there is a recognition that social determinants of health — socio-economic status, housing and nutrition — affect health status as much as or more than medical care for the population at large. Health care organizations can go only so far in affecting these social issues, so having relationships with community resources that can help to manage critical needs is considered a must-have for health systems, particularly those with higher Medicaid or underserved populations. Adequate behavioral health services will continue to be an unmet need in many communities.
Trustees should discuss: What are projected trends in Medicaid or uninsured populations? What needs have been identified through the organization’s community-needs studies that could be coordinated or provided by external community resources? Do the organization’s ACOs make use of these community resources to help mitigate unnecessary ED visits? What is the organization’s behavioral health strategy?
Retooling for the future
8. Health system integration and performance
As noted, there is intense pressure on health care organizations to find greater efficiencies and demonstrate value to consumers. Health systems also are becoming more complex, vertically and horizontally. This can create added governance, management and operational complexity that must be resolved to ensure success.
With continued partnership activity expected through 2018, health systems increasingly will be looking to create greater "systemness" through simplifying decision-making and governance, systemwide clinical operating structures, streamlining operations, and leveraging assets and information technology investments. Management accountabilities will shift from a local or business unit focus to a greater emphasis on systemwide performance. Many health systems will continue to strengthen the cultures, governance and management of employed-physician practices to create an even more effective physician enterprise.
Trustees should discuss: Is our governance structure as efficient as it could be? Does it support our health system structure, i.e., as a holding company or operating company? Do performance metrics and management incentives promote the success of the system overall? Are there mechanisms in place to spread best practices across the system to raise the bar on performance overall?
9. The digital health care delivery system
Health systems will be seeking to optimize their investments in digital technology: electronic health records, data “lakes” or warehouses, patient portals and so forth. But even more than these more obvious technologies, advanced health systems are looking for ways to use all of the digital information that exists in their health care ecosystems — monitoring equipment, imaging and other diagnostic technology, scheduling systems, clinical systems, admission/discharge/transfer systems, laboratory systems, productivity management systems and more.
By leveraging the digital universe that exists with advanced analytics and applications that can pull from all digital sources, relevant, real-time, actionable data can be leveraged to make smart decisions about patient care or operational improvement. Further, artificial intelligence and machine learning are providing ways to enhance productivity and the focus of the care team. There will continue to be much innovation in this space; the challenge for many health systems will be to determine where and how much to invest and, once invested, how to spread innovation across the system.
Trustees should discuss: What is the digital strategy for the organization? Is current technology being leveraged to optimize medical and operational decisions and ensure that care teams can work at the top of their license? Are analytics available that blend clinical, operational, financial and human resource data to support decision-making? Is there a strategy and set of criteria to guide investments in new technology or innovation?
10. Workforce and talent management
With the stresses on the health care field, management, physician and employee burnout is a real risk. More organizations are taking a “value-chain” view of their most precious resource: human capital. That is, they are integrating recruiting, training and development, performance management, productivity metrics and cultural development to ensure that individuals and teams are supported and that the potential of the labor pool is optimized. Many organizations will continue to seek ways to redesign the roles of the care team to put the joy back into their profession. This can be done with “design-thinking” approaches to ensure that stakeholder perceptions are considered in the redesign process. Leadership development, especially for clinical leaders, also will be a priority to support succession planning and accelerate change.
Trustees should discuss: Is there a comprehensive plan for the development and management of our organization’s human capital? Are the systems in place to support the desired culture and performance expectations? What efforts are underway to mitigate team burnout?
The pace of change is unlikely to waver over the foreseeable future; as trustees, it will be important to continue to look forward and understand the most significant changes that likely will affect your organization. While the challenges can be great, it is also a time of opportunity for organizations that can embrace change and adapt to succeed.
Laura P. Jacobs, M.P.H. (Laura.Jacobs@ge.com) is managing principal of GE Healthcare Partners. She is based in Los Angeles.