LAFAYETTE, Calif., Feb. 20, 2020 /PRNewswire-PRWeb/ -- The need for transformation in healthcare has been well documented. Healthcare providers face a litany of challenges in the pursuit of their missions and sustainable financial performance. Challenges include cost increases well above inflation, lower government reimbursements, greater regulatory scrutiny (and costs), labor uncertainties and more. These challenges are made more acute by a relatively new phenomenon, an increasingly demanding healthcare consumer.
Consumers (patients) have seen their personal costs for healthcare soar. Household out-of-pocket for premiums reached an average of $20,000 in 2019 for the first time. Add to these deductibles, co-pays and actual costs for care and it's easy to see why these costs have dampened consumer demand to the detriment of their health and community's well-being. Those who do seek care are eschewing the traditional primary care delivery model, opening a door for innovative new entrants capable of operating more efficient, convenient and affordable healthcare delivery businesses models.
These trying conditions for providers and patients have served to underscore the importance of a patient-first approach to care delivery. Importantly, this approach has been expanded to include much more than the provider's clinical care, where patient-first is expected. The concept now extends to every other dimension of the patient care experience including the administrative and financial, areas where patients' experiences have historically been anything but patient-first.
Earlier this year, McKinsey & Company partner and global healthcare practice leader Shubham Singhai published "Seven Healthcare Industry Trends to Watch in 2020." The analysis affirms several key strategic industry advancements we have addressed in recent months, most particularly the need for business model transformation and smarter healthcare ecosystems, aka technology. The significance of these trends is borne out by other industry analyses including our own and is supported by early 2020 financial performance from some of the largest healthcare providers.
Throughout the analysis, the growing influence of consumers on provider policy and performance is dominant. Under one trend - healthcare ecosystems - Mr. Singhai points out that "ownership of the consumer relationship" has become a key determinant in any healthcare provider's ability to add or derive value, and that ownership of those relationships has the potential to shift (as much as 40% according to our recent analysis) - an important if not existential factor in any provider strategy for the early part of this new decade.
McKinsey's Seven Trends to Watch in 2020 are as follows:
1. Business Model Transformation - "New business models that create significant healthcare value (that is, substantially better cost, quality and outcomes)."
2. Healthcare ecosystems - Market and regulatory pressure on profits is forcing providers to "invest billions of R&D dollars into their platforms to create services easily usable across a range of customers and for a range of applications that accelerate innovation." In the area of patient financial engagement, our own technology - Loyale Patient Financial Manager - is one example. The potential for added value in the form of consumer engagement and scalable operating efficiency is also attracting billions in investor dollars.
3. Healthcare Reform - The McKinsey analysis acknowledges the likely prominence of healthcare in the upcoming presidential election, especially in light of the observation that "affordability issues felt directly by consumers through cost sharing raise the chances for real change." We explored the market, regulatory and legislative pressures on consumer finances and patient friendly solutions in a recent article.
4. Programmatic M&A and an agile operating model - Essentially, programmatic M&A is a strategy of pursuing multiple, smaller acquisitions focused on the execution of specific operating strategies, rather than on one or two large "bet the company" kinds of deals. This strategy helps support organizational nimbleness, as "Speed of execution" becomes a major source of advantage to a provider's competitiveness.
5. Recession and resilience - Whether the inevitable economic recession occurs in 2020 or later, healthcare providers should plan now to "emerge differentially stronger from it than one's peers." By securing balance sheets, improving operating costs (particularly through automation and analytics) and investments in growth during the downturn (when competitors have gone into bunker mode).
6. Social influencers of health - Consistent with the industry's long stated objective of the Triple Aim (Improved patient experience - Improved population health - Reduced costs), the industry will broaden its focus to include "social, non-medical factors - including socioeconomic factors, neighborhoods, employment, and physical safety" to address the root causes of many of the U.S.'s most troublesome health issues.
7. Drug spending - The subject of political campaigns and public outrage, the cost of drugs will continue to drive innovation and "efforts to reshape the Pharmacy Benefit Management business model". This will become increasingly important as more targeted and costly drug therapies are discovered and prescribed.
Importantly, Mr. Singhal concludes his analysis by acknowledging the presence of both innovators and incumbents as we enter the new decade. Pointing out that "those that can achieve productivity gains will create competitive advantages through growth and margin." He goes on to say that "Stakeholders that can remain alert for innovations and leaps in best practices will have the potential for greater impact and improvement," warning that "those that stick with a plan propped up by traditional approaches may not find enough ability to flourish in this new era."
We're summarizing this 2020 trend analysis because, like McKinsey and others, we believe that a focus on "technology-enabled consumerism" will be essential for health systems and hospitals to remain competitive. Our own experiences have confirmed it in one of healthcare's most chronically underperforming functions - patient financial management. Working with industry innovators like Parallon and HCA Healthcare, we're improving patient experiences and operating performance with scalable technology to ensure better patient experiences in every setting on every occasion.
Finding the Proof in the Pudding
Since this trend analysis was published, Oakland, CA - based Kaiser Permanente reported 2019 financial results and Boston area Partners Healthcare (soon to be Mass General Brigham) released its 1st quarter 2020 operating results. Each of these large health systems offers some telling insights into the trends identified above.
Kaiser's 2019 Annual Results were strong, reflecting what Kaiser CEO and chairman Greg Adams described as "solid operating performance and strong investment returns". With respect to operating performance, Kaiser's executive VP and CFO Kathy Lancaster is noted saying, "Our financial results allow us to make capital investments, deploy new technologies and drive affordability for our members." The Kaiser report comments specifically on topics such as "improving community health" and "consumer-focused digital" as well as the company's aggressive expansion strategy.
Moving into 2020, Partners Healthcare recently released its First Quarter 2020 Financial Results. In the report's C-Suite Perspective, Partner Healthcare's CFO Peter K. Markell is quoted stating, "We continue to execute well on resource management and revenue optimization efforts while making investments in new digital health tools and more convenient outpatient locations in order to improve the patient experience." Partners Healthcare's new system-wide strategy (included in the financial report) focuses on 5 strategic themes that emphasize patients, communities, value and technological innovation.
Based on their recent performance, both Kaiser Permanente and Partners Healthcare are demonstrating in real time how appropriate and important the trends outlined in the McKinsey analysis suggests. Facing stiff headwinds like higher costs for everything from equipment to labor, reduced compensation and more, these systems are making smart investments to improve access and uncover efficiencies. Both have included innovation as a core operating principle.
Admittedly, it's very early in the new decade but so far it seems the proof of these trends is in the pudding.
Kevin Fleming is the CEO of Loyale Healthcare
About Loyale
Loyale Patient Financial Manager™ is a comprehensive patient financial engagement technology platform leveraging a suite of configurable solution components including predictive analytics, intelligent workflows, multiple patient financing vehicles, communications, payments, digital front doors and other key capabilities.
Loyale Healthcare is committed to a mission of turning patient responsibility into lasting loyalty for its healthcare provider customers. Based in Lafayette, California, Loyale and its leadership team bring 27 years of expertise delivering leading financial engagement solutions for complex business environments. Loyale currently serves approximately 12,000 healthcare providers across 48 states. Loyale is proud to be an enterprise-level strategic partner with Parallon, including deployment of Loyale's industry leading technology to all HCA hospitals and Physician Groups.
SOURCE Loyale Healthcare
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
