Addressing the Changing Health Care Landscape

Driven by payer reform, technology, scientific advances, and consumer demands (among others), the health care field is undergoing unprecedented transformation. As this landscape changes, the fundamental work of strategists must also change, both in response to and in anticipation of emerging trends. The themes below represent some of the changes that are transforming the work of strategists.

Changing Utilization PatternsNew Competition
Advanced Science of MedicinePartners and Collaborators
TechnologyConsumerism and Retail-ization
Big DataEngagement and Behavior Change
Uncertainty in Payment Models and PolicyHolistic View of Population Health

Changing Utilization Patterns
Services and procedures that previously were delivered only in acute care hospitals are now provided in ambulatory, community, virtual, and home settings. Driven largely by value-based changes in reimbursement, the need for cost control, and advances in technology and procedural technique, this trend will continue. While the rate of growth for outpatient encounters outpaces inpatient cases in nearly every organization today, many hospitals and health systems still see inpatient revenue as a major economic driver. Some organizations are investing in networks of integrated services that extend far beyond the hospital locale. As value-based care becomes the norm, health care providers, payers, communities, and government are expanding their focus on prevention and addressing social determinants of health. Many organizations are experiencing dramatic changes in the acuity of cases and the erosion of volume.

Advanced Science of Medicine
As the science of health advances and the cost of technology decreases, the discovery of biomarkers and biologic pathways accelerates. The influence of “-omics” (e.g., genomics, proteomics, metabalomics, microbiomics) and comparative analytics on therapies and disease mechanisms provide improved predictions of disease susceptibility, earlier detection, and tailored therapies. Health care providers on the cutting edge of clinical research are seeking new translational models to better integrate research with clinical care. Organizations that can actively leverage knowledge, advancements, and ongoing education to both physicians and patient populations create competitive advantage.

“You're going to see a health system that's focused on human longevity and aspirational living versus focused on the reduction of misery and suffering.”
– Roger Jansen, Chief Strategy Officer, Spectrum Health

Technology must be a central consideration of strategy development and an element of strategy execution. Technology drives efficiency and scale, and enables transformation and shifts in market dynamics, service models, and consumer engagement. Health care tools and delivery models must keep up with the development and convergence of the Internet, digital devices, portable technologies, artificial intelligence, and social networking, while ensuring security and privacy. Since the rate of technology innovation regularly outpaces the ability to integrate it meaningfully into operations and care delivery, health care organizations often struggle to prioritize investment and determine how technology enables long-term goals. Consumers, based on their experiences outside of health care, expect quick and intuitive interactions.

Big Data
The rapid adoption of technology by consumers and business operations has created an ever-increasing flood of interaction and transaction data. While the technology industry hype around big data has been in full force for nearly a decade, many organizations struggle to manage “little data,” much less to integrate data across systems. The four Vs of big data—volume, velocity, variety, and veracity—present additional challenges to the technology infrastructure and the analytics talent of health care organizations. Most importantly, data is only useful if it generates insights that enable better decision-making. New tools, including predictive models and artificial intelligence, allow regular users to connect and visualize large volumes of data from multiple sources in ways that generate actionable insights.

Uncertainty in Payment Models and Policy
In general, reimbursement systems are largely shifting from volume/production-based to outcome/value-driven or capitated models. This presents a significant conflict in the current state. Health care organizations must find a way to build operations, infrastructure, and leadership capabilities as payment models continue to shift to value- and risk-based payment, while still operating in today’s fee-for-service model, where incentives reward output. The uncertainty around health care policy and Medicare/Medicaid reimbursement makes this transition even more challenging. Gaining traction for emerging outcomes-based strategies like population health is particularly difficult when economic incentives and specific bottom-line impacts of emerging models are difficult to quantify.

Additionally, as employers and consumers raise concerns about affordability, appropriateness, and quality, players in the health care marketplace will compete on the total value proposition, transparently explaining their complex cost and quality data.

New Competition
While competition across the health care field used to focus on local providers, today’s health care entities face new competition on numerous fronts. National health systems are moving into regional and local markets through mergers, acquisitions, and partnerships. Competition for consumers can emerge from anywhere, from startups to freestanding urgent care to retail chains. Venture investment dollars are flooding into the health care market to fund new entrants, which focus on profitable aspects of health care, offering consumers convenience, integrated technology, ease of use, and a close fit with their daily routines. New players offer highly consumer-oriented and designed services that elevate the health care experience. While these solutions are somewhat disconnected from the continuum of care, the “tipping point” is nearing as new entrants move rapidly to close gaps between their offering and the traditional health care enterprise. Health care organizations must determine where they will openly compete, collaborate, or innovate to maintain their position and optimally determine new market opportunities.

Partners and Collaborators
Health care is both labor and capital intensive. Health care organizations must explore all possible avenues to not only reduce operating costs, but also lower their overall cost structure. To compete in value-based reimbursement environments, organizations must leverage economies of scale achieved through a combination of creative partnerships, including mergers, acquisitions, clinical integration efforts, operating efficiencies, and new models of collaboration. The demand for cost-neutral or even cost-saving solutions that still demonstrate a solid return on investment is growing. This may include divesting unprofitable areas of business and executing these services through outsourcing or partnerships. Many health care providers are working with local government agencies, social services, and faith-based organizations toward a common goal of population health. Each partner organization executes their core competency in coordination with other partners to achieve a greater collective impact.

Consumerism and Retail-ization
Based in part on maturing consumer expectations, the “retail-ization” of health care is already well underway. Consumers are increasingly able to direct how their health care dollar is spent. More importantly, expectations of service and quality garnered from experience with other industries influence their expectations. Anytime/anywhere availability, upfront price transparency, and an intentionally designed consumer experience are hallmarks of successful non-health care service offerings like Netflix, Nordstrom, and Apple. Consumers now expect this from health care. The incursion of traditional retail providers—like CVS Health, Walmart, and Walgreens—into the health care delivery space has called attention to this trend, but other more subtle forces are shaping retail health models as well. The move toward price transparency associated with insurance exchanges is one such force. Telehealth models that offer customers a choice between accessing a physician by phone or video chat—priced using a flat upfront rate—are another. As retail thinking continues to permeate the health care landscape, consumers will increasingly expect advanced, personalized, and self-directed care options executed through an array of websites, apps, and wearable devices, which may or may not be connected to their physician (or health system).

Engagement and Behavior Change 
General societal trends like globalization, cultural diversification, the aging of the baby boomers, and the millennial generation influence both consumer expectations and service delivery models. The integration of health care, lifestyle, retail, and community services are becoming the norm as health care organizations look toward more holistic models that engage consumers in multiple, personalized ways. Different generations have different expectations of health care interactions; traditional approaches may not resonate with millennials, for example. Engagement is a cornerstone of population health management. Strategies include technology-enabled care coordination, personalization enabled through advanced content management and business intelligence, 24/7 access models, behavioral economics, and social media that leverages peer-to-peer influence. These approaches seek to improve overall health by altering behavior, establishing new routines, and creating accountability.

“I’ve seen a change in terminology, moving from the phrase ‘population health’ and flipping those words around to ‘healthy populations.’ That gives you a much broader range of activity and the ability to mix the social and business missions of organizations.”
– Mark Parrington, Vice President of Strategic Transactions, Catholic Health Initiatives

Holistic View of Population Health 
Though the World Health Organization (WHO) for decades has defined  health as more than the “absence of disease”, the ways in which health care providers help patients achieve this expanded definition are now more varied and complexwith significant financial incentives to measurably improve population health outcomes. Over the last century, medical breakthroughs and preventative medicine have reduced or eliminated many acute episodic diseases and extended human life. As a result, today’s most prevalent diseases are chronic conditions requiring behavior and lifestyle changes and ongoing medical management.

Additionally, providers must now consider and address the upstream impact of social determinants of health. Research shows that social, behavioral, economic, and environmental factors account for about 70 percent  of a person’s total health status. Health care organizations must think beyond episodic interactions within their facility to address issues within the fabric of communities that affect health and deploy solutions to resolve them.

Improving health outcomes requires a “whole person” model of care that integrates all facets of a patient’s physical, mental, and emotional health. Further, across all states of wellness, consumers are increasingly seeking complementary and alternative treatments as a supplement to—or replacement of—traditional health care.

As the connections between mind and body receive increasing attention, behavioral health has likewise garnered significant focus among provider and community-based organizations. A fuller understanding of how best to address behavioral health issues—from reducing the social stigma associated with diseases of the mind to greater integration with primary care—sits atop the agenda for many organizations.


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