It has been a busy year in health care. From the passing of the American Health Care Act by the House in May to the subsequent rejections of ACA repeal legislation by the Senate in July, “repeal, replace, or repair” questions loom large on what the next wave of health care reform means for provider and payer strategy.
Despite the unknowns, it seems clear that a number of trends will dominate the 2018 health care landscape. For one, tackling cost challenges and reducing the price of care will continue to be a major theme. Downward price forces including dilution of commercial coverage, shifting demographics and payer mixes, and deregulation—coupled with upward cost pressures such as rising pharmaceutical spend and specialized labor shortages—create inevitable margin challenges across the board.
Meanwhile, the cost-cutting measures Washington is pursuing all but assure further compression is coming down the pike; for example, the House budget proposal stands to cut federal Medicare dollars by $487 billion between now and 2027. A CBO analysis of the impact of these cuts projects a 60% increase in the share of hospitals with negative profit margins by 2025.
Another likely trend that will persist in 2018 is the rise of consumerism and expansion of the consumer-driven marketplace. Delivering value is paramount, and consumers are putting particularly heavy emphasis on access, convenience, and competitive pricing. Meeting these market demands requires doubling down on innovation, infrastructure, and, in many cases, new partnership strategies. But investing in these areas is pricey—and in an era of shrinking margins is “better for patients” always “better for business”?
While there are no silver bullets per se, there are some no-regret moves that will allow you to do more with less while driving increased value for customers. One place to start: stamping out unwarranted clinical variation, which can substantially move many of the value dials but requires true collaboration across payers and providers to be impactful. Another no-regret move: being clear about your value proposition. In a retail marketplace with highly activated consumers, being able to articulate and deliver on a meaningful differentiated value proposition is key. This cannot just be another jargon-filled marketing message; rather, it must permeate all aspects of your business. A third: realizing full value from your IT investments. Electronic medical records are some of the most costly health care investments ever made, yet the value proposition in many cases remains elusive. Investing here in both optimization and innovation to drive greater value will allow you to not only facilitate better outcomes in the aforementioned areas but also fuel future avenues of growth.
Continue 2017 priorities
Many of these initiatives may feel familiar—and I hope they do. They dominated the 2017 landscape, and more than likely your organization has been working on them for a while now. With 2018 strategic planning underway, recognize that all of these initiatives are interrelated and that by doubling down on one you will only improve the others. Engage with consumers, achieve clinical economies of scale, and improve outcomes by fully leveraging your data and analytics assets to detect conditions earlier, support more accurate and specific treatment decisions. Integrate disparate capabilities in consumer-relevant areas (e.g., price estimation, scheduling, referral management) to improve delivery on the patient journey and differentiate on customer experience. And so on, and so forth.
As we look ahead to 2018, let’s work toward changing the headline to “Better for Patients IS Better for Business.” Although it may be tempting to take a cautionary approach toward the investment, by putting the best interests of the consumer at the center of all we do, we can all be better positioned for the next era of health care reform—no matter what gets thrown our way.