Over the past two years, the phrase “New Normal” has become a permanent part of our vocabulary. As we begin a new year, now is the perfect time to refine our thinking and consider what McKinsey has named the “Next Normal.”
Given the immense complexity and constant change within healthcare, it’s impossible to fully and neatly summarize the industry. However, by reflecting on the past, we can more accurately forecast what we’ll see in the future. Three major trends that are shaping and, I believe, will continue to shape healthcare are:
- Improving Technology & Workflows
- Continuing to Build Momentum for Value-Based Care
- Increasing Offerings for Employers & Partners
For each topic, I’ll set the stage by reviewing key moments of 2021. I’ll then share my perspective on how these themes may evolve this year (and in the years to come) and pinpoint a few focus areas, related trends, and next steps.
Improving Technology & Workflows
Every year, innovation in healthcare technology creates new opportunities as well as new challenges, which then spur new opportunities. This cycle of innovation was prevalent throughout 2021. Here are a few of the most important, influential developments:
- Big plays from Big Tech and retail (with mixed results). Healthcare saw continued cooperative competition — or “coopetition,” as the American Hospital Association put it — among major retailers and technology companies. Google Health shuttered. Apple unveiled data-sharing tools. CVS shook up primary care. As Rock Health observed, smaller, consumer-focused companies entered healthcare, such as Dollar General’s hiring of a Chief Medical Officer. These agile “middle children” can disrupt healthcare whereas larger alliances, such as now-defunct Haven, often struggle.
- Cybersecurity breaches. Technology’s growing role in healthcare is a double-edged sword: Alongside countless benefits are countless opportunities for bad actors to steal the most sensitive information. In 2021, more than 40 million patient records were compromised. This unfortunate statistic is one reason why trust in healthcare has eroded, according to researchers at Forrester. To counter this trend in the years to come, we must ensure that technological progress is paired with the utmost safety and security.
- Telehealth plateaus. Telehealth usage has gradually receded after a pandemic-driven boom. However, utilization still stands “well above pre-pandemic levels” and has become a must-have for many consumers. The challenge now is to solidify telehealth’s role in the industry while overcoming pitfalls, such as a lack of broadband access in rural areas.
Before looking ahead, let’s take a step back to assess the challenges healthcare continues to face. Various factors — the growing labor shortage, provider burnout, regulatory complexity, and more — make the day-to-day practice of medicine difficult for providers. Too often we focus solely on consumer technology without sufficient regard for and buy-in from providers. Although telehealth rightfully made headlines, the industry needs to focus on technologies that work behind the scenes. With that in mind, here are three focus areas to elevate healthcare technology in 2022 — and beyond.
- Enhancing provider workflows. In the coming years, we should focus on elevating providers’ perspectives in clinical informatics. This refocusing can help us implement and integrate technology into seamless, streamlined workflows to reduce friction on the providers’ side. One promising tool is virtual scribe software, which can help providers reallocate time and energy to caring for patients instead of their EHR. This technology also supports a better work-life balance to combat burnout, which affects more than 40 percent of clinicians according to research by McKinsey. These backend technologies, including software to support billing and coding, enable providers to work at the top of their license and cut down on cumbersome administrative work.
- Deploying intelligent technology. Once-futuristic ideas such as artificial intelligence (AI) and remote patient monitoring (RPM) are increasingly practical technologies. A recent study found that two-thirds of healthcare leaders agree that RPM can help identify care gaps. Additional research suggests that, by 2026, AI may save the industry $150 billion annually. These advanced tools can help reduce administrative work, improve health outcomes, and assist in clinical decision-making.
- Gathering data to advance value-based care. “Data is the new healthcare currency,” according to researchers from Deloitte. In 2022, I urge the industry to collaborate and equip providers with accessible, meaningful data to drive value-based care. We can leverage electronic health records (EHRs) to coordinate care and generate population health insights. The industry should also seriously explore predictive analytics as a tool to better personalize medicine by intelligently segmenting patient populations.
That last point illustrates the interconnectedness of technology and healthcare. It’s critical that we remember to view technology — any technology — as a tool and not a solution in and of itself. No single algorithm will ensure a rapid, strategic, successful transition to value-based care. Technology, policy, education, and other factors are crucial to advancing the “volume-to-value transition.”
Continuing to Build Momentum for Value-Based Care
On that note, the pandemic proved the importance of value-based care. The steep, immediate decline in patient volume drastically reduced fee-for-service revenue. While telehealth helped partially offset the losses, many small and independent groups considered — or resorted to — closing their practices, selling their practice to hospitals or corporate entities, or entering employment. However, research by Humana shows that providers in value-based care arrangements were “more adaptable” and able to maintain a “steady revenue stream.” As a result, the pandemic prompted the industry to “rethink the operational models to deliver long-term sustainability,” according to the American Medical Association (AMA). Three notable stories that highlighted this value-oriented rethinking:
- Achieving major Medicare savings. As further proof of value-based care’s impact, data shows that accountable care organizations (ACOs) saved Medicare $4.1 billion in 2020. Organizations that excelled in this area did so by combining technology, team-based care, and unique wellness programs that engage patients in their health, prevent disease, and enhance care coordination both in and outside of the doctor’s office. With Medicare premiums soaring, it’s vital we enable providers to deliver high-quality care that lowers costs.
- Boosting value via home health. The Centers for Medicare and Medicaid Services (CMS) revised key rules around home health to emphasize value over volume. The final rule expands Home Health Value-Based Purchasing (HHVBP), which aligns incentives to care quality. Researchers at Forrester note that this rule “will accelerate the shift of payment” and “number of hospitals that deliver care at home.”
- Charting a new path. In October, the CMS Innovation Center (CMMI) unveiled an ambitious, unified strategy. The five objectives of the new approach aim to drive accountable care, advance health equity, support innovation, address affordability, and partner to achieve system transformation. Among the many notable progress markers outlined in CMMI’s “Strategy Refresh” is the goal of including all Medicare beneficiaries in a “care relationship with accountability for quality and total cost of care by 2030.” As we pursue such bold initiatives, it’s critical that organizations seek and develop new tools and support to enable providers.
It’s important to note that all three 2021 highlights occurred at the federal level. While nationwide policy guides the overall direction and rate of value-based care, I predict we’ll see tremendous industry innovation and provider involvement on a smaller scale in 2022.
- Consumer and provider education. The Strategy Refresh includes goals for not only providers, but also Medicare beneficiaries. To achieve CMMI’s goals for accountable care, we must support providers “through incentives and flexibilities to manage quality and total cost of care” while also protecting beneficiaries’ “opportunity to select who will be responsible for assessing and coordinating their care needs and the cost and quality of their care.” Success therefore requires education for all stakeholders. However, recent data found that 62 percent of consumers are unfamiliar with value-based care. As such, it’s essential that the industry spread accurate, helpful information while accounting for health literacy.
- Commercial payer involvement. As the largest payer, CMS’ updated strategy can help model and steer commercial payers’ toward value-based care. Research from the Kaiser Family Foundation suggests that 42 percent of all Medicare beneficiaries are enrolled in Medicare Advantage (MA) arrangements. And that number is rising. Once again, the pandemic has highlighted the benefits of value-based care as MA beneficiaries were less likely to be hospitalized for COVID-19 than their fee-for-service counterparts. This growing popularity has created opportunities for private payers to experiment with innovative MA program designs. For instance, Anthem has addressed social determinants of health and other initiatives to address “food insecurity and mental health needs,” according to Fierce Healthcare. Similarly, Humana launched a pilot program to manage chronic conditions. In the coming years, we expect to see continued creativity from commercial payers that will extend beyond Medicare Advantage.
The pandemic continues to demonstrate that value-based care is not only viable, but critical for resilience. However, we must avoid the temptation to rush into value-based care. As my colleague Rick Foerster noted, we should strive to “break out of black-and-white thinking” and enter into value-based models with equal measures of caution and confidence. Consistency is crucial. This approach helps skirt common pitfalls while making gradual yet undeniable progress among key metrics: higher care quality, increased satisfaction, improved coordination, and lower total costs.
Increasing Offerings for Employers & Partners
Rising costs are one of the primary catalysts for value-based care transformation. Employers are not immune to this trend. As Healthcare Finance News reports, “Employer-sponsored healthcare spending is at an all-time high.” In order to lower costs while optimizing spending, many employers are exploring partnerships that can deliver innovative, customized medical benefits packages. These specialized packages may include high-performance networks, advanced telehealth capabilities, patient engagement tools, and more. Additionally, forward-looking employers have interrogated previously held assumptions and approaches. Two trends that stood out in 2021 are increased focus on mental health and telehealth.
- Prioritizing mental health. Savvy employers can retool benefit design to prioritize high-value care, lower spending, and retain employees. Many employers have reacted to a pandemic-fueled spike in mental health conditions by adjusting benefits. Data from the Kaiser Family Foundation found that nearly one-third of employers with more than 50 employees (and 38 percent of those with more than 1,000 employees) increased access to mental health services. Furthermore, 16 percent offered employee assistance programs or resources for mental health.
- Experimenting with virtual-first plans. Teladoc recently partnered with Trustmark’s employer-sponsored division to give self-funded employers a “virtual-first” health plan. The offering aims to provide “whole-person care” while reducing costs, improving outcomes, and creating a “unified member experience.” In particular, the plan seeks to build and nurture relationships with primary care providers. The Trustmark-Teladoc plan isn’t the only of its kind; Humana unveiled a similar package pre-pandemic. While this innovation is exciting, we must ensure that “virtual-first” doesn’t become “virtual-only.” However, to avoid fragmentation and discontinuity, we should prioritize connecting a patient with their primary care provider and ensure any and all appointment data is captured and preserved in the EHR. Additionally, we should continue to pursue innovation for in-person visits, such as check-in kiosks and virtual scribes. Growing employer-led, primary-care-centric telehealth adoption may also drive value-based payments as data suggests more telehealth utilization among primary care providers in value-based payment models.
Another employment trend that will continue to impact healthcare in 2022 — and the economy as a whole — is the “Great Resignation.” The pandemic has led many employees to re-evaluate their career paths, pivot sharply, or even exit the workforce altogether. As industry thought leader Paul Keckley, Ph.D., opined: “The post-pandemic workforce is dicey for employers, especially for those already facing shortages as a result of ‘the Great Resignation.’” Consequently, employers are seeking ways to attract and retain talent. Health benefits are one major incentive. Employers want more opportunities for partners to influence healthcare with decision-making power and foster a more collaborative environment.
- Novel arrangements for fiercely independent providers. Healthcare is not exempt from the Great Resignation. The strain caused by the pandemic has exacerbated burnout and led many workers to leave the industry. Providers — especially independent physicians — who opted to stay in the field now have more leverage and are rightfully demanding more support and flexibility. from their partners. As the Advisory Board observed, providers are seeking to “intentionally partner with multiple organizations in order to strengthen their leverage and spread-out risk.” And healthcare is responding and rising to the challenge. For instance, our Privia Care Partners offering will begin operation in 2022. This intraoperative, flexible offering gives physicians access to population health expertise, exclusive contracts, and other value-based services without changing EHRs.
This increased flexibility comes at a vital time. Data shows a steep decline in the number of independent physicians. Physicians employed by a hospital, health system, or private corporation skyrocketed to 70 percent — a 12 percent increase in just two years. According to the AMA, the pandemic has “exacerbated the struggles faced by private practices,” with 97 percent of practices reporting pandemic-related financial challenges.
Thankfully, that trend appears to be changing. Researchers from Kareo found that, in 2021, “independent practices feel stronger, resilient, and positive about the future of their practice and the industry.” As a result, I believe we’ll see employed physicians begin to leave employment and start their own practice. As Sonal Patel, MD, wrote in a moving, triumphant op-ed published by the AMA: “Practice ownership meant more autonomy, more independence, more control over my destiny as a physician to change healthcare and help my patients.”
Dr. Patel’s words beautifully encapsulate our vision of healthcare — where it is and where it’s headed. Helping providers help patients is our goal for this year, next year, every year. There are so many exciting advancements underway that I haven’t discussed here. We’ve seen companies go public, progress in clinical research, greater efforts around diversity, equity, and inclusion, and much more. We must continually pursue operational excellence by continually questioning our assumptions and refining our solutions. Let’s call that our New Year’s resolution.