The evolution of the health industry: Categorization and pressure points.
As disruptors increasingly infiltrate the healthcare
space, hospitals are losing their place at the center of the healthcare system and will have to adapt to survive. The PwC Health Research Institute believes
that to become "providers of the future," hospitals and health systems will likely need to fit into one of four categories, based on the areas where they excel:
- Product leaders. These health systems will lead on providing advanced care and positive patient outcomes by investing in telemedicine and care for complex conditions to new markets;
- Experience leaders. These will focus on analyzing the communities they serve to achieve high customer satisfaction while ensuring the market has access to diverse care settings to improve the experience;
- Health managers. These will focus on population health and social determinants through a robust data infrastructure and direct contracts with employers to manage health; and
- Integrators. These will expand and build scale, and having a large network will create value for patients.
Along the same lines, Oliver Wyman’s research
on the hospital of the future points to nine market pressure points for health systems as a result of lower reimbursement, challenging cross-subsidization dynamics, and lower inpatient utilization. Disruptors are vying for patient relationships, especially around the front-end of care delivery, while networks are narrowing and payers are pushing for risk-based contracts.
Most health systems are pursuing initiatives such as cutting costs to mitigate the effects of lower reimbursements, growing through M&As to gain bigger scale and shifting care delivery to ambulatory care offerings, urgent care clinics and telemedicine. Hospital systems are also working to grow clinical fields through centers of excellence (COEs) - mostly around the profitable areas of oncology, orthopedics, cardiology, and neurology - while some have pushed further to redesign care models and experiences around the patient’s needs and journey.
Health systems have also had to balance fee-for-service and value-based care, with most efforts focusing on optimizing pay-for-performance, upside only, or very light risk arrangements. Most providers are hesitant to take on downside risk and are waiting for an elusive ‘tipping point’ that will make its uptake more attractive.
Additionally, hospital systems want to improve patient loyalty and adoption by forming deeper payer partnerships. Such payer-provider integration can bring to providers improved access to patients, whether through network designs or by attracting new patients.
That being said, health systems have to figure out how to best navigate a landscape ripe for disruption, innovative partnerships and improve patient experience, and decide where they fit in an ecosystem that’s doing away with the traditional segmentation of its participants and their roles.
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