As we set out to write the trends for 2023, we see that operational efficiency is now the central theme for hospital and healthcare systems leaders. The trends we covered in our 2022 paper continue to get stronger. These included the dawn of the digital health era, the rise of telehealth, the shift to work-from-home models, surprise billing regulations, AI-enabled processing, rogue nation-states leading to increasing cybersecurity risks, and patients now responsible for a rising portion of payments. 2023 is likely to be a very different and fast-paced year and mark a definitive shift in how healthcare is delivered and paid.
Let us now look at the trends for 2023 and beyond.
1. Human Longevity will create new opportunities.
Every year we extend human life, it makes a $38 trillion impact on the economy. This will spur innovation in care delivery, enhance focus on improving clinical resource utilization, and increase global demand for home healthcare services.
2. The future of healthcare is in the home.
We see continued growth in the home care space. With as much as 30% of the US population, i.e., an estimated 75 million people belonging to the Baby Boomer category, the future of healthcare is in the home. With such a large section of the population requiring nursing and companionship care, the demand for Home and Community-based services (HCBS) has created a multi-year labor shortage for clinical and nursing labor.
3. Telehealth – Rising adoption; $250 B Opportunity.
Troubled times spur innovation, and COVID-19 did just that to telehealth adoption. Three factors converged to make it a $250B opportunity:
Increased patient willingness to use telehealth
Lockdowns that spurred provider adoption of telehealth technologies
Forced by the Public Healthcare Emergency, CMS finally made changes to allow reimbursements for telehealth
Telehealth and remote patient monitoring technologies offer endless possibilities in virtual and in-person case models. These will be at the center of most healthcare delivery strategies in the future.
4. Quest for Operational Efficiency to accelerate outsourcing, technology adoption, and supply chain transformation
2022 is the worst financial year for hospitals and healthcare systems in decades, with most reporting negative margins. Operation Efficiency will become the central theme for healthcare leaders, and they will strive to do more with less. We see increased adoption of:
Revenue cycle outsourcing and offshoring strategies
Automation and AI-based solutions.
Outsourcing of clinical and semi-clinical functions
Supply Chain Optimization Solutions.
5. Labor shortage and clinician burnout create new business opportunities and delivery models.
With the aging population in the United States, it is becoming more apparent that the labor shortage for healthcare jobs is not a flash in the pan. It is a multi-year phenomenon that requires close attention. As the population of the United States ages, so will the demand for trained and qualified healthcare workers. By 2026, the US will have a shortage of over One Million healthcare practitioners – doctors, home health aides, medical and lab technicians, registered nurses, and assistants. We see four clear trends.
Innovation in Clinical Documentation to reduce clinician burnout
Traveling Nurses, a trend prevalent in the 70s now coming back to the fore.
Recognition of foreign medical degrees and certifications to reduce the shortage of skilled nurses and doctors
Fight for talent in clinical. and administrative roles
6. Consolidation in the healthcare provider and service provider ecosystem to increase.
Multiple investment themes are driving investments in healthcare delivery and revenue cycle space. These include:
Opportunity to invest in fragmented providers such as physician practices. Consolidation can help practices negotiate better contracts with payers, enhance operational efficiency due to reducing costs of revenue cycle software, and better utilization of administrative staff while driving investments in improving patient experience. We see this trend in physician practices becoming part of nationwide networks, the emergence of behavioral and mental health clinic chains, urgent care chains, and regional/national brands in dental care.
Bigger is better. Mega acquisitions in healthcare to become a market leader and create a national footprint continued to hog the limelight.
In the service provider ecosystem, PE firms are pursuing two strategies in parallel - the quest for scale and the acquisition of niche capabilities.
7. Rising consumerism brings patient experience to the fore.
Rising consumerism in healthcare has many implications for the way care is delivered. Increased adoption of HDHPs (High-deductible Health Plans) will emphasize patient financial responsibility more. Issues like price transparency, no-surprise billing, digital health, branded care delivery systems, and more get interwoven into this megatrend. Revenue cycle leaders must redesign their revenue cycle around the patient.
8. Big Tech in Healthcare
Six forces that have piqued the interest of Big Tech in healthcare are:
Rising Consumer Demand
The emergence of the patient as the primary payer for healthcare
Fragmented systems
High Administrative Burden
Aging Population and Clinical Labor Shortage
Increased tech adoption by healthcare providers, patients, and families.
The global healthcare market is over $11 trillion and growing quickly. The big five players of the technology world – Google, Apple, Microsoft, Amazon, and Oracle - are developing healthcare products and services and investing in acquiring or partnering with product firms. We anticipate the big five creating and owning some of the largest healthcare platforms and delivery entities in the next five to seven years.
9. Value-based care is shifting the focus to holistic wellness from reactive care delivery.
Conceptually, value-based care improves patient quality, enhances outcomes, and lowers care costs. Today, over 30% of healthcare costs get paid through a value-based payment model. As doctors and hospitals get paid on results and not on the number of patients seen or the procedures performed, they are looking to make healthcare more proactive rather than reactive.
Value-based care is a long-term concept. It seeks to deliver better healthcare outcomes by improving your overall health and well-being.
10. Future of work.
The whole work equation of humans is about to change completely. Let's look at this in three dimensions.
How work is done is changing. The gig economy's rise led to the trend of traveling nurses and caregivers delivering home and community-based services.
Where you do the work is changing. Remote RCM workforce, use of AI in the revenue cycle, and autonomous coding are examples of the changes in where the work gets done.
In the next 10 years, over 60% of the people that can work will be in India and Nigeria. Offshoring in the revenue cycle, Remote/virtual nursing, and Nursing talent export will get a boost.
Conclusion
Healthcare in 2023 will continue to face labor shortage challenges, rising costs, declining reimbursement, resurgent COVID-19 variants, and supply chain inefficiency. The continuing transformation of healthcare delivery models presents opportunities for healthcare entities to adopt new business models and invest in technology and process. We anticipate a frantic pace of healthcare M&A and rapid growth in outsourcing and offshoring. 2023 will be a defining year for outsourcing clinical functions such as remote patient monitoring, virtual scribing, virtual nursing, and utilization management.
We hope the trends in this paper will help you shape your vision and strategy.