Will Providers See ROI on Digital Investments in 2020?

Returns from digital investment are among the top concerns for providers in 2020, according to PricewaterhouseCoopers.

Provider organizations are looking at whether digital health investments will yield a significant return on investment (ROI), according to a PricewaterhouseCoopers (PwC) 2020 health industry forecast released Wednesday morning.

Hospitals and health systems hope to see ROI related to electronic medical record system (EMR) implementations, the report found, as well as from more recent investments in medical technology, data analytics, and artificial intelligence (AI).

Focus on digital transformation ROI will be a top line concern for provider executives next year alongside other issues like the regulatory push for greater price transparency and pressure from employers to address cost concerns.

Ben Isgur, HRI leader at PwC, told HealthLeaders that providers are facing increased pressure from employers, consumers, and the federal government related to improved price transparency going forward.

Isgur added that executives should consider utilizing data analytics and AI to improve the process by which clinicians treat patients and reduce inefficiencies regarding emergency room intake.

Thirty-three percent of provider executives pointed to digital upskilling as the top workforce strategy for 2020, while nearly a quarter of leaders plan to use technology for tasks previously performed by employees.

"The days of saying, 'We're a hospital system and we need to get more efficient by going after our vendors and supply chain to decrease costs' is table stakes at this point," Isgur said. "The movement that we're going to need to see in 2020 is more about how we deliver care and can we make that case to employers, insurers, the government, and consumers." 

There is also the potential for direct contracting opportunities with employers who are impressed by new process efficiencies generated by technology-enabled health systems, Isgur said. 

Related: Hospitals Claim Their Mergers Reduce Costs, Disputing Other Studies

The widespread megamerger trend among healthcare organizations, including providers, is expected to remain strong in 2020, according to PwC. Around 40% of surveyed executives said their organization is likely or somewhat likely to acquire next year.

Isgur said M&A activity remains consistent in the provider community but leaders are now focusing on what the "archetype of the future" looks like for their organization.

"Health systems have to prepare themselves for the future, so they have to build around an archetype and that's something like being nationally or regionally known as a center of excellence," Isgur said. "But [providers] may also have archetypes of being a consumer experience leader or being a community builder, like an academic medical center. Health leaders are looking at this and saying, 'I need to get my strategy together around a major archetype.'"

While healthcare organizations continue to pursue sizable mergers, consumers are skeptical that the deals will improve costs, care quality, and access.

Less than 40% agree that mergers lower the cost of care, less than one-third agree that deals result in more personalized care and higher quality doctors.

Related: Health Services Deals Rose in Value, Declined in Volume During Q3

Heading into an election year, Isgur urged provider executives to be aware of the ongoing healthcare policy debates about the future of the Affordable Care Act (ACA) or the various Medicare for All proposals, but primarily focus on the potential impact of changes at the state and regulatory level.

This includes following state elections, mostly in the South, that might expand Medicaid or navigating pending regulatory actions like the final price transparency rule issued last month, Isgur said.

Hospitals can take action in the interim to address consumer concerns about billing issues and pricing questions, Isgur said, including through bundled payments that provide greater transparency to patients.

He added that the rise of retail health clinics and urgent care centers owned by hospitals have allowed provider organizations to interact with consumers and experiment with price lists that improve the patient experience.

"Hospitals and health systems, when they're outside of primary care, are dealing with something that's a lot more complicated," Isgur said. "There are still things that [providers] can do, like having prices around imaging, births, and other types of procedures. That's the direction [providers] are going to have to move. They've been talking about it for a long time, and some have moved there, but there's still a long way to go."

Isgur added that improving diversity and inclusion within healthcare organizations is another goal leaders plan to address next year, calling it a "moral imperative" for the industry.