The leaders' guide on what's shaping the industry.
Editor's note: This article appears in the March 2023 edition of HealthLeaders magazine.
Now is the time for decisive action and visionary leadership as the healthcare industry moves past the urgency of the pandemic—which forever changed care delivery and the workforce—to opportunities that will create a more patient-centric and sustainable healthcare system. That takes a watchful eye from leaders on what’s shaping the industry. HealthLeaders editors talked with healthcare executives about five trends in the industry, with an eye to the possibilities and challenges ahead to achieve success in 2023.
Innovation must come into maturity
2022 saw an intense period of innovation as healthcare organizations took advantage of federal and state waivers related to the pandemic to try out new digital health and telehealth tools. But with the pandemic easing and the waivers set to expire this year, the pace of innovation will change. Experts say it will become more focused.
Two trends will significantly affect innovation in 2023. With the economy lagging (due in no small part to the pandemic), healthcare organizations are struggling to stay afloat. They’re slashing spending and cutting back on new programs to keep steady with what they have. When the choice is between new tech and keeping the front door open, the latter always wins.
In addition, the healthcare industry is facing an exodus of employees. Burnout and stress are high, and health systems are struggling to maintain their workforce, hire new employees, and remain competitive with new entries in the healthcare market, including retail companies, payers, and telehealth providers with their own doctors and nurses.
"It’s going to be tough," says Saad Chaudhry, chief digital and information officer at Maryland’s Luminis Health, and regular contributor to the HealthLeaders Exchange community. "How do you invest in your organization for growth while continuing to support the needs of your communities [when] the only innovation you’re looking for right now is how do I get back to good health?"
"You can have a beautiful hospital, but it is shutting down [without innovation]," he adds.
Another benchmark is venture capital funding. Rock Health reports that some $29.1 billion was raised for innovative healthcare startups in 2021, while the 2022 haul is expected to be about $21 billion, with few new public exits. The high-profile HLTH conference last November in Las Vegas showed that these companies still have money to promote their ideas, but analysts believe that funding spigot is closing, due in large part to the state of the economy.
For 2023, this means companies will have to move beyond potential and prove that their innovative concepts are working. Pilot programs with measurable results and partnerships with hospitals and health systems will be crucial.
Chaudhry says healthcare innovation will focus on two areas in 2023: augmenting—in many cases automating—operations to improve workflows and reduce staff stress and burnout, and moving beyond simple solutions that address how patients access the health system.
"We have to be more mature about the digital front door," he says.
Many healthcare organizations have been testing out AI and other platforms that improve operations, but most of that work has happened around the edges. As the industry continues to experience high rates of burnout and workforce shortages, organizations will make it a priority to embrace technology and processes that make workflows easier, handling tasks that doctors and nurses do every day that take them away from the bedside or the patient.
That might be automated scheduling platforms for consumers—a top priority among health systems in 2022, according to a survey by UPMC’s Center for Connected Medicine. Or it might be a platform that helps administrators organize staffing and shifts and match the right provider or care team to patients in inpatient settings. Also high on the list are clinical decision support tools that directly benefit diagnosis and care.
Equally important will be technology that improves the revenue cycle process, a crucial add-on at a time when hospitals are struggling with their bottom line. That might mean tools that add transparency to a patient’s healthcare bill, improve the coding process, or handle supply chain issues.
2023 might be a good year for outsourcing as well, given the many challenges faced by healthcare organizations. Tech companies that can step in and handle certain functions might be beneficial to health systems struggling to find the right people in-house to do the job, giving administrators more freedom to focus on patient care.
As for the second trend shaping innovation in 2023, Chaudhry says healthcare "learned some valuable lessons with COVID-19," particularly in virtual care and digital health. Many new technologies and processes were tried out and helped along by state and federal waivers aimed at easing the rules and providing more coverage. While this has proven that digital health and telehealth have a place at the table, it has also created a wave of parallel processes and programs that saddle health systems with new or duplicated tasks.
That’s why healthcare organizations will be moving beyond the concept of the digital front door in 2023 and examining how those processes are improving access to care or to care itself. It’s no longer important to have telehealth and digital health programs alongside in-person programs, but it is important to make sure digital initiatives aren’t creating more back-and-forth tasks than needed.
In that sense, this coming year may be focused on maturity. All the fun new toys, tools, and ideas of the past few years now must prove that they work. Healthcare organizations struggling to stay afloat and to keep their workforce stable won’t have the time or money to spend on promises anymore. They’ll want to see hard data proving that new technology or processes will save money, improve workflows, and boost clinical outcomes.
"The chickens are coming home to roost," says Chaudhry.
Reeling in value-based care
With every turn of the calendar, it feels more and more like value-based care (VBC) is the U.S. healthcare system’s white whale. Most seem to agree that VBC should be the model for how care is delivered and providers are paid, yet universal adoption continues to be elusive. Will 2023 get us any closer?
The short answer: yes. But expect less of a leap forward and more of a "steady progress," as Jennifer Brady, MD, CEO of the Atrium Health Collaborative Physician Alliance, tells HealthLeaders.
The Alliance defines itself as a strategic partnership of physicians working together to advance VBC, in collaboration with Atrium Health and independent medical groups.
The shift to VBC still has a long way to go. A report by the Medical Group Management Association, featuring data from more than 2,300 organizations, revealed that in 2021, value-based contracts accounted for 6.74% of revenue in primary care specialties, 5.54% in surgical specialties, and 14.74% in nonsurgical specialties. Across all practices, the median revenue amount from value-based contracts was $30,922 per full-time equivalent provider.
Of course, the only way for VBC to be widely adopted is if providers actually want it.
For Brady, it’s not so much an option as it is a calling.
"It is the way to practice medicine," Brady says. "And if you talk to most physicians, that’s the environment in which a provider wants to practice. It’s what we went to school to do. It’s generally our passion to fully take care of the patient and all of the components that are part of VBC: high quality, lower cost, great experience. That’s what we’re driving for."
Most providers seem to agree with Brady, at least to an extent. According to Bain & Company’s recent Frontline of Healthcare survey, around 80% of physicians say they are interested in participating in VBC.
However, as the level of risk to the provider increases, interest drops. Bain & Company’s survey found that when the VBC model has shared savings, or only upside risk, 27% of physicians express interest. When there is both upside and downside risk, that interest wanes to 17%.
The willingness to take on risk appears to be the number one factor holding back greater VBC adoption.
It’s expensive to build the infrastructure that VBC requires, Brady says. "There’s a lot of upfront cost, and across the nation we are still predominantly a fee-for-service model. Organizations, to get ready for value-based care, have to put in a lot of investments. And smaller organizations haven’t been able to invest the way that it’s required."
Brady thinks it will take incentivizing smaller providers, which includes flexibility for providers to participate depending on where they are on the continuum.
"Those, like Atrium, that are more advanced in value-based care are likely to want to go ahead and take some of the downside risk," she says. "But smaller organizations that haven’t invested in things like behavioral health integration, population health analytics, and clinically integrated networks, it’s about helping them be able to ease into it. So having a pay-for-performance program and upside only without forcing them to go into downside risk before they’re ready, that’s part of what it’s going to take."
Pouring financial resources into VBC is harder right now for providers as they deal with the aftershocks of the COVID-19 pandemic, Brady notes.
"While COVID pushed us forward in value-based care in a number of ways—we had to quickly think about how we could provide care differently, more virtually—the financial burden now on healthcare systems across the country is going to impact organizations’ ability to invest in value-based care," Brady says.
Investing in VBC is easier said than done, but the payoff is clear. When it’s implemented correctly, evidence shows VBC has an effect on the bottom line. The Medicare Shared Savings Program through accountable care organizations saved $1.66 billion in 2021 alone.
It will take a combination of desire and action to advance VBC in 2023—time in and of itself won’t be enough, and hasn’t been enough so far.
Otherwise, the collective U.S. healthcare system will continue to have more in common with Captain Ahab than we’d like.
The delicate dance of financial sustainability
The onslaught of financial challenges that plague hospitals and health systems makes achieving and maintaining financial sustainability a priority for these organizations.
Hospital CFOs will need to implement unique strategies to help them overcome labor shortages, margin pressures, rising expenses, demand for improved quality of care, and a host of other issues that impact their bottom lines.
"We’re competing for top talent, so we’re struggling to keep our hands on top of the compensation," says Javier Vallejo, CFO for Prism Health North Texas, and contributor to the HealthLeaders CFO Exchange. "Between the nursing shortage, the provider shortage, and the uncertainty surrounding the pipeline, we’re having to pay a premium on top talent. We’re having to focus on the culture and not trying to immerse ourselves with personalities that don’t necessarily align with the mission."
The best way to save money is to cut down on labor, which can mean a decline in the quality of care, but hospitals can’t afford to take that approach. Maintaining the organization’s financial health without impacting employee pay or the quality of patient care is a "delicate song and dance," Vallejo says.
"We aren’t looking to downsize the workforce, but when there is turnover, we have to have a long honest conversation about whether or not that position needs to be filled, or if that’s something that can be [absorbed] somewhere else," he adds. "Strategically, we’re looking at our contracts and our expenditures, and we’re consolidating [where we can]. We recently got in with a group purchasing organization for better pricing on expenses. We’re taking a holistic approach and we’re trying to make the best decisions we can."
Kris Kurtz, chief operations and finance officer for University of Michigan Health-West, an acute care facility with over $1 billion in total revenue, explains what financial stability and sustainability looks like for his organization.
"It’s maintaining a consistent margin so that we can reinvest in new programs, replace our existing capital, and reinvest in our people.
"You want that margin to be consistent, so you can plan accordingly into the future. At the same time, you also don’t want a whole bunch of variations every couple of years where you’re having to make significant cuts. Again, the key is that consistency. That consistency helps your long-range planning. Long-range plans can blow up quickly when all of a sudden things turn on you."
It also means considering alternate revenue streams.
"This could be specialty pharmacy, it could be a retail pharmacy; we’re looking at things that are still health-related but may not be things we’ve always done before," Kurtz says. "We’re still small right now, but we are doing some more direct-to-employer contracting as well. So, there are several [options] out there. The larger organizations are probably getting more into the private equity side of things; they have an actual ability to invest significant amounts. We’re obviously a little small for that, but there are other streams that are out there. There will certainly be joint ventures in our future, I’m sure of that."
For these CFOs, sustainability and stability go hand in hand. The unpredictability of the last few years has taught hospitals and health systems to expect the unexpected, to be proactive rather than reactive, and to think outside of the box when it comes to maintaining their organization’s financial well-being.
Prioritizing patient-centric care
Anne Klibanski, MD, president and CEO of Mass General Brigham, has her eye on prioritizing patient-centered care, and she believes that the country’s healthcare system needs that same focus.
The integrated health system based in Boston serves 1.5 million patients annually and is a world-recognized leader in research.
"We need to work on new ways to think about what’s best for patients, no matter where you are in the healthcare world, no matter what you’re doing," Klibanski says.
This includes hospitals and health systems actively partnering with for-profit companies.
"We see so many for-profit companies, technology companies, and pharmaceutical companies coming into this space. How do we partner with those companies that provide things that will be beneficial to the nonprofit healthcare world? How do we think about partnerships in a different way?" Klibanski says.
She continues, "Healthcare needs to focus on what the models of healthcare delivery [will be] in the future. How do we achieve lowering the total cost of care, providing equitable care and access, and at the same time surviving as healthcare systems?"
Klibanski says Mass General Brigham uses several guiding principles to keep its patients at the center:
Understanding the care continuum and providing access to it
Providing high-intensity complex care fueled by research and innovation
Technology-enabled care, home-based care, and shifting care closer to home
Patient-centered research and innovation
Klibanski emphasizes the importance of creating accessible healthcare for patients as a health equity issue, one that Mass General Brigham is aiming to address.
"Lack of access to quality healthcare is a crisis across the country and globally," she says. "Access is an equity issue. The capacity levels that we’re seeing are incredibly high [and] are grave."
Mass General Brigham is addressing access by making all services enterprisewide, Klibanski says, providing a single entry point for patients.
"It also gets into how do we move care to the right place," she says. "I’m optimistic about the future, but it will take a different mindset to always put patients at the center of everything that we do," she says. "That is going to be a real shift for many healthcare systems and how we think about things in general."
Automating the workforce
Automation is a promising solution for the workforce shortage problem at health systems and hospitals, says Eric Eskioglu, MD, MBA, the former executive vice president and chief medical and scientific officer at Novant Health.
Healthcare organizations across the country are struggling with workforce shortages. The problem is particularly severe in nursing, but workforce shortages are being reported in nearly all clinical and nonclinical roles.
"The area … experiencing workforce shortages, first and foremost, is nursing. We are experiencing a tremendous amount of bedside clinical nursing shortages. Having said that, we are also seeing shortages in phlebotomists, respiratory therapists, physical therapists, pharmacy technicians, and other positions," he says.
In addition to hiring and retention efforts and flexible scheduling, automation through technologies such as artificial intelligence (AI), machine learning, and natural language processing can ease workforce shortages, he says. "In healthcare, workers want to do meaningful work—not repetitive work that does not add much value to patient care. I see automation evolving rapidly in healthcare over the next two to five years because of the workforce shortages."
Automation can help address the nursing shortage, Eskioglu says. "A lot of people advocating for AI and machine learning are talking about clinical decision-making and clinical support. You hear a lot about automating revenue cycle management. We need to focus on the nursing. There are companies … that are working on developing natural language processing for documentation, which can take up to 50% of a nurse’s shift. We must eliminate that documentation burden."
Wearable devices are another automation opportunity that can help solve the workforce shortage problem, he says. "A wearable device can transmit vital signs, and it can have machine learning as well as AI that gives behavioral nudging, such as what time you should go to bed. I expect these types of devices to make it into acute care facilities, where a nurse does not have to go into a patient’s room four times a day to collect vital signs then enter documentation. This should be automatic, and the patient should not have to be woken up for collection of vital signs."
Health systems and hospitals that embrace automation as a solution to their workforce shortage problems will have a competitive advantage, Eskioglu says. "I predict toward the middle of 2023 you are going to start to see a separation between the health systems that modernize and automate workforce functions and those that don’t. The innovative health systems are going to attract staff by being able to create a work environment that is inviting and less prone to burnout."
Editor's note: The HealthLeaders Exchange community is a private idea-sharing network for senior executives in hospitals, health plans and physician organizations. To join, please visit the HealthLeaders Exchange LinkedIn page.