At its peak in April 2020, telehealth visits represented 69% of all healthcare encounters. Now, with most major health systems having implemented some form of telemedicine platform, it is generally expected that 15% – 30% of visits will remain virtual – signaling the dawn of new paradigm in which healthcare is increasingly delivered in the home.
The unbundling of hospital services brings the industry full circle. In the 1930’s, 40% of the patient-doctor interaction was within the patient’s own home. By 1980, it was less than 1%. This shift was largely driven by the centralization of expensive capital equipment, like MRIs, and increasingly sub-specialized physicians.
Now, however, many executives are bracing for a future in which the hospital is limited to intensive care and major surgery, with everything else managed in the home. COVID-19 has accelerated changes in consumer preferences and CMS reimbursement, causing health systems to experience increased competition and fixed costs that are driving an intense focus on shifting healthcare into the home.
Rising Consumer Demand for Virtual Care & Hospital Competition
While there was no shortage of telehealth companies prior to the pandemic, the market struggled to gain traction outside of on-demand urgent care. Without reimbursement parity, there was little incentive for providers to integrate telehealth into their standard practice. However, since March 2020, almost all major health systems have adopted some form of telehealth services, and patients and providers alike become familiar – and comfortable – with healthcare visits from the couch. In fact, 80% of U.S. consumers want to continue virtual care services after COVID-19. Now that patients have experienced care at home – from a trusted provider, no less – they will increasingly put pressure on health systems to make virtual care a norm.
As virtual visits become the norm, organizations must differentiate themselves by offering more robust care within a patient’s home. Not only will this help attract patients in the short term, but it will also keep providers better connected throughout the continuum of care. The ability to maintain a longitudinal view of patient health at home will become a competitive advantage, allowing health systems to enhance patient engagement, while anticipating and preventing costly health issues.
Increased Fixed Costs for Brick and Mortar
Health systems must balance the need to be competitive with the rising costs for delivering healthcare. In a nation where 1 in 5 Americans will be 65+ by 2030, and where chronic conditions account for 90% of healthcare costs, our healthcare systems do not have the infrastructure or personnel needed to deliver care. In fact, personnel costs are the single biggest part of healthcare and only expected to rise as we brace for an expected provider shortage.
With this, and impending Medicare trust fund insolvency, in mind, health systems and payers see healthcare at home as a way to deliver on the promise of value-based care and avoid costly demands for new brick and mortar construction. Technology such as remote patient monitoring can reduce the frequency of in-hospital visits while AI-driven risk prediction can help providers prioritize patient care. We’re already seeing many health systems build dedicated command centers to coordinate care outside the hospital, indicating improved efficiency from these new technology-enabled care models.
Financial Viability for Healthcare at Home
While the need for healthcare at home pre-dates COVID-19, the pandemic has provided the financial support to prove outs its value. The combination of new reimbursement codes, grant programs, and waivers put in place during COVID-19 have created overwhelming pressure for CMS and commercial payers to continue to support these programs going forward. As new care models are developed and refined, proving that they can boost patient experience, improve outcomes, and reduce costs, increased financial parity will make the home a primary site for healthcare.