In anticipation of all that is to come in the new year we took a break from our weekly Business News Report to bring you some expert voices on the future landscape of healthcare from a business and financial perspective. Hear what these experts have to say this week and next week we will return to our regularly scheduled programming.
And join us for the next few weeks as we look at what we might see in 2024.
Hospitals and health systems looking for the greatest care-at-home ROI in 2024 will be implementing or expanding AI-driven strategic timely discharge programs that maximize bed capacity and reduce average length-of-stay, both of which can deliver significant reimbursement and cost-saving benefits. To further improve financial and clinical results, eligible early discharge patients will receive tech-enabled, hospital-level care at home that includes virtual and in-home care management to ensure optimal outcomes and prevent avoidable readmissions. By focusing on this crucial care transition and others, health systems will thrive in value-based care payment models that reward providers for prevention-oriented, continuum-wide management.
EHRs were sold as cost-savers but instead buried doctors in mindless busywork, displacing patient focus. New technologies finally offer relief by extracting insights from documentation – predicting needs, identifying risks early, and connecting care gaps. Healthcare leaders must implement tools now to retain burned-out talent, capture lost revenue, and deliver lower-cost coordinated care vital for organizational sustainability.
Growing consumerism is putting customer experience at the forefront of healthcare . For the second year in a row, Star ratings for Medicare Advantage and Part D plans fell in 2024, potentially arming dissatisfied members with added incentive to explore their options. I see this as an opportunity, rather than a warning, for payers to assume a leading role in elevating the member journey. Ensuring members receive the best possible experience, that is also cost effective, will be imperative to driving renewals, growing brand loyalty, and protecting revenue streams in 2024 and beyond. The answer lies in strategically employing member-centric approaches and embracing game changing technologies, such as Generative AI, to transform healthcare agents into advocates that deliver empathetic experiences at every touchpoint. Partnering with a trusted customer experience management (CXM) provider allows health plans to lean into the provider’s domain and technology expertise, accelerating their mission of delivering affordable, high-quality care – all while safeguarding their margins and reputation in a highly competitive market.
While health systems generally have shown modest improvements in profitability during the second half of 2023, the industry group remains under significant cost pressure. As a result, we should expect to see health systems and their payer partners continue to look towards digital solutions, including AI, to reduce cost, generally improve patient outcomes and increase efficiency.
Further, and particularly given continued growth in Medicare Advantage (MA) and Affordable Care Act (ACA) member populations, we should expect to see payers focus on improved member care and outcomes through efficient access to relevant clinical data.
Better access to clinical data informs optimal patient and member care. Payers and providers will likely accelerate the use of Fast Healthcare Interoperability Resources (FHIR) to achieve these clinical care objectives. In situations where FHIR technology is not available, we will see payers seek to expand custom clinical data exchange networks with key provider groups and systems.
Seismic shifts in health-related regulatory policy seem unlikely in 2024 due to the general state of policy-making and the upcoming Presidential election cycle. But we should expect to see the emergence of federal policy debate around AI technology, how it should be used to improve patient care, and generally increase the operational efficiency of our national healthcare system.
Integrated Healthcare Management Platforms: Post-pandemic, there’s a notable shift towards simplifying the administrative landscape for healthcare providers. Rather than juggling disparate software for billing, scheduling, patient records, etc, the trend is veering towards fully integrated platforms. These interconnected solutions streamline operations, offering a single source of truth for healthcare providers to efficiently manage all aspects of their practice.
As the finances of our nation’s hospitals and health systems continue to stabilize, anemic operating margins persist. In the year ahead, savvy CFOs will go on the offensive, investing in RCM or finance technologies where they make the most strategic sense. One such technology that should be seriously considered by any hospital or health system that has legacy applications in play is an active archive. Investing in an active archive helps organizations reduce costs and increase security by retiring legacy systems. What’s more important is that active archived data remains readily available to work down accounts receivable, calculate bad debt, and respond to audit, legal, and regulatory requests.
In 2024, we anticipate a transformative leap in health technology adoption, revolutionizing patient care and operational efficiency. With the widespread integration of advanced health information technology, we foresee streamlined workflows, enhanced interoperability, and a data-driven approach, ultimately delivering unprecedented insights and improved outcomes for both healthcare providers and patients alike.
Reports from KFF, an independent polling organization indicate that the cost of employee healthcare coverage for 2024 is expected to rise at its fastest pace in years as inflation infiltrates insurance expenses. Both employers and their workers will feel this squeeze in the form of higher premiums and out-of-pocket costs. To address these escalating expenses, an increasing number of employers are turning to self-funded health plans, which allow employers to achieve greater cost savings by:
- Maintaining control over the health plan reserves, enabling maximization of interest income.
- Avoiding prepaying for coverage, thereby improving cash flow.
- Averting state health insurance premium taxes.
For these reasons and more, employers are finding that self-funded health plans present stronger options – especially during financially restrictive times.
As health systems continue to face narrowing margins and workforce shortages, they will partner more with tightly integrated virtual care groups to fill these gaps. Virtual care partners enable health systems to easily augment care teams, optimize capacity, and widen their digital front doors by offering access to a national network of virtual physicians. Further, by increasing virtual care options, health systems enhance access to care for patients and lower costs.
In the realm of healthcare business and finance, the financial struggles faced by providers and payers directly impact the experience of patients and members. Technology like AI holds tremendous potential to address these challenges by complementing healthcare providers rather than replacing them. By streamlining administrative tasks and reducing paperwork, AI saves time for providers, allowing them to dedicate more quality care to patients. It also enhances communication between payers and providers, facilitating effective long-term care coordination for patients with less critical conditions. Automation of processes with AI makes healthcare more accessible and convenient for patients, resulting in improved health outcomes and cost savings for both payers and providers.
Considering rising medical costs and challenging economic times, more and more employers are turning to fully insured benefit plans for their employees. Self-insured employers are better able to control insurance costs and evaluate coverage that ensures long-term stability and a return on investment. And while being fully insured has tremendous advantages over “one-size-fits-all” standardized health insurance coverage, it is crucial that these employers mitigate their risk through the use of stop-loss coverage. Stop-loss insurance provides those employers with the best of both worlds by not only accessing the cost-saving advantages of self-funding, but also protecting the plan against the risk of catastrophic claim costs, giving the employer a more stable benefit cost structure.
When provider and payer organizations are struggling financially, it becomes more difficult to enhance the experience for patients and members. Transforming as businesses requires healthcare organizations to fully leverage their assets, including patient data. However, 80% of data in EHRs is in unstructured form, making it difficult to access and analyze using traditional natural language processing (NLP). Fortunately, advances in artificial intelligence (AI) and machine learning have led to the deployment of medical-grade NLP that can extract value from unstructured EHR data at scale. In 2024, more providers, payers, life sciences companies, and researchers will turn to medical-grade NLP to explore hundreds of use cases in clinical medicine, research, administration, and value-based care.
Following discussions with healthy system CFOs nationwide in anticipation of challenges to healthcare operating margins, LogicSource’s executive leadership foresees continued pressure in the coming fiscal years. The 2024 healthcare finance landscape will be characterized by a proactive stance against labor cost challenges, with an emphasis on optimizing operations, strategic investment, and collaborative management strategies.
The supply and demand imbalance in healthcare labor, a persistent concern, is expected to intensify throughout 2024. In response to the escalating labor cost challenge, the industry is poised to witness increased investments and initiatives directed toward non-labor cost reduction. This shift necessitates a multi-year perspective, focusing on viable operating improvement projects with demonstrable returns on investment, all under the strategic guidance of an optimized supply chain.
Within academic health systems, CFOs, COOs, and supply chain executives will spearhead initiatives promoting cohesion and discipline within the entire management team. Their objective will be to streamline the sourcing and procurement of non-clinical services, transcending traditional Group Purchasing Organizations. This will demand specialized data and expertise, marking a new era of strategic discipline and rigor in the healthcare management business of 2024.
The business side of healthcare will continue to undergo significant changes in 2024 with the industry’s growing technology presence and changes at the federal level. Below are three key themes to look out for:
- Approaches to AI: While I predict the industry will remain cautious of AI, 2024 will see a renewed emphasis on automation and low-risk uses of AI, such as scribing and large-scale propensity matching for more individually tailored treatment approaches.
- More mergers and acquisitions: We saw several insurance tech companies fail in 2023, and many other technology-based companies experience massive layoffs. I expect we will see more of the same as technologists wake up to the realization that succeeding requires knowledge of the healthcare industry, not just technology. Merger and acquisition activity should be high.
- Federal changes impacting care: Federal legislation is making traditional fee-for-service Medicare and Medicaid look and act more like managed care. Related legislative efforts are erasing many of the differences between Medicare Advantage and Managed Medicaid and bringing the two programs (Title XVIII and Title XIX) closer to being a single program under federal control. The end of the COVID Public Health Emergency, along with inflationary pressures, will swell membership in ACA plans without concomitant increases in healthcare access.
In 2024, financial markets will continue to adjust and shorten the time for companies to show true product-market fit. As a result, more companies will outsource non-essential capabilities and focus on their core offerings. Doing so will increase the pace of innovation and create greater efficiencies.
In the new year, we will see a surge of PE investment, a recovery of IPOs, and adaptation to a new digital economy.
A challenging economy has made organizations even smarter about how they raise funds and speak about their value. Simultaneously, as the market moves from publicly funded models of health data exchange to private models, it will become more important than ever to focus on long-term impact and care quality. In the new year, we will see stakeholders become savvier in filling care gaps, improving connectivity, and creating new platforms to bridge siloes. We will also see the lion share of investment, specifically PE, being filtered into mature, lower-risk organizations with attractive, long-term market impact. As the healthcare industry shifts and models evolve, everyone will need to find their place in a new digital economy and ensure they are focused on how they can bring value to the market. PE will become more attractive to organizations seeking investment with a long-term growth strategy because PE investment will help optimize the business over time vs. optimizing every quarter. Additionally, we will also see a recovery of IPOs and mature organizations seeking public exits.
With employer and consumer budgets getting ever tighter, we will see a drive towards pricing models that start to shift more risk to the provider. These ‘packages of care’ will emerge in competitive markets where providers are seeking to differentiate against competitors. In this way, we will start to see a vision of the reality of Value-based Care, but without calling it VBC.
Healthcare systems will continue to face inflated costs for labor, supplies and drugs. Meanwhile, patient volumes may be permanently reduced because of the shift to care outside of traditional delivery models. To compete, providers must invest in digital-age patient and clinician experiences yet improve operating margins. That’s a challenging balancing act. Generative AI and intelligent automation tools can equip providers to achieve it. For instance, gen-AI in the revenue cycle can automate patient pre-registration, financial counseling, preauthorization requests and follow up, coding, claims and billing, appeals and denials management, and more. Providers can access these next-gen capabilities as hosted services, making them cost effective solutions for healthier balance sheets.
Hospitals and health systems face escalating financial challenges due to lowers revenues and higher costs, with many providers operating in the red. They also struggle with labor shortages, hampering overall efficiency and utilization management across their organizations. Moreover, healthcare disruptors are intensifying competition, causing traditional provider organizations to lose outpatient market share. Confronted with these market complexities and economic uncertainties, providers need to understand their competition by analyzing benchmark data and consider restructuring their technology and processes aimed at curbing or eliminating inefficiencies that not only inflate operating costs but also make it difficult to find for patients to find beds when and where they need them.
AI will eventually be everywhere, similar to how computers are everywhere today, and will help improve results in everything from research to bedside care to payments. But we must walk before we run. Hospitals should first integrate AI to augment human insight first in controlled domains like billing, which lay the foundations of trust and process needed for more advanced applications down the road. The best path towards future transformation is focusing on tangible value that hospitals and health systems can act on today.
In an ever increasingly impersonalized world, and yet an environment ever increasingly reliant on technology, patients will be drawn to healthcare entities which provide an individualized and patient centered experience through their technology partners. Hospital leaders will invest in innovative, scalable and affordable options which provide a broad range of real-time data sources in one vertical view to their clinicians, allowing for more relevant and meaningful patient interaction.
Health systems will invest more in technology that improves interoperability to address TEFCA requirements and to satisfy value-based care goals for optimized patient outcomes. Greater interoperability leads to more accurate, complete patient records and supports care coordination, enabling providers to close care gaps and improve care. This, in turn, drives lower care costs by helping health systems address patients’ health issues with preventive care before those issues escalate into expensive chronic conditions.