High Stakes

J.P. Morgan Leader Breaks Down Top Trends from 2017 Healthcare Conference

If you’re an optimist, and let’s face it healthcare is running short on people like you these days, consider this: opportunity is a by-product of the transformation underway in our industry.

This sense of opportunity – the opportunity to improve, disrupt, grow, progress, succeed and emerge stronger –  is the key takeaway of healthcare’s most coveted event, the 2017 J.P. Morgan Healthcare Conference, according to Liz Connelly (National Segment Head and leader of J.P. Morgan’s Healthcare, Higher Education & Not-For-Profit Banking business). Connelly, who spoke at Chicago healthcare innovation hub Matter, earlier this week, shared the most consistent and significant themes from among presentations by 24 of the nation’s most prestigious not-for-profit health systems.

Encompassing all of these themes is the demand for affordability and the rise of consumers – both of which will reshape healthcare as we know it.

With that in mind, here’s the skinny from our nation’s most prestigious health systems.

The Rise of the Consumer. Easily the most sweeping, impactful and consistent theme among the presenters, consumerism represents the biggest driver of change for our nation’s healthcare delivery system. Simply put, health systems can no longer take patients for granted.

As patients assume more financial risk for their healthcare, their power will transform the way health systems do everything, much in the same way consumers have transformed other industries in the U.S. economy like finance, telecom, etc.

Smart systems are responding by lowering their fixed costs, pursuing multi-modal access, offering competitive price points, as well as leveraging their data and marketing departments to figure out what real loyalty actually looks like. Finally, new leaders from outside the industry are bringing fresh ideas be more efficient, creative and multi-dimensional.

 

Partnerships are Essential. While combinations vary in size, structure, and creativity, one thing is for sure, they’ll continue. This means straight mergers and acquisitions, strategic alliances and creative affiliations. (You know, all those strange bedfellow type head-scratchers we’ve all seen over the last few years.)

But, the next layer down is more interesting. Partnerships around non-core services, which present creative ways for health systems to broaden their reach, appeal more to consumers and innovate while keeping their fixed costs down – think urgent care centers, micro hospitals, rehabilitation facilities, etc. – are on the rise and will continue. This trend plays into population health as well, where providers must partner to manage the health of patients via partnerships with community health and social services organizations.

All in, Connelly sees consolidation increasing and continuing to have a big impact on the reshaping of our nation’s delivery system.  The key question, she says (and we agree by the way), is how do you scale well? That’s going to be the differentiator of success.

 

Innovation and Commercialization Will Increase. While innovation is on the brink of joining the ranks of healthcare’s most overused buzzwords, the largest and most successful organizations are investing significant dollars and efforts into innovation in a very deliberate – and highly successful – way. They’re also seeking ways to commercialize these efforts and be rewarded for them. Think about the big systems’ creation of their own venture organizations within to identify new technologies and spin them out.

At a time when cost pressures run deep and new revenue streams are in demand, innovation and commercialization will only grow more attractive for systems that can do it well.

 

Market Relevance and Branding as a Strategy. Although these have been a common themes over her 30 years in the business, Connelly noted the maturation, formalization and sophistication of these efforts apparent this year. She pointed to real life examples of systems investing in critical markets, divesting non-core services and investing in social services and coordination to fuel population health – including Geisinger Health System’s Fresh Food Pharmacy and Kaiser Permanente’s Mental Health initiative.

 

The Need to Diversify Revenue. Representing a seismic shift, 50 percent of the presenting organizations’ revenue now comes from the outpatient setting. Faced with increased cost pressure, consumerism, advancements in technology and changes in reimbursements, health systems are shaking it up in terms of where, how and when care is delivered.

 

The Rise of Digital Healthcare. While it takes on many forms, digital healthcare is changing the way health systems are run and care is delivered. Digital healthcare presents a great way for health systems to lower fixed costs, while increasing access to services and care settings. It’s all about managing efficiency and connectivity – two other common themes – and, catering to the consumer. Think e-visits, telehealth, same day appointments … or “radical convenience” as these systems say.

 

ACA and Reimbursement Changes.  Regardless of the overhang of political uncertainty, smart health systems have a laser-like focus on operational excellence, quality and caring for all patients. No matter what, these efforts will guide our nation’s top health systems. Alongside them, capital and  institutional investments toward value vs. volume will rise, as value becomes a greater market force. Clearly it is here to stay – mainly because it’s good for the consumer and they’ll demand it.

 

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