This week, we checked around with friends in our network for their takes on 2022. Friends from investing, legal, a hospital association, strategy and planning and rural healthcare.
We asked them about challenges, investing, partnerships, trust, the media – and what gets them up in the morning when they think about healthcare.
Notice that we don’t quote our clients – healthcare providers. They’re impossibly covered up and looking towards another tough year, so it’s just not a great time to bring out the crystal ball.
Several clear themes emerged. Full quotes from the interviewees follow the themes section.
Staffing alarm bells are ringing. The cost of labor is going to put a crimp on provider operations, with unsustainable travel nursing rates on one side and healthcare workers leaving (due to burnout or mandates) on the other.
Transparency matters in all respects. Respondents who addressed “building trust” synced on this: Communicate, and do it clearly. Be open about pricing (and not just because CMS said so).
Behavioral health will be a point of emphasis. The pandemic laid bare what many in the mental/behavioral health space had long been saying: Our system of caring for behavioral health isn’t good enough. Several respondents market this space as one to watch in 2022.
Care models must shift. We mentioned telehealth above. Hospital at home also got a shoutout. All told, a combination of better technology, patient expectations, the steady march towards value and the influx of investment for new entrants is pushing care out of hospitals and into, well, anywhere else.
Technology is poised for a breakthrough. More AI, more digital tools, more ways for patients to engage with providers on both their physical and mental health needs. At the same time, technologies that saw significant growth during the pandemic – most notably telehealth – will be reassessed to bring them back in line with a more natural, sustainable level. All of this came with the caveats that 1) regulation needs to keep up and 2) we need to see proof from the many digital health companies that have taken significant investment in recent years.
Payer-Provider relationships will thaw. Multiple respondents suggested that payer-provider partnerships will be successful contributors to the move towards value. The implication seems obvious: Delivering the care and paying for it in the most efficient way will force collaboration between often antagonistic stakeholders. As Jesse Neil of Waller put it, “The traditional ‘zero-sum’ relationship has changed.”
Value is coming (finally?). Value showed up as both a challenge and recipient of big investment. Partnerships that advance value-based arrangements also got a nod. Now that more primary care groups have waded into value and taken on more risk, expect to see the same for specialty practices.
Needs are aligning. Dawn Carter, founder and senior partner at Ascendient, summed it up well with a story about robots delivering food in a restaurant due to workforce shortages. It’s an anecdote that demonstrates how a reduced pool of labor, improved technology and the need for reduced cost and streamlined operations can flow towards a single solution.
The sound of silence. Just as interesting as what was said might be what wasn’t. While no providers were officially interviewed, we understand from our client base that following two incredibly challenging years in the trenches, no one’s really comfortable looking into the crystal ball at year three. Providers quietly tell us it’s going to be a very tough year for them, with ongoing uncertainty. That caution and concern is a theme in and of itself.
Human resources, particularly retaining sufficient levels of direct care providers. Premium pay for a high percentage of travel clinicians is not sustainable, yet the pandemic has exhausted the workforce, particularly nurses. I recently heard of an RN in her early 30s who has worked a COVID unit at an academic medical center since the start of the pandemic. She’s leaving because she can’t do it anymore and is taking a job working from home.
Non-traditional sites of care, such as hospital@home and more virtual/high-tech options. I’m hearing more and more conversations about addressing behavioral health, particularly in light of how the pandemic has exacerbated what was already not working.
Opportunity is ripe for extreme innovation. Who will step out of a traditionally-minded industry and take advantage?
No question, it’s talent recruitment and retention. Nurse and physician burnout has been an issue facing the healthcare industry for many years, however, the COVID-19 pandemic (starting to turn endemic) has put further strain on individual providers. Whether it’s doctors, nurses or administrators, this challenge is top of everyone’s mind.
The biggest investments will be in technology that optimizes and extends the efforts of existing personnel. There has been a massive flood of capital into digital health/healthcare IT in the last year and I believe we’ll continue to see investors fueling innovation.
COVID-19 changed the way that individual patients engage with their providers and in some ways empowered them to take a front seat role in their own health decisions. That said, I believe evolving payer-provider relationships and their incentive to drive utilization will be a major force for change in the industry. It will shift not only how care is delivered, but also the roles each party plays in the overall system.
Over time, I think we will continue to see the industry move towards stronger payer-provider relationships. However, I’m particularly excited and bullish on the idea of retail brands – who have built a lot of trust with consumers – partnering with providers to drive both access and engagement with hard to reach patient populations. Retail brands have the opportunity to impact accessibility, affordability, and possibly even adherence. (Think of how much power brands have in influencing consumer behavior!)
Be transparent with patients and treat them like consumers who have CHOICE. This is something I’m hopeful for in 2022, but know will likely take years for the industry to actually implement.
It’s hard not to say that the media continues to drive division and skepticism in our country. However, as it relates to healthcare, I believe the media helped facilitate the adoption of new models of care and certainly the acceptance of telemedicine as a trusted option for care.
We all know that the healthcare industry is slow to change, but the pace of innovation has never felt faster or more urgent than it does now. I’m excited to see how the dynamic between payer, provider, and patient shifts in 2022 and how willing each party will be in the change that seems inevitable and, frankly, needed.
Staffing a facility has always been a difficult, but necessary challenge. It was surprising that some health systems were so quick to lay off workers during a shortage. This was compounded by inevitable lawsuits against the Executive Branch vaccine mandate. In 2022 and beyond I think systems will wait for the legal dust to settle before jumping the gun.
In terms of the most common investments, we’ll see IT expansion and upgrades. Relative to the most significant cost, it’ll be hospitals investing more in ambulatory care.
Payment expansion for telehealth along with federal legislation allowing telehealth state to state.
Academic health systems and community hospitals.
Communicate regularly on staffing expansion and safety.
Continued expansion into telehealth, especially in the rural space.
Ongoing pandemic concerns and the incredible toll that the pandemic has placed on clinicians. There is a continued threat of variants that may be resistent to vaccines that will continue to place significant stress on health systems and further erode their revenues. Coupled with that will be a workforce that is burning out due to stress, mental and emotional fatigue and politicization of healthcare in what seems like an endless war against COVID.
Over the past few years, we have seen an increase in the number of megamergers of regional/national health systems, as well as an increase in the aggregate value of the combined health systems. We expect that this trend will continue as one of the biggest investments in healthcare. In addition, expect to see a tidal wave of investments in digital health and artificial intelligence.
The consumerization of healthcare. Patients now more than ever have a voice in their healthcare, and that is requiring providers to respond to patient demands, whether in terms of the site of care, the manner in which a patient receives care or transparency in pricing. In addition, these expectations are now bringing new and nontraditional entrants into the market, and they are further driving change.
Healthcare organizations should collaborate with community partners that are representative of the different constituents within the community. This will allow for advancements in combating healthcare inequities. As part of this collaboration, healthcare providers should listen and take constructive feedback from their community partners and use this information to enact positive change.
Historically, the healthcare industry has been slow to adopt change, even when change was clearly required and long overdue. We are now in an era of change that is occurring at lightning speed, and it’s exciting to see the advancements in how care is delivered, the use of technology and AI to create better clinical outcomes and provide for a better patient experience, recognition of social determinants of health and the role it plays in an individual’s health outcomes. In the midst of incredible adversity, our industry has worked collaboratively to save lives and in the process make considerable advancements, and I’m looking forward to seeing the evolution of changes in 2022.
The uncertainty around the demand and permissibility of telehealth services is a wildcard for 2022. It’s no secret that physicians’ use of telehealth increased dramatically during the COVID-19 pandemic in 2020—jumping from 25 percent of physicians in 2018 to almost 80 percent of physicians in 2020, according to the American Medical Association. While some heralded the trend as a new day in healthcare, a closer look shows that telehealth use may continue to flourish in some limited areas, such as mental health or chronic care management, but that overall usage rates may settle back into more normal levels. Additionally, many of the emergency telehealth rules put in place during the pandemic have expired—meaning that many states will need to make regulatory changes to allow for the continued widespread use of telehealth services.
Collaboration with other providers has become an important tool for healthcare companies across the care spectrum, and that remains the case as we approach 2022. Valuations are strong across the board, and behavioral health, telehealth, dental and healthcare IT are of particular interest for private equity firms and other investors. Sellers are commanding higher valuations as a result of increased competition between buyers. An increase in home-based services has also been an area of increased valuations and interest, as has the orthopedic space, which notably leads the way in the shift toward value-based care among physician practices.
Providers, operators, investors, and policymakers agree that home-based healthcare options are transforming how healthcare is delivered and the economics that drive it. Regardless of the specialty, care at home implicates a discrete set of local, state and federal legal issues. At the same time, the regulations have not fully caught up with the various business models being adopted, and CMS and states are actively experimenting with waivers, pilot programs, and new reimbursement methodologies. Anticipating this trend, we have seen increased investment by providers, payors, and private equity firms into both provider platforms and technology companies that facilitate care at home.
The traditional “zero-sum” relationship between providers and payers has changed and they are no longer in their own silos. Post-acute care providers are likely to find ways to leverage clinical excellence to partner with payers and assume up- and down-side risk under value-based arrangements.
Carefully-calibrated transparency across the board but in particular clinical outcomes and pricing.
I can’t remember a year where the media had a bigger impact on healthcare than 2021 – except perhaps 2020. I think policymakers are realizing that the media is one of the most important stakeholders when executing on public health initiatives. I don’t think any agency or media outlet has found the “secret sauce” but that responsible media coverage will be rewarded in the end.
Providers are actively experimenting with the new value-based regulations to take advantage of the added flexibility. If our healthcare system is equipped to do anything, it is to innovate in terms of technology and, increasingly, delivery models. I’m excited to see patients reap the benefit. Getting healthcare spending on a sustainable path is one of the biggest domestic public policy challenges we have in front of us, and these new regulations are a step in the right direction.
Technology – specifically EHR APIs and telehealth
Wide-scale collaboration between payers and providers, community-based organizations and hospitals, and public health departments and hospitals.
A focus on the patient experience and health equity.
The media has both helped educate the public about COVID-19 and contributed to spreading misinformation. “Media” is too broad a term to consider as one these days with all of the niche news.
A growing determination by hospitals to begin work on community health and affect social determinants of health.
The biggest challenge facing healthcare providers in 2022 is a combination of a few factors:
In many ways, regulators have returned to “business as usual,” with new or revised rules becoming effective in January 2022. However, healthcare providers are still experiencing waves of COVID, but this time with lower staffing rates and without the public support for healthcare heroes seen in 2020. In addition, many waivers that have been a lifeline to healthcare providers during the public health emergency (PHE) – from hospital at home services to the expansion of telehealth services – are at this time set to expire in January 2022, with little to no time built in for providers and their patients to gradually transition away from these flexibilities. While the PHE is likely to be extended, the pressure on healthcare providers – from staff nurses to the c-suite – to navigate such significant changes simultaneously while COVID measures are still very much in effect will be the biggest challenge for providers in the year ahead.
I expect to see investments in both organic and inorganic growth. With regard to organic growth, hospitals and health systems are focusing investment in services lines that have gained traction and reimbursement parity during the PHE. For example, hospital at home services, as well as digital health across practice areas – not just behavioral health, but also in areas in physical therapy and primary care. Wellness programs and wellness tools are also experiencing growth through commercial payer investment to help people take control of their own health beyond seeing their primary care providers. In general, areas that can empower patients to engage with their care and allow healthcare providers to provide much-needed care at lower costs are likely to win the year. In addition, many providers are “back on track” with regard to strategic acquisitions and affiliations in core business areas.
New market entrants and non-traditional players in healthcare will continue to be one of the biggest change drivers for healthcare in 2022. We’ve been following this trend for several years now and the past two years have underscored that the challenges facing healthcare and the demand for innovation are things that cannot be tackled in siloes. Perspectives from new healthcare entrants like retail and tech, the influx of funding from PE and VC investors, partnerships between traditional healthcare companies and new entrants, and collaborations between providers in different services areas or markets, are all drivers of change that will shape not just 2022, but the next several years in healthcare.
Some of the most successful partnerships will be ones that improve the patient care experience while seamlessly working within clinician workflows. Whether these partnerships are between “traditional” providers, or among traditional providers and parties from outside the healthcare space to launch something completely new, the successful ones will be where and the product or solution supports patients without overburdening clinicians, all while fitting within the complex healthcare regulatory landscape. It’s a tall order, but from what we’ve seen, parties are more than up to the challenge.
Continuing to see what comes from the novel partnerships between hospitals and health systems and other market participants, as getting the best of both worlds working together on bold innovations is truly exciting.
Increasing labor/other input costs and declining reimbursement. Providers will seek to adapt, and think this will accelerate a shift towards value-based arrangements to get paid for the value they deliver to patients and payers.
Specialty value-based care. As risk-bearing primary care groups seem to optimize their performance, there will be increasing focus on specialties and moving towards value-based care. Also much more focus on technology enabling provider groups and health systems to optimize performance and care delivery redesign.
A shift to value-based care over the next several years and its impact on improving patient experience and outcomes. Also expect to see more emphasis on preventative care versus reactive care.
Enablement of value-based care, with providers better enhancing payer-provider collaboration.
Overcommunicate and be transparent.
The media has highlighted the importance of providers and the services they deliver and trust built between the public and healthcare providers. It will be important to expand on that over the next several years and elevate care delivery to meet and exceed consumer demand.
Continued change that improves quality, reduces cost, and enhances the patient experience. Consumer expectations are increasing and we are being forced to keep up.