The healthcare industry was already undergoing widespread transformation before the pandemic hit. Consolidation, new payment structures and direct-to-consumer business models were hitting providers from all sides. At the same time, new players, such as Oak Street Health and Walmart, were new to the scene. Ongoing regulatory changes were also underway, such as the price transparency rule, which goes into effect on Jan. 1, enabling patients and payers to shop for care on the basis of price.
Arriving amid all these changes, Covid-19 presented both an enormous challenge and a unique opportunity for health systems. Just as similar public health crises have in the past, Covid-19 exposed a broad need for business models that are more resilient in the face of change and more fluid in terms of operations. In this case, health systems had to build and expand the digital capabilities and infrastructure necessary to support remote work and advance clinical services — fast.
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Tim Kinney Timothy Kinney is a partner in the Guidehouse healthcare practice. As a founding partner of McKinnis Consulting Services, which was acquired by Guidehouse in 2016, Timothy is responsible for strategic direction of the practice, engagement leadership, and human capital management.
As we see Covid-19 spiking again — and when another major crisis inevitably comes along — healthcare leaders and administrators must ensure their organizations are strong enough to support current and future needs. They may need to further upgrade their telehealth capabilities, reevaluate corporate services, or evolve patient intake and management systems to create fundamental and sustainable change.
New uses for revenue
In the months following the outbreak, patient volume from elective surgeries and other non- Covid-19 treatments improved but still hasn’t rebounded to Covid-19 levels, introducing new uncertainty around the best path forward.
As the Covid-19 threat starts to taper off, facilities will likely start treating more Medicaid and self-pay patients, relative to those with commercial reimbursements who are being treated now. This would correlate with an increase in patient liability. One big question is if providers will be equipped to effectively address the expected rise in self-pay accounts.
While the market expects a shift toward Medicaid and higher patient liability, it’s important to remember that some of those patients may not be accessing care in the hospital/clinic setting. It’s up to health system leaders to prepare for a world in which healthcare is no longer only delivered face to face. To stay relevant, they need to develop and implement a targeted and thoughtful access strategy. That means building the technology foundation to support proactive outreach, remote scheduling, telehealth, and more – not just for today’s demand but to meet future consumer demands in an ever-evolving market.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Fixed cost conundrum
It’s also a time for industry leaders to step back and objectively evaluate and address their fixed costs.
Real estate, staffing, and supply chain costs are not unique to healthcare. However, the industry has been slow to consider and adopt other models. Shifting to a variable cost structure, whether it is through partnerships or outsourcing, could prove to be a smart financial move for leaders who are simultaneously facing high overhead and shifts in payer mix. It’s not just about reacting for today – it’s about planning for the healthcare landscape ahead.
If 2020 has taught us anything it’s that health systems need an agile roadmap. Not just a plan, but flexible guidelines that can adapt with changing times. Healthcare leaders have an opportunity to challenge their organizations to address and accomplish key factors, such as consumerism, partnerships, growth, funding, and balance sheets.
Consumerism: What is the consumer experience strategy? Take a page from retail, and help consumers get the information they need by integrating tech systems. This, in turn, engenders loyalty. Chatbots and other digital tools can boost efficiencies around appointments, bill paying, receiving screening results, and understanding charges — but only if systems talk to each other.
Partnerships: How recently have new partnership opportunities been considered? Partnerships can align like-minded organizations to enhance market presence and community health while supporting an organization’s variable cost strategy. Lean into aligning with other healthcare organizations, insurance companies, physician groups, employers, and even retailers.
Growth: Where do the strategic growth areas for the organization exist? Evaluate volume and growth projections, including service lines, expansion plans, and merger and acquisition opportunities.
Funding and investments: What funding resources are available? Which investments will generate the most value and make the most difference? What can be outsourced or automated? It’s important to closely scrutinize and innovate traditional methods of delivering corporate services, supply chain, care management, revenue cycle, etc.
Balance sheets: Consider the composition of the portfolio of facilities and real estate assets. Are those the most appropriate use of funds today? Can any assets be monetized now? How much facility space will be needed in five or 10 years?
Pre-Covid-19, healthcare was amid a major transformation. That hasn’t changed. But many of the strategies that were on the bottom of the priority list in early 2020 may have moved up, with a new focus on digital enablement and other technological capabilities. Those that emerge from the pandemic stronger will be the leaders questioning the way things have always been done, leveraging an innovative roadmap to meet the needs of the future…. and doing so quickly.
Picture: Getty Images, Eonren
