CVForward  >  7 Healthcare Trends Worth Planning for

Healthcare is a constantly evolving space. As a result, it’s essential to keep watch for trends in the industry. But which shifts are temporary, and which should cardiovascular service lines be planning for?

To learn more about which trends are on the horizon, we spoke to Kevin C. “Casey” Nolan - the Managing Director of Navigant Heath Systems and the leader of their Healthcare Provider Strategic Planning practice. With more than 35 years of strategic planning experience, his industry insight is invaluable. In a series of seven “C’s”, Nolan spoke to us about the most vital emerging trends that he predicts will affect the healthcare industry over the next few years.

 

7 Healthcare Trends Worth Planning for

 

1. Compression of Margins

The first trend Nolan identifies is compressing margins. “We see expenses growing faster than revenues at virtually every one of our clients around the country,” says Nolan. It’s been that way for the last few years, and he expects it to continue into the future as well.

Medicaid payments to providers and Medicare payment rates are not rising at the same levels. Commercial insurers pay for less of an increase on an annual basis than they used to, while expenses continue to rise. As a result, the compression of margins is and will continue to be a major issue.

 

2. Contraction of Inpatient Volumes

Nolan believes the average occupancy of hospitals in the United States today may be less than 62%. “I'll be in a hotel tonight, and if they were at 62%, they'd probably be out of business,” he continues. Most facilities currently have more inpatient capacity than they need, and that's likely going to continue.

In the same vein, outpatient volumes have doubled in the last 10 years. Nolan notes that “the mix of services, and the locale of where those services are delivered, has changed substantially.” He points out that in 2016, for the first time in history, hospitals in the United States received more overall revenue from outpatient services than from inpatient services. He expects outpatient treatment to continue to grow while inpatient treatment declines.

 

"The mix of services, and the locale of where those services are delivered, has changed substantially."

Kevin C. "Casey" Nolan
Managing Director
Navigant Consulting, Inc.
 

3. Changing Delivery Models

“We have created a healthcare infrastructure in this country that is beautifully designed to treat acute illnesses,” says Nolan, before adding, “It’s not very good at treating chronic illnesses.” The majority of healthcare spend in the U.S. goes towards treating a few major chronic diseases – namely heart disease, cancer, stroke, COPD, and diabetes. As a result, there is a fast-growing focus on care for chronic conditions. And, as Nolan points out, if you’re dealing with a chronic condition, not all of the care you receive will be inside the four walls of a hospital.

“It's at home. It's at the doctor's office. It's in the ambulatory center. It's the nursing home. It's at the home care agency,” says Nolan. There has been a recent explosion in the number of companies focused on changing care processes, all while supporting healthy behavior and providing data support. This number will continue to grow as more people seek to treat chronic conditions.

 

4. Consolidation of Care

Care consolidation can be seen in the grouping of independent hospitals into systems. “If you go back to 1990 in the United States, only about 38% of the hospitals in the country were part of a multi-hospital system. Today, it's upwards of 80%,” remarks Nolan. This is a trend Nolan expects to see moving forward, potentially evolving into system-to system consolidation down the line.

Consolidation doesn’t only take place at the hospital level – it applies to physicians, too. “It's not unusual to see physician groups that are 500, 600, 1,000 physicians,” says Nolan. The days of one- and two-person practices are fading. Consolidation can even be seen at the vertical level, where national pharmacy brands acquire healthcare businesses. The resulting businesses, like Minute Clinics, have a direct impact on consumer behavior.

 

"...businesses, like Minute Clinics, have a direct impact on consumer behavior."

 

5. Consumerism

The shift away from transaction-to consumer-oriented healthcare is a trend that “is growing by leaps and bounds literally every day,” according to Nolan. This is driven by the fact that more and more people rely on high-deductible health plans – if a person is spending more of their income on healthcare, they are more likely to shop around for services.

This shift is also fueled by the availability of information on the internet – Nolan points out that nearly one in every twenty searches online is for health information. The trend will only continue as companies with loyal consumers like Amazon and Apple start to play in the health care space.

 

6. Connectivity

Mirroring the growth in consumerism is the rise of connectivity. Devices like smart watches can already report on health data, tracking everything from steps taken and calories burned to sleep information and heart rate. These in turn can provide data back to providers. The resulting explosion of available data will surely impact healthcare moving forward. “The connectivity piece is going to be huge,” emphasizes Nolan. “I have data. I want my physicians to be looking at it and telling me if I've got an issue.”
 

"I have data. I want my physicians to be looking at it and telling me if I've got an issue."

 

7. Competing on Value

The last trend Nolan highlights is the shift in emphasis from volume to value in healthcare. “Right now, we're in a period of extraordinary experimentation,” says Nolan. “Five years from now, providers are going to be paid on the basis of their cost and the quality in their service.” While the experiment is ongoing, and no one knows exactly what the formula will look like, Nolan is certain it will be based on value, not volume. “That march has been ongoing for 30 years,” he notes. “That train has left the station, and it ain't going back.”
 

"Right now, we're in a period of extraordinary experimentation."

 
From speaking to Casey Nolan, it’s clear that healthcare is transforming at a rapid pace. But by breaking things down into 7 C’s, it's clear which trends are on the horizon and how they might impact each other. No one can predict the future but planning certainly becomes more manageable with a detailed forecast in hand.
 

 
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