News and Insights
The Numerof 2021 US Healthcare Delivery Outlook
Even with the election over, healthcare remains in the spotlight. The Supreme Court’s decision regarding the legality of the Affordable Care Act is the next act, to be followed by action on drug pricing, surprise medical billing, and more broadly, action to lower the cost of care.
In the background, market forces continue to reshape our healthcare system. The same pressures that made healthcare a key election issue continue to grow. Employers and consumers will see their earnings eroded by the costs of care and insurance. Migration of inpatient procedures to outpatient facilities will stress conventional provider margins, reinforcing the damage done by the Covid-19 pandemic. And as M&A continues to create fewer and larger conventional provider organizations, the threat of competition from non-traditional disruptors is becoming increasingly real.
The net of these forces will be to raise the urgency of change, and subtle but important shifts in emphasis for providers. Most healthcare delivery organizations that relied on fee-for-service will be repairing their balance sheets for years to come. In more forward-leaning markets, delivery organizations will focus more concretely on conceptualizing, differentiating and commercializing new offerings that are more responsive to their market. After being battered by Covid, some organizations might look more favorably on the predictable revenue offered by capitated arrangements. In any case, we expect 2021 to be a year of accelerating change.
Delivery organizations will continue to use consolidated purchase volumes as leverage for price concessions from vendors, pharma and device suppliers. Eventually, risk sharing schemes will supplant straight discounting as technology and process management capabilities mature.
Government mandated transparency will accelerate development of tools to facilitate comparison shopping for non-emergent care. As an offset to other bottom line pressures, market leaders will continue to build out direct contracting efforts with employers to reinforce their competitive advantage. Likewise, payers will continue to pursue alternative reimbursement arrangements with providers in receptive markets.
Continuing emphasis on total cost of care will drive integration across the care continuum by payers. Forward thinking acute care providers will increase their focus on patient accessibility through retail and urgent care clinics, telehealth services, centralized scheduling with physicians, and coordination with post-acute care providers. Consolidated delivery organizations will standardize data platforms, processes and organizational structures. Consolidation among acute care providers and acquisition of physician practices will continue at a slower pace than in years past. The FTC will raise the bar for future consolidation proposals in response to growing concerns about market impact.
Given this outlook, what’s next? We recommend these key action steps:
- Demonstrate differentiated outcomes and value for growth.
- Develop/commercialize bundled and capitated products and services.
- Accelerate performance in new delivery/payment models.
- Redesign the business to ensure patient centricity.
- Rationalize/realign care delivery platforms.
- Manage variation in cost and quality across the continuum.
- Realign structure, roles and competencies with market needs.
- Build service line capability to drive clinical and financial performance.
At Numerof & Associates, we support healthcare delivery organizations in reinventing their strategies, processes, structure, and analytics to succeed in our evolving healthcare landscape. From competitive strategy to implementation of new payment and delivery models, we have solutions. Read more about our perspectives and solutions for healthcare delivery and see our case studies.