Wow, what a year we had in 2021! Such an exciting, dynamic, and daunting time across the healthcare industry. Amongst other topics, we continued to see the pandemic remain front and center as a driving force; private equity’s role in evolving our landscape advanced even further in the digital health world; data and analytics plays shaped the dialogue further on technology’s role in care; and consumer-driven primary care models emerged as a contender in delivering on the promise of integrated patient experiences.
As we embark on our 2nd annual March Healthcare Classic, we wanted to take a brief look back at how last year’s top four trends faired in the past 12 months.
2021 Healthcare Trends Recap
WINNER: Embrace and Accept Risk
According to the Healthcare Payment Learning & Action Network (HCPLAN), while approximately 39% of US healthcare payments remained strictly fee-for-service (FFS), a majority were in some way tied to value or quality. More than 40% stemmed from value-based reimbursement models, which included upside and downside risk arrangements, as well as population-based payments, and nearly 20% had a combined FFS and value-based arrangement.
Medicare Advantage enrollment has doubled over the past decade, with beneficiaries spending $1,640 less on healthcare costs than those on traditional Medicare. Enrollment is expected to increase from 42% of all Medicare beneficiaries to more than 50% by 2030. In 2020, Medicare and Medicare Advantage (MA) led the way in value-based arrangements with only 15% of traditional Medicare and 38% of MA payments being strictly FFS.
RUNNER-UP: Payviders
There is a growing trend among provider organizations operating their own health plans or participating in risk-based collaborations with payers. According to a survey by Healthcare Financial Management Association (HFMA), of more than 100 health system CFOs and other executives, nearly 60% said they plan to get into risk-based Medicare Advantage payment models next year, as part of the growing “payvider” trend. However, 50% of executives believe the biggest external challenge to pursuing these “payvider” models are strategic partnerships with payers, based on survey results.
Rounding out the Top 4:
Find a Partner, Go for Scale
COVID-19 altered the mergers & acquisitions (M&A) activity across the healthcare sector in 2020 with the types of transactions seen; the industry saw a 25% increase in deals with over 3,000 transactions in 2021. The trend of fewer but larger value transactions will continue, with an emphasis on strategic partnerships and transformative impact (see Kaufman Hall report).
Providers
- Announced in June 2020, the $12.9 billion between two of Michigan’s largest providers, Spectrum Health and Beaumont Health, is likely to close the first quarter of 2022. The combined health system will include 22 hospitals, 305 outpatient facilities, and an insurance company.
- Announced in September 2020, the merger between Intermountain Healthcare and SCL Health will form a 33-hospital system and provide health insurance coverage to roughly 1 million people. The combined system would run 385 clinics across Utah, Idaho, Nevada, Colorado, Montana, and Kansas. According to Intermountain CEO and President Dr. Marc Harrison, the merger would bring in roughly $14 billion in annual revenues and create a model for population health.
Post-Acute Care
- LifePoint Health, a for-profit hospital system, acquired Kindred Healthcare, a post-acute care services company, in June 2020. In October, they announced the launch of a new healthcare company called ScionHealth; upon close it spans 25 states, and will provide both acute and post- acute care that will operate in tandem with LifePoint.
- Humana acquired One Homecare Solutions, a home health company, which has pioneered a value-based model in both Texas and Florida. This complements their acquisition of the remaining stake of Kindred at Home and will allow Humana to deliver value-based home health at a national scale, rounding out their CenterWell brand.
Mental Health
- In October 2020, Headspace and Ginger merged creating a $3 billion mental health company. The company has reached 100 million consumers through Ginger’s teletherapy services and Headspace’s meditation and mindfulness app.
Platform
Across the healthcare industry, platforms advanced with digital approaches becoming requisite care delivery/coordination components, due largely to the pandemic as an accelerant. Digital health companies in particular saw deals approaching $60B in funding last year (see CB Insights’ report). To launch patient engagement successfully, telehealth and other virtual services providers, who had invested in technology platforms not just point solutions, were able to quickly adapt to the needs of
their patients and the community:
- Banner Health unified its patient engagement strategies into one platform a few years ago. This enabled operations to launch a Vaccine Delivery Help Center using Luma Health’s engagement platform in two days, resulting in 45,000 appointments in five states, 100,000 messages about appointment reminders, and an 87% completion rate.
- UnityPoint Health, a health system headquartered in Des Moines, Iowa, launched a digital health platform with the health IT vendor, b.well Connected Health, where patients manage every aspect of their health in one centralized location. The platform integrates the EHR and many other systems to improve patient experience, telehealth utilization, call center volumes, and care gap closure, all of which supports population health and value-based care initiatives.
- Walmart Health acquired MeMD, allowing their growing healthcare business to focus on seamless care delivery/coordination experiences, while improving the health of the populations they serve through virtual access, not just in-clinic access across the country.
It was a busy year, and the trends identified in last year’s March Healthcare Classic positioned themselves well for 2022. Will they reign supreme again? Tune in to the 2022 March Healthcare Classic during the coming days/weeks to find out, as our esteemed Selection Committee makes their picks known, and make sure to join them by making and debating picks of your own in the process. In the wake of the pandemic’s evolution to becoming an endemic part of our lives, here’s to hoping for a year of better health, a strengthened industry, and innovation in healthcare we all deserve!