As we enter Quarter 4, it’s time for a fresh analysis of how the top trends from the 2023 March Healthcare Classic are influencing the industry. In case you missed the Three-Month Recap, be sure to catch up on it. The trends that secured a spot in the finals were: Cost Cutting Strategies (4), Primary Care Transformation (4), Affordability (2), and Cybersecurity (6). Our distinguished Selection Committee was spot-on in their assessment as these trends continue to shape the industry. Keep reading to discover the latest developments.
2023 Champion: Cost Cutting Strategies (4)
Our 2023 Champion–Cost Cutting Strategies (4)–continues to have a profound effect on the healthcare industry. The financial headwinds facing health systems continue to persist and unfortunately, organizations are turning to workforce reductions as a response. A new report reveals that job cuts and layoffs between January and August increased 128% compared to the same time period last year. Even corporate giants, such as CVS Health, are feeling the impact, despite major growth strategies. In August, the retail giant announced an $800M restructuring plan to account for higher costs.
In an effort to minimize financial strain, hospital CEOs are shifting their efforts toward retention. Some hospitals estimate that the recruitment process for one nurse can be up to $60,000. With the nurse turnover rate being 22% nationwide, hospital CEOs are developing new strategies to retain nurses. These initiatives include improving company culture, creating better benefits programs, offering growth opportunities, and more. Impressively, some hospitals, such as El Camino in California, have achieved savings by reducing their nurse turnover rate to just 8%.
Other health systems are turning their focus to more cost-efficient ways to deliver care. Penn Medicine implemented a 24/7 co-payment-free telemedicine program, which yielded nearly a 25% savings compared to traditional in-person visits. While many organizations have been slow to adopt telemedicine, health systems have the potential to drive significant savings through virtual care. Keep an eye on this cost-cutting strategy as it may gain more traction in 2024.
Top Two Trend: Primary Care Transformation (4)
The emergence of Primary Care Transformation (4) as a newcomer trend brought fierce competition to the tournament, as it secured a spot in the final round. The trend garnered significant attention from the Selection Committee, and for good reason – in the few short months following the Classic, the trend made a sizable impact on the industry, and its influence in Quarter 3 was equally as impressive.
In August, Humana’s primary care arm, Centerwell, began offering services in patients’ homes. The initiative–focused on senior patients–launched in Georgia and Louisiana, offering patients traditional healthcare services such as vaccinations, prescription management, and blood draws.
In September, Walgreens announced a partnership with startup Pearl Health, marking its entrance into value-based primary care. Through the partnership, Pearl Health’s technology-backed platform will allow community-based primary care physicians to have access to new payment models and identify patients requiring higher levels of care.
Most recently, Costco unveiled a partnership with telehealth startup, Sesame. Using Sesame’s platform, Costco members will have access to a range of discounted healthcare services including virtual primary care visits for $29 and online mental health visits for $79. Sesame’s platform offers consumers direct access to 10,000 providers with over 40 specialties. Additionally, Sesame has a cash-pay no insurance model, allowing consumers to pay a transparent price at the time of service. All of these initiatives are driving primary care transformation by introducing innovative care delivery models.
Top Four Trend: Affordability (2)
The issue of Affordability (2) has been a persistent and ongoing discussion within the healthcare industry. It’s no secret that zipcodes play a major role in an individual’s health status and access to care. A new report published by the Commonwealth Fund reveals other barriers for rural Americans. Individuals living in rural areas make up 15% of the U.S. population, and that subset is most likely to struggle with paying medical bills. Additionally, one in three rural Americans report forgoing care due to high costs.
However, rural U.S. citizens aren’t the only ones experiencing the pressure of high healthcare costs. According to a recent Reuters article, U.S. employers are preparing for the largest increase in healthcare insurance costs in the last decade. In 2024, employer healthcare costs are expected to soar an additional 5.4% to 8.5% due to inflation. This leaves employers in a precarious position, debating whether to allocate additional funds to employee health coverage or cut benefits through solutions such as high deductible plans.
The Inflation Reduction Act, which was signed in August of 2022, has reportedly reduced healthcare costs for millions of Medicare enrollees. The law encompasses lower premiums on marketplace insurance, a $35 cap on insulin, and free recommended vaccines. While this represents a positive move forward, it’s evident that the healthcare industry is primed for transformation, with the goal of ensuring affordability for all Americans.
Top Four Trend: Cybersecurity (6)
As technology becomes more sophisticated and increasingly more prevalent, Cybersecurity (6) remains a top concern for hospitals and health systems. Healthcare providers reported a 15% decrease in data breaches in the first half of 2023 compared to the last half of 2022. However, the scale of breaches has increased. This is attributed to the rising trend of hackers targeting healthcare providers’ third party business associates.
In response to this phenomenon, the U.S. Department of Health and Human Services (HHS) and the Federal Trade Commission (FTC) sent a warning to over 130 hospitals and telehealth providers. The letter urged providers to consider the security and privacy risks of using third-party tracking technology.
Last quarter, HHS published trainings and best practices surrounding Cybersecurity for the healthcare industry. Not surprisingly, the agency has continued its focus on Cybersecurity, launching yet another initiative. HHS is aiming to bolster cybersecurity through a new project called DIGIHEALS. The project requested proposals outlining ways to boost cybersecurity for health systems, clinical care facilities, and personal health devices. At the end of September, six recipient organizations received a collective sum of 50M for their winning proposals. Breaches and cyberattacks remain a substantial threat to the industry, but the dissemination of information will promote greater knowledge and awareness in protecting patient data.
Stay tuned for future posts and insights on the blog as well as LinkedIn.