Industry experts expect significant changes to shake up the healthcare landscape in the next few years, which will affect both health insurers and providers. Many are the result of a shift toward value-based care, a move toward decreased care in hospital settings, technological advances, and other forces.
Here’s a look at what can payers and providers can expect to occur, why each change is occurring, and how payers and providers can prepare for each change:
1. A shift in healthcare delivery from hospital to ambulatory settings
Healthcare delivery will continue to move from inpatient to outpatient facilities. “More surgeries and diagnostic procedures that historically have required an inpatient hospital stay can now be performed more safely and efficiently in an outpatient setting,” says Stephen A. Timoni, JD, an attorney and partner at the law firm Lindabury, McCormick, Estabrook & Cooper, in Westfield, New Jersey, who represents healthcare providers in areas of reimbursement and managed care contracting. A growing volume of outpatient care will be provided in ambulatory surgery centers, primary care clinics, retail clinics, urgent care centers, nurse managed health centers, imaging facilities, emergency departments, retail clinics, and patients’ homes.
This change is occurring as the result of clinical innovations, patient preferences, financial incentives, electronic health records, telemedicine, and an increased focus on improving quality of care and clinical outcomes. “The upward trend in value-based payment models is also influencing this shift, with the goal of reducing the cost of care and improving the overall patient experience,” Timoni says.
Payers and providers can prepare for this shift by analyzing and forecasting the cost and reimbursement implications of providing care in outpatient settings compared to inpatient settings. They should continue to analyze changing patient demographics, consumer preferences, and satisfaction trends, Timoni says. Collecting and analyzing data regarding quality and clinical outcomes as the result of changes in delivery of care from inpatient to outpatient is also key. Healthcare providers should develop effective strategies to grow capacity and infrastructure for outpatient services and invest in innovative mobile technologies, diagnostic tools, and telemedicine systems.
2. Consolidation will continue industry wide
More healthcare entities will continue to merge together. “Even though the number of available partners for transactions is shrinking, new deals pop up all the time because smaller entities are being targeted or entities that had been holding out are now changing their position,” says Matthew Fisher, JD, partner and chair of the Health Law Group at Mirick O’Connell, a law firm in Westborough, Massachusetts. Increased consolidation will result in higher healthcare prices as larger sized institutions use their size to their advantage. Another impact will be narrowing the field of contracting options, which will result in greater dominance by fewer entities in a market.
This change is occurring because industry stakeholder believes that consolidation is the way to survive in a healthcare landscape still being shaped by the ACA. “The belief is that value-based care models require single unified entities as opposed to more contractual-based ventures to succeed,” Fisher says. Another factor is that momentum for consolidations across the industry has continued to build and no player wants to be left behind.
Along these lines, Timoni says that consolidation has been motivated by the evolving and challenging commercial and government reimbursement models which include lower fee-for-service payment rates, value-based payment components, and incentives to move care from inpatient to outpatient settings. “Basic economic theory suggests that consolidation of hospitals and physicians enables these combined providers to charge higher prices to private payers as the result of a lack of competition,” Timoni says. “Likewise, combined insurers are able to charge higher premiums to their subscribers.”
Payers and providers can prepare for this change by evaluating their operations and determining whether consolidation with another entity is advantageous. “This requires assessing an entity’s operations and the risks of consolidation,” Fisher says.
Timoni advises payers and providers to monitor the consolidation landscape and develop effective merger and acquisition strategies. These strategies should focus on optimizing economies of scale to reduce costs and finding the best partners to achieve improved quality of care and effectively manage population health.
3. Protecting data privacy
Ongoing attention will be given to protecting the privacy of healthcare data. New laws, at both the federal and state levels, will be considered that could introduce new regulatory requirements, Fisher says.
While a federal law in an election year may be doubtful, individual states are proceeding. The California Consumer Protection Act (CCPA), intended to enhance privacy rights and consumer protection, will become effective in 2020, for example. Even though the CCPA doesn’t cover all healthcare data, healthcare organizations will still collect additional information that could be subject to CCPA, which means more compliance obligations, Fisher says. Other states are considering how to jump on the privacy legislation bandwagon, which means that regulatory requirements will increase. “Even in the absence of legislation, payers and providers can expect individuals to assert concerns and use public pressure to drive increased attention to privacy issues,” Fisher says.
Meanwhile, debates around what is meant by privacy continue to evolve, Fisher continues. A backlash against the non-transparent sharing of healthcare data and arguable profiteering is creating anger among patients and other groups. Simultaneously, data breaches continue to be reported on a daily basis. Add in that healthcare is a prime target, and all of the factors point to healthcare needing to do more to protect data.