4 Healthcare Trends to Look Out For in 2023
As the healthcare industry emerges from an innovation free-for-all, with historic levels of investment in digital health now tapering off, the lines of a new landscape are settling into place. Economic and social factors have driven a radical reorientation, resulting in a more interconnected healthcare industry.
At this pivotal time, here are four trends to look out for in the upcoming year, and what they mean for the primary stakeholders:
Inflation is prioritizing cost efficiencies
Inflation is putting increased financial pressure on hospitals, which were struggling with rising labor costs even before this year. Now, the traditional means for a hospital to boost its razor-thin profit margins are drying up.
Historically, elective and outpatient surgeries experience declines during economic downturns. High-deductible health plans are on the rise. These and other factors leave hospitals with little to no ability to increase their revenue. A report from the Center for Health Quality and Payment Reform found 30 percent of rural hospitals are at substantial risk of closing within the next five years.
Given these factors, it’s likely that cost efficiency will be the most (if not the only) viable option for hospitals to normalize profits in the next 3-5 years.
Demand for care providers is increasing, and so is burnout
The causes of burnout among healthcare workers are well-documented, including consolidation and other factors driving the current labor shortage. According to Mercer’s 2021 analysis of the healthcare industry, the demand for primary care physicians, mental health workers, low-wage healthcare workers, and registered nurses are all expected to grow significantly in the years to come. Yet many are leaving these jobs for a variety of reasons (including burnout), which merely increases the strain (including burnout) on the existing workforce.
As a stopgap measure, the industry is looking to digital health tools that can decrease the outward flow of people leaving the industry by automating some tasks and reducing administrative burdens. Voice-recognition software, for example, has been used to reduce the amount of time clinicians spend updating a patient’s EHR during face-to-face time with patients. This, in turn, decreases the overall workload on clinicians. Other digital technologies promise to help clinicians manage their own mental and physical health.
Big Retail, Big Tech, Big Payer are making a play for the digital front door
Walmart, CVS, Optum, Amazon, and others have made headlines this year with a series of acquisitions and partnerships that promise to disrupt traditional healthcare models. These players are honing in on at-home medical services and primary care, extending their reach deeper into the care continuum and blurring the lines between who owns what part of the space.
These players have a wealth of consumer data at their disposal, and those in the retail space have existing locations in some of the most vulnerable areas of the country in terms of access to care (in 2017, 90 percent of Americans lived within 10 miles of a Walmart compared to 82 percent who lived the same distance from a hospital). Existing infrastructure also positions Big Retail to partner on social determinants of health risks, such as food insecurity, giving them an edge on traditional providers.
These new offerings threaten to siphon younger, healthier patients from health systems, putting increased pressure on hospitals to integrate at-home care models and own the digital front door. While health systems will continue to capture the majority of condition-specific and specialty care; ownership of primary care, insurance services, and ancillary care (lab/imaging/pharmacy) are at the center of a contentious battle.
Traditional healthcare models will adapt or die
As startups and traditional providers race to meet their patients’ needs, the lines between new and old models of care delivery have blurred. Patients are using digital tools for the purposes of remote monitoring, and using them successfully, forcing traditional health systems to adapt or die. That includes improving price transparency. In the traditional healthcare system, the price you pay for services depends on your insurance coverage ― the opposite of a simple price tag. Price transparency and an emphasis on a la carte services are a major boon to providers in the direct-to-consumer healthcare space.
A related phenomenon: a few native digital firms have expanded into brick-and-mortar offices. Tia, the female-focused virtual care platform, now has locations in Los Angeles, San Francisco and Phoenix in addition to its Manhattan flagship. Cityblock Health is another digital-first provider with locations in five states and the District of Columbia. Kindbody was offering its fertility, gynecology and wellness services online before moving into physical spaces in 13 cities across the U.S.