6 Insights Affecting the Direction of the Healthcare Market in 2022

The last two years have had a huge impact on the healthcare industry, leaving it in a state of flux. Projections about utilization, demand, consumer preference and policy regulations have been tested requiring healthcare leaders to make tough decisions that will have lasting implications for the future of the industry long after the crisis is over. Advisory Board identified several insights that will affect the trajectory of the healthcare market. We are highlighting 6 insights that we feel CEOs need to know in 2022.

Workforce Sustainability is the Primary Threat to the Physician Landscape

While physician practices were impacted financially by Covid-related declines in in-person care, ultimately the workforce crisis hit much harder. Physician burnout hit 42% in 2020 with a growing number of physicians considering changing employers, early retirement or leaving medicine altogether.

Expect Significant Changes to Individual Service Lines and Sites of Care – Especially Highly Profitable Procedures

Care delays due to Covid-19 are likely to increase the need for oncology and orthopedic services. On the other hand, elective procedures such as bariatrics and specialty pharmaceuticals are likely to decrease in demand due to financial strains. Expect continued shifts in site-of-care as emergency department use is down and more and more inpatient care and diagnostic services are moving to less acute settings, including the home.

Health Equity Must Be a Business Imperative Not Just a Mission

It’s up to leadership to drive change. CEOs and senior executives need to establish clear framework for accountability and demonstrate a commitment to equity through their actions and personal dedication. Solidifying health equity as a business imperative with measurable objectives that hold real financial consequences for the entire organization will lead to more meaningful progress on this issue.

Providers and Plans Response to New Price Transparency Requirements Determine Whether the Policies Will Make or Break the Market

2022 marks the merging of 3 price transparency policies in healthcare – hospital price transparency, payer price transparency and the No Surprises Act. Plans and providers will be largely motivated to utilize price transparency to reinforce existing pricing structures and bring outliers closer to their typical standards. This new influx of pricing information has employers excited as well as the data can be used to structure requirements in the procurement process and negotiate better contracts. The collective actions of the government, providers and plans themselves will determine if the push toward price transparency shakes up the market or makes little movement.

Interest in Value-Based Payment is More Probable with Physicians than Provider Groups

Risk-based payment and value-based care were top of mind during the pandemic, receiving mixed reviews as some providers conveyed reservations about taking on financial risk amid so much uncertainty. Views have shifted as the overall interest in risk-based payment has grown. Private plans continue to expand their value-based programs while commercial payers are offering physician groups advanced payments to protect against revenue losses in return for participating in their risk-based payment programs. On the other hand, hospitals and plans continue to battle to find a contract that delivers both revenue growth for the hospital and a cost savings for the plan.

The Future of Virtual Care is Not a Question of How Much, but of Whom

Telehealth increased dramatically from 2020 to 2021. Despite the large growth, most virtual care visits were through a patient’s own local provider. In response, technology vendors are rapidly working to expand their service offerings to make them more appealing to consumers and employers. To maintain local telehealth utilization, providers, health systems and physician groups will need to invest in technology to improve the digital patient experience as well as secure sufficient reimbursement from health plans.

As we go through 2022, the question healthcare leaders should be asking is not how to adapt to the “new normal” but what they can do to guide their organization down the right path and shape their own future.