DIGITAL STRATEGY

What Is Driving the New Status Quo: Six Data Points Defining the Future of Health Care 

Six key data points frame the near-term context for the survival and adaptation of strategic planning within health care systems, says Dan Lavelle, chief strategy officer for Unlock Health. Lavelle spoke during a recent SHSMD webinar focused on the changing landscape of the inpatient and ambulatory health care world.  

“Any one of them is like a gentle wind; all of them combined will fundamentally change the health care landscape,” he notes. “The status quo in health care is no longer acceptable. All the data point to that. But this is not doomsday. This is ‘roll up your sleeves and get to work.’” 

Adaptation is key to survival, according to Lavelle. The demand for health care services will only continue to increase, but it is the supply of care, and the way health systems create and deliver that supply for better performance and better cost, that defines the industry’s future, he adds. 

So, what are the six key data points and what do they mean? 

1. Increased competition and merger and acquisition activity in every aspect of the health care economy

This was happening before the COVID-19 pandemic, but has accelerated since, Lavelle says, citing examples such as Amazon’s $3.9 billion acquisition of primary care company One Medical; United Health’s $5.4 billion acquisition of home health care provider LHC group; and “hospital merger mega-mania,” such as the Kaiser/Geisinger merger, Aurora Atrium and Froedtert Thedacare.

“We’re also watching a proposal for more stringent consolidation requirements by the Federal Trade Commission and the Department of Justice,” Lavelle notes.

What do these moves mean for the health care industry? 

Doctors and hospitals are reevaluating their financial and operational priorities. It's evident that people are looking for better health care options at a lower cost. They are increasingly drawn to organizations that prioritize the consumer experience, offer flexible financing, and improve the delivery of services. This situation calls for a reevaluation of our communication strategies and the way we formulate our marketing plans. 

2. Battle for “top of funnel dominance”

The competition for securing the top spot in the customer acquisition funnel is fierce. To illustrate this point, Lavelle highlights the remarkable growth of urgent care services, which are projected to reach $50 billion by 2024, with only a quarter of that market share being owned by hospitals.

"Prominent national brands are constantly vying for supremacy through competitive pricing and convenience," he emphasizes.

This situation serves as a glaring signal that our communication strategies need a revamp. Traditionally, health care systems used to differentiate themselves by boasting about being "the region's only X" or offering "the most advanced specialty care." However, these claims no longer hold the same sway they once did. So, what captures the audience's attention now? Lavelle draws a lesson from major retail players like Walmart, Starbucks, and CVS. These companies excel at simplifying payment processes and enabling convenience-oriented decision-making. As Lavelle explains, "When I visit Starbucks, I never need to pull out my wallet; I just use their mobile app." These big brands earn customer loyalty by making life easier for consumers.  
 
Consequently, there's been a shift in health care, moving beyond just quality and focusing on providing both quality and convenience. If you can't deliver on this dual promise, consumers are savvy enough to seek better alternatives. 

3. Overall low adoption of digital health technology, driving significant churn

While the COVID-19 pandemic did drive a significant influx of digital health point solutions into the consumer landscape, the ongoing adoption of these tools has remained relatively low. As Lavelle points out, there's a distinction between merely downloading an app and integrating it into one's regular consumer experience with a health care provider, akin to how many of us do with the Starbucks app. 

An interesting insight comes from Panda Health, the digital health tech group purchasing organization, which introduced the concept of a "churn index." This index found that telemedicine and remote patient monitoring, technologies that played a vital role during the height of the pandemic, are no longer part of the new normal. On the other hand, solutions like self-service patient scheduling and digital care coordination exhibit significantly lower churn rates. 

In this context, health systems are increasingly seeking integrated platforms rather than individual, standalone solutions. Vendors that can provide multiple pieces of technology under one roof are gaining favor due to the economies of scale they offer. It's crucial to understand that technology, by itself, is not enough to drive innovation. What's needed is the strategic adoption of technology in the right use cases at the right cost, which is what ultimately propels that bell curve of success. 

4. A majority of the U.S. population is dissatisfied with the health care system

In a recent Gallup poll, the majority of Americans now rate our health care industry as subpar, a stark contrast to the high confidence levels seen in 2013. Lavelle calls this a reality check and an urgent call to action for hospitals. One key issue is the lack of price transparency, with under 40% of hospitals fully compliant with the three-year-old executive order. Hostility between national insurers and hospitals is exacerbating the problem, leading to negative PR against health care institutions. 

This mounting negativity, including scrutiny of executive compensation and charity care, is sowing seeds of confusion and distrust. Lavelle urges health care providers to put aside their differences and unite in telling a coherent story. In a competitive landscape, it's time for the health care system to work together for the greater good. 

5. There will be a shortage of 134,000 physicians by 2034

"This is the point that gives me the greatest pause," Lavelle acknowledges. "In 2018, the projected clinician shortage for 2034 was just 21,000.  That number has now been recast to a shortage of 134,000 clinicians by 2034. The impact of COVID-19 on this forecast is akin to a 'black swan' event. Beyond demographic shifts and the aging clinician workforce, burnout is a significant contributor. It's worth contemplating: who will provide care for you as you age, and who will care for the next generation?" 

Even the figure of 134,000 appears to be a best-case scenario at this juncture, Lavelle explains. This estimate assumes reduced inpatient care and healthier communities, particularly in rural areas, lowering their reliance on hospitals. However, if these favorable assumptions don't materialize, and rural communities and uninsured individuals maintain their current health care patterns, the shortage could swell by an additional 180,000 physicians, creating a precarious situation for the entire health care ecosystem. 

6. This country continues to spend more on health care without better outcomes

The United States spent twice the amount on health care as a percentage of the Gross Domestic Product than others in the Organization for Economic Cooperation and Development (OECD), Lavelle observes. (The OECD is a collaborative forum of 37 democracies with market-based economies.)

“We spent about 18%, compared with other OECD partners that spend around 9.5%,” he explains. “We’re the only one that doesn’t have universal health coverage. Our obesity rate is twice OECD average. We have the highest rate of people with multiple chronic conditions, the lowest life expectancy at birth, the highest death rates for avoidable conditions, the highest maternal and infant mortality rate, and the second-highest suicide rate. We continue to spend more without providing better outcomes or better value per dollar.” 

Based on these trends, the status quo is no longer acceptable and sustainable, according to Lavelle. So how do health systems adapt, survive, and thrive?  

“These macroeconomic factors, including funding and clinician shortages, concern me, but fundamentally I believe there are opportunities for hospitals and health systems to work together, remain competitive, stay financially viable and then negotiate on the back end,” he explains. “Strategies that depend on opaque pricing, that limit access, that protect the incumbents even at the expense of improving patient care—these simply will not work anymore. These are uncomfortable discussions, but each of them is actionable. Now we need to go back to our hospitals and health systems and challenge the status quo.”