Healthcare’s Biggest Trends in 2023: Industry Forecast from Redesign Health
Powering healthcare innovation at scale is the heart of our work at Redesign Health. With 2023 on the horizon, we surveyed our cross-functional team of industry leaders for their take on what’s needed, what’s possible and what healthcare companies should expect in the year ahead. Here’s their forecast for 2023’s biggest trends in healthcare.
1. Labor shortages will persist
Large numbers of our most experienced healthcare professionals are set to quit or retire in the next few years, with the Bureau of Labor Statistics estimating that 500,000 nurses left the profession in 2022 alone. The pandemic has driven burnout and stress that has exacerbated the labor shortage in healthcare, and the American Hospital Association has deemed the situation a national emergency, with a shortage of 1.1 million nurses heading into 2023 and a shortfall of 3.2 million allied health professionals over the next five years.
Venture Chair Karthik Krishnan sees "attracting early career professionals to healthcare, and retaining them through active financial and career progressions” as key to achieving the trifecta of access, cost and quality goals.
Meanwhile, Beverly Grossman, VP of Government Affairs, notes that though “we are coming out of the pandemic with an overstressed workforce and not enough patient-focused healthcare workers. Employees have gained strength in this economy, and like management groups, they are looking to policymakers to help ease this pain.” She sees the labor shortage as a priority item for federal, state and local policymakers in the coming year.
2. Innovation moves from the front of the house to the back
Each year pushes healthcare modernization forward, but 2023 may be the year healthcare leaders refocus on administration upgrades. While largely out of view of consumers, these enhancements will drive efficiencies and ultimately improve profitability for healthcare systems.
Rona Li, Managing Director, explains: “Administration spending contributes around $1 trillion in healthcare spending, with the bulk hiding in financial and corporate functions of payers, pharma and health systems that only those from within can truly understand. Expect partnerships between incumbents and innovators to continue to address these pain points.”
Venture Chair Missy Krasner echoes the rise of the “unsexy business” in powering healthcare workstreams and offering investing opportunities. “Incumbents, such as payers and providers, will embrace administrative software solutions, while infrastructure as a service brings new innovation to billing, RCM, eligibility, scheduling and member engagement.”
3. Refinement and scaling of hybrid care models
Hybrid care models will continue to change the game for patients and providers looking for more flexibility in reaching diverse populations across the healthcare continuum.
“The majority of value-based savings opportunities fall into high-cost specialty care, like cardiology, orthopedics, oncology and behavioral health,” shares Mark Rosenblum, Managing Director of New Ventures. “To date, these areas have lacked the scale and ability to measure required for at-risk pricing agreements.”
Venture Chair Danielle Russella thinks retail clinics will double their share of the primary care market. “Players like Amazon, Optum, Walmart and Walgreens have the money to invest in this lucrative space and are likely to offer better experiences and price than traditional health systems.”
Eric Morris, Managing Director, thinks we’ll shift from prevention as a cost-reduction measure toward high-cost chronic disease management. “As technology becomes ubiquitous and easier to develop, clinical efficacy will take center stage, and care models and clinical results will become moats.”
4. Increased accessibility for those who need it most
If there was a silver lining to the pandemic, it was opening the door to virtual care solutions, something experts predict will extend into 2023. While the industry has made progress in this area, it still has a long way to go.
“Despite all the advances in medicine and new innovations,” Alicia Bloom, Vice President, says, “individuals and families still struggle to access the care they need, whether for wellness and prevention or chronic disease management. Access issues could be related to coverage and affordability, geographic location, and long wait times due to workforce shortages, to name a few.”
Virtual solutions, telemedicine and community-based care hold the key to serving those populations. Grossman, Bloom and Neil Patel, Head of New Ventures, all cited the temporary telehealth expansion granted during the COVID-19 health emergency as a much-needed tool for providing accessible care.
Drug costs are likely to also come down, with Head of New Business Development Kyle Tatz predicting that “2023 will be the year that payers and government entities finally make headway in reducing drug pricing for high-cost solutions and insulin.”
5. Recalculating the cost of care
What benchmarks will we use to measure both health and financial gains? The coming year may be a gamechanger for even the most widely accepted policies.
We could see what Advisor Scott Disch describes as a move from “episodic cost measurement to longitudinal chronic disease management.” While the past decade has prioritized quality measures, risk adjustment, post-acute transitions, patient engagement and keeping people out of the ER, this won’t be the way to manage Medical Loss Ratio (MLR).
Disch anticipates utilization, decision support and “next-generation care management” may change the tide for payers and financiers. He notes, “Investors are expecting a waterfall effect on MLR and for new companies to get paid on milestone achievement or results, and no more advance Per Member Per Month Payments (PMPM) with a future promise of cost improvement.”
6. Stitching, not just consolidating, the healthcare tapestry
For both small and large healthcare systems that survived the turmoil of the past few years, more change is looming. While health systems have relied heavily on investment income and access to cheap capital to grow despite razor-thin margins, the market downturn and labor costs may force additional mergers and acquisitions.
The result? “Physicians who sold their practices to health systems will leave and/or buy their practices back as they see greater opportunities to thrive in independent practice,” Patel explains. “They could capture a greater share of the value they generate via risk-based arrangements with payers."
Meanwhile, Rona Li notes, “Over the past few years, innovation in payment models and delivery modalities has opened up the ability to address more needs than ever before. However, as stakeholders have become inundated with options, there is the need not only to consolidate, but to ‘stitch’ solutions into the existing infrastructure.” This could include greater collaboration with family caregivers and virtual third-party staff to coordinate care and eliminate redundancies; helping patients choose the right care and patch together services; and leveraging data to better serve patients at every stage of their journey.
New innovations for not-so-new challenges
With the high cost of supplies and the shrinking labor market, health systems that were feeling the pinch before may now find themselves on the brink without sustainable, forward-thinking change. From better back-end systems to harnessing data, tech is one way leaders see positive changes coming. Leaders will continue to refine equity and sustainability efforts, creating best practices in real time.
We're optimistic for what 2023 will bring as we continue to develop technologies, tools, and insights that lower the barriers to change across the industry.
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