A new phenomenon is happening in healthcare these days. Retailers are morphing into providers. Physicians are exploring innovative options to provide convenient and accessible care, and health systems are becoming insurers. Why? Because new payment and delivery reforms are pushing healthcare executives to define their next strategic steps to thrive in a value-based environment.
Health systems are facing new competitors in the provider market while also, in many cases, competing in new markets themselves; and now, healthcare executives are facing new challenges to address these market changes. In our semiannual Economic Outlook survey, healthcare executives cited the following challenges their health systems will face over the next three years:
- Half (51 percent) of C-suite survey respondents are concerned with the challenges they face starting or managing their own insurance products, which supports the recent Premier survey finding that 66 percent of C-suite leaders are interested in starting their own health plan or working with an already-established provider-owned health plan. Alternative payment models – especially CMS’ Next Generation model – prepare health systems to take on more financial risk. Insuring patients, whether they are employers or a broader population of covered lives in an accountable care model, means health systems have access to claims data on the patients on whom they already have EMR data.
- 87 percent of survey respondents are concerned about the challenge of competitors organizing physician practices to compete with hospital services. Insurers are interested in the same thing as health systems – driving down total healthcare costs. However, while there was a spree of buying activity from 2011-2013, it appears insurers as competitors in the physician practice arena are not as much of a threat as once thought.
- A similar 85 percent of healthcare executives believe retailers as competitors are a major challenge their system faces over the next three years. Retailers, like CVS MinuteClinic or RiteAid RediClinic, have been playing in the primary care space for several years now. Prior to the recent surge of health systems building out their urgent and primary care networks to manage population health, retailers offered the convenience that many patients, especially Millennials, desire. However, almost as many healthcare executives believe these retailers could be potential partners; 80 percent believe retailers as partners could be another challenge their organization faces.
The increased focus on key competitors and potential partners is a result of the growing emphasis on value-based care. Value-based programs and population health efforts need scale, especially in an environment that is increasingly rewarding, or penalizing, health systems for good outcomes while reducing costs. And healthcare executives will continue to work toward finding new solutions for how they can be successful in this value-based care environment.
The healthcare industry has long been one of silos, but now, many industry players are aiming to combat fragmentation and rising costs by expanding their reach in the market. Whole healthcare – the idea of a streamlined, high quality, lower cost delivery system – is a necessary step for our industry and requires all stakeholders to work more efficiently and effectively toward the same goals.
To learn more about how value-based care is impacting healthcare providers, CLICK HERE to request a copy of our Fall 2016 Economic Outlook.