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Blog Post

How 7 strategic decisions are unfolding in this year's market

By Ben PalmerAshley Antonelli

June 29, 2022

    Advisory Board experts recently got together to share what they're hearing from health care executives about their biggest strategic decisions—from what they're seeing unfold in the market, to the levers leaders can use to shape the future of the health care workforce, health equity, value-based care, physician alignment, consumer navigation, digital health, and home-based care. Here are seven key takeaways for health care leaders.

    1. The health care workforce crisis is far-reaching—and solving it requires tough strategic tradeoffs for some industry players, while others may benefit

    It's no secret that the health care workforce has been in crisis since the start of the Covid-19 pandemic, and now, it's reached a breaking point. But while some industry players could lose out on both staff and strategic capacity because of the workforce crisis, others can prioritize their long-term strategic plans and potentially pick up experienced staff—as long as their entire ecosystem doesn't collapse.

    Organizations struggling with acute staffing shortages and rising personnel costs are having to dedicate outsized resources to addressing the crisis, often at the expense of other strategic priorities. For example, a health system that is seeing staffing shortages in its post-acute care setting may have to divert staff from its growing home-based care unit. In some cases, the strain from trying to mitigate the immediate workforce crisis could mean an organization's other strategic plans are "dead in the water," Advisory Board's Rae Woods explained.

    But other organizations could benefit from the staffing shifts occurring among the health care workforce. Experienced staff looking to move on from roles or employers they feel are no longer a good fit could land at industry players who might be able to offer what they desire, such as more stable or flexible hours.

    2. The industry is taking the first steps to incorporate health equity into its business model

    Investment in health equity is happening across the industry. In 2021, for example, Blue Cross Blue Shield of Massachusetts became the first health plan to incorporate health equity measures into its payment models, gathering data on member demographics, delivering tailored reports to provider organizations that highlight quality disparities among their patients, and providing coaching and support to help reduce those disparities. And beginning in 2023, BCBS of Massachusetts will start tying payments to health equity performance.

    Integrating equity into quality metrics and payments is a promising trend, but it's not a silver bullet. The trend can narrowly focus on provider organizations rather than all stakeholders who have an impact on health equity, and it doesn't address two other pillars of health equity—the workforce and the community. Health care leaders will have to decide whether quality metrics are a stepping stone or a stopping point for transforming the business model to address equity issues.

    3. Value-based care currently requires a foot in two boats for many

    Although Medicare has been steadily moving toward a value-based payment structure, the industry has seen a mix of wins and losses when it comes to commercial value-based care. Advancing commercial risk comes with multiple tradeoffs for leaders to consider. Following in the footsteps of public-sector risk and developing a "glide path" to population-wide models can be more efficient, but it also comes with an overly broad emphasis on multiple chronic condition management.

    Meanwhile, taking a more distinct approach on commercial risk can tailor payment models to that specific population's clinical needs and provide opportunities for savings, but it forces providers to split their focus across various payment models with different demands and metrics.

    Moving commercial risk toward a model that looks more like value-based payment models in Medicare could ease strain on providers by aligning incentives around similar metrics while reducing the administrative burden that can come from participating in varied, separate payment models. But providers and commercial payers will need to work together to devise payment structures that strike the right balance of alignment and providing the most valuable care for diverse populations.

    4. Physician practices are becoming more powerful—and some are looking to circumvent the hospital

    The acquisition of physician practices by corporate entities has become significantly more common in recent years. While models of corporate ownership of physician practices may look different depending on the organization, one trend stands out: the emergence of well-equipped "superpractice" groups that are looking to disrupt where patients receive care.

    Some of these superpractices look to manage their patients' care journeys by steering them toward specific, affiliated health systems that align with these practices' overall strategic goals. Other superpractices partner with plans to form networks of alternative sites of care that center on keeping patients out of hospitals and achieving goals under value-based payment arrangements. In those cases, superpractices are either looking to keep patients out of the hospital entirely or confined to seeking care at a specific hospital partner, which could limit volumes to other hospitals in that market.

    As these superpractices grow and gain market share, Advisory Board's Sarah Hostetter noted that "something will have to give from the hospital perspective, but what that 'something' is will depend on how hospitals are willing to work with these groups." Health systems that own hospitals will need to decide whether they're going to compete with these practices or partner with them—and how that competition or collaboration might affect the way they work with other entities in their market that hold power, such as payers and purchasers.

    5. Beyond physician practices, a wide array of players are trying to influence how consumers navigate the health care system at all levels

    While health care organizations aim to increasingly appeal to patients as more active shoppers, patients still rarely have sufficient awareness about their care choices at the right times or the ability and incentives to shift what options make sense for them. 

    In lieu of a "true, free market" for consumers, payers, employers, and vendors are instead looking to shape the entire environment in which consumers make care choices—either at a holistic level or for every discrete health care choice.

    The first approach is to shift the default places consumers go to start their care journey and nudge consumers along a route that aligns with the organization's goals. For example, a virtual-first health plan may aim to have patients start their care journey with an affiliated virtual provider, who then could refer patients for follow-up care at settings preferred by the plan.

    But as price transparency regulations start to pull back the curtain on costs, data analytics firms are looking to offer services that could disaggregate networks by allowing employers and purchases to contract at the individual-procedure level. If successful, that could mean an array of health care players—from purchasers to vendors to providers—will try to influence the information and incentives for consumers around every single health care decision.

    6. Telehealth can be more than virtual visits, and partnerships could help shape its future

    Virtual visits come to the forefront of most people's minds when thinking about how patients interact with health care digitally. That's because the Covid-19 pandemic pushed virtual visits into the spotlight as the primary mode of telehealth. But there's a plethora of other digital tools that providers, payers, and vendors could use as part of their holistic telehealth strategy.

    Health care leaders are looking to expand their telehealth services beyond virtual visits. In fact, in a 2021 Advisory Board survey, 39% of providers said their top telehealth priority was expanding telehealth modalities beyond just virtual visits. For example, providers could look to grow their capabilities to include remote patient monitoring and asynchronous care. Meanwhile, other stakeholders could look to engage with patients via new technologies.

    How health care businesses expand their telehealth offerings ultimately will depend on their strategic business goals and how they choose to partner with other organizations, as providers, plans and purchasers, and vendors all can bring different assets to the table. Advisory Board's Mojisola Ndukwe said stakeholders need to move beyond the "reactionary" stage of their telehealth strategy and focus on how they want to leverage digital tools to solve business goals, such as creating the best experience for their patients or consumers while minimizing burden on clinical staff. Those decisions will shape what telehealth looks like in the future, Ndukwe added.

    7. Home-based care is poised to grow, but not all stakeholders should take the same approach

    Home-based care services also saw remarkable growth amid the Covid-19 pandemic. However, many home-based care services are still in a testing phase: while they're seeing early success and evidence of positive patient outcomes, they've not yet become a standard of care, as organizations have struggled to figure out how to deploy and sustain these services across the health care industry.

    Home-based care encompasses a wide variety of services with unique challenges, including telehealth, home infusion, hospital-at-home, and home-based skilled nursing services, just to name a few. All of these services operate under different regulatory and payment parameters, require different staffing models and supplies, and have other key differences that could affect how quickly and easily they can grow. As such, there's not a "one-size-fits-all" approach for organizations looking to expand their home-based care services, Advisory Board's Miriam Sznycer-Taub said. "A lot of this depends on how much your organization wants to compete versus collaborate," she added.

    For example, large Medicare Advantage plans are acquiring various types of home-based care companies to build home-care ecosystems that can provide a wide array of services. But that strategy isn't feasible for all organizations. For some organizations, it may make more sense to double down on home-care services where they offer a unique value and partner with other organizations to offer additional services that will help all partners achieve their home-care goals.

    The areas highlighted above represent just some of the most pressing strategic decisions facing health care leaders right now. To learn more about the key decision points where health care leaders have the biggest ability to influence the industry's future, join Advisory Board's Stay Up to Date webinar on Thursday, June 30.

    Stay Up to Date: The strategic decisions shaping health care in 2022

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    The health care industry right now is facing an increasingly tough business climate, dominated by increasing costs and prices, tightening margins and capital, and staffing upheaval. This array of disruptive market forces means that leaders must navigate an unusually high number of short-term crises and opportunities, and their strategic choices now will have an outsized impact—positive or negative—on their trajectory toward long-term goals.

    Join us on Thursday, June 30, at 3 p.m. ET, as we investigate the strategic decisions that give health care organizations the biggest ability to influence the future of the industry’s structure

    Register now

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