January 24, 2020

If there's one constant in health care and medicine, it's that the industry is always changing. For health systems and provider practices to remain competitive, it's essential that leaders are not only aware of the latest shifts in the market, but are actively responding to them.

That's why Advisory Board researchers examine market trends across various service lines at the start of every year. This year, as we wade into a new decade, our research team looked at the market trends shaping four service lines—cardiovascular, OB/GYN, oncology, and orthopedics—and identified the top four trends poised to shape health care over the next decade.

Infographic: 4 imperatives to achieve service line growth

1. Consumerism is poised to disrupt referral chains (finally)

Industry experts have been predicting rising consumerism for decades, and for orthopedic and OB/GYN services, patient shopping has already become common. But as deductibles continue to rise and patients becoming increasingly responsible for the cost of care, our experts expect the impact to expand further among other service lines.

We can turn to orthopedics and OB/GYN as examples for how this shift will play out. It makes sense why both are prime targets for patient shopping; both have a large supply of providers and are based on elective procedures, which allow patients to take their time in selecting care options. And, as providers have begun to appeal to these patients through price transparency and enhanced service options, patients in these service lines have become the primary driver of their care decisions. Advisory Board research has found 41% of new, private payer OB/GYN visits stem from self-referrals and 45% of orthopedics patients are self-referred. 

In comparison, CV and oncology patients mostly rely on physician referrals—with 86% of CV services stemming from physician referrals and 43% of oncology patients naming physician referrals as one of the top three reasons for choosing a provider in our 2019 survey. This is mainly because oncology and CV patients have fewer opportunities to shop around for care. But that doesn't mean that this pattern can't change.

Advisory Board research found an increase in the share of cancer patients who reported changing their oncology providers along their care journey. Specifically, 11% of cancer patients in 2019 said they switched their provider because they were dissatisfied with their care—up from 8% in 2015. As patients' expectations for their service continue to rise, we will likely continue to see patient shopping spread.

To prepare for the growth in consumerism, providers should optimize their online presence, build relationships with insurers to receive more favorable rankings on their recommendations lists, and showcase clinical quality whenever possible. To learn more, download our report on Creating a Consumer Focused Digital Strategy.

2. Payers will push providers to compete on value, not market presence

As health care costs have risen, insurers and employers have taken steps to have more control of care decisions—which is changing the way providers compete for care. They've adopted three broad strategies: steerage, alternative payment models, and direct disease management.

One of the earliest adopters of a steerage model was Walmart, which in 2015 created a center of excellence partnership for oncology services with the Mayo Clinic. Under the partnership, patients with certain cancers can have their local treatment plan, including their medical records and scans, reviewed by a multidisciplinary team at Mayo Clinic, which determines whether they would benefit from plan changes or receiving care at one of Mayo's three care locations. If the latter, Walmart covers the cost of this travel for the patient and their family.

Others are offering direct cash incentives to steer patients to higher-quality options. For instance, Vitals SmartShopper, a New Jersey vendor, ranks physicians in a patient's market by cost and then partners with self-insurers and employers to offer incentives for patients to go to the lowest-cost provider. For example, Vitals SmartShopper will offer angioplasty patients $500 to see the lowest-cost physician in the market.

Meanwhile, service lines like orthopedics have seen broad adoption of bundled payments. For instance, Delta Joint Management, a physician-owned case management company specializing in outpatient bundles, launched a partnership with Blue Cross and Blue Shield of North Carolina to steer patients out of the hospital toward lower cost outpatient care. Delta assumes financial risk over the care, a great value proposition for BCBS, and they have seen surprisingly strong results. The program's volumes have tripled in nearly two years while cutting costs by almost 20%.

In the OB/GYN space, United Healthcare (UHC)*, Cigna, and Humana have created payment bundles for maternity care. UHC's model, for example, provides a lump sum to physician practices for prenatal services, delivery, and 60 days of post-delivery care.

Finally, many payers are experimenting with providing disease management care directly to patients. Some of these offer patients new modalities for remote monitoring, like Apple Watches, Fitbits, remote glucose monitors, or access to disease management platforms. Others, like Anthem, actually pay providers for care, which meets their disease management standards. For instance, Anthem's program pays oncologists $350 per month for each patient who is treated in compliance with its cancer care quality pathways.

With all of these models, payers and employers are proving that they will invest resources in steering patients to what they consider high-quality care. Especially in high-cost, high-revenue service lines, providers must be prepared to defend their value and quality. It will no longer be sufficient for providers to simply be patient's most convenient choice.

3. Market changes will steer providers toward a network strategy

As providers consolidate and care shifts toward the outpatient setting, more service line leaders will need to adopt a network approach that incorporates coordination and differentiation among hospital, outpatient, medical group, and freestanding sites.

Done well, this network approach can leverage scale to reduce costs, improve efficient allocation of staff, make patient experience more consistent across sites, and align quality initiatives. However, many programs still put most focus on their inpatient, hospital-centered services and duplicate services across sites. In the future, this strategy will no longer be sustainable.

For example, in the orthopedics space, clinical advances have allowed far more procedures, such as joint replacements and spinal fusions, to be performed outside of traditional inpatient hospital settings. In addition, CMS is issuing regulatory changes to promote reimbursement of many common orthopedic procedures in outpatient settings. There is similar movement to the outpatient setting in the CV space—with, for example, CMS allowing percutaneous coronary intervention procedures at ambulatory surgery centers. As these bread-and-butter inpatient services shift outpatient, providers must shift their strategies to respond.

Because cancer care encompasses such a broad spectrum of services and specialists, navigating it within a health system is often very complex. And that's only becoming more acute with hospital consolidation. For instance, one cancer program leader told our experts that, absent any central leadership or coordination, she had to manually look up which of her health system's 50 hospitals offered infusion services. She then had to call them one by one. This is an extreme example, but hospitals must take steps to move forward with coordination, including working to unifying oncology leadership across their sites and fostering a shared system identity among frontline staff.

4. New entrants are poised to disrupt the industry

There's been much talk of disruptive industry entrants recently, but our experts don't expect as much impact to core service lines due to industry disruption compared to other trends. That's because, while there's been a steady stream of innovation in recent years, it has yet to fundamentally disrupt the procedural business.

However, the risk for some disruption is still present. In particular, the OB/GYN service line risks losing volumes to freestanding competitors offering services at lower costs. There was an 84% increase in out-of-hospital-births between 2007 and 2017, partially due to the allure of free-standing birthing centers, which seek to attract patients with comprehensive amenities and alternative birthing options. There are also now options for prenatal virtual visits such as Mayo Clinic's "OB Nest," which allows patients to connect with their care team both at home and in person through a mix of traditional prenatal care office visits and phone calls or secure online messaging.

Patients involved in OB Nest trial reported a 14 percentage point higher level of satisfaction than patients receiving usual care, though they reported a similar quality of care and outcomes, highlighting the role of convenience in patient satisfaction. These patients also had five fewer (9 vs. 14) in-person prenatal visits than traditional patients—highlighting their potential impact on volumes.

Similarly, in oncology, freestanding and home infusion providers risk threating volumes of hospital-based cancer programs' infusion businesses. While these have not posed serious threats in recent years, site-of-care policies, which push patients out of the hospital, could tip the scale. At a minimum, these alternative providers could encroach on the non-cancer infusions that make up a significant portion (around 25%) of cancer program infusion centers' volumes and revenue.

Industry disruptors so far have had less of an impact on cardiovascular and orthopedic service lines, but that could change over the next decade. New industry entrants are likely to cause disruptions to the surgical orthopedics business by focusing on non-interventional care.

Learn more

To learn more about how these trends will impact each of these key service lines, as well as others, make sure you register for our upcoming market trends webinar series. We'll be covering the key trends impacting each service line, as well as the future growth prospects, and the strategic imperatives your organization should adopt to stay ahead.

Register now to learn more about:

*The Daily Briefing is published by Advisory Board Research, a wholly owned subsidiary of UnitedHealth Group. UnitedHealth Group separately owns UnitedHealthcare.

Infographic: 4 imperatives to achieve service line growth

Use the strategies displayed in this infographic to start revamping your service line strategies to actively compete for volumes and successfully grow market share.
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