Daily Briefing

What CEOs need to know in 2023 (Part 1)

Healthcare leaders are entering the new year with an unusually high number of short-term crises—things like rising costs, increased competition, and staffing shortages. So where should you be focusing your attention in 2023?

Radio Advisory's Rachel Woods sat down with executive strategy experts Natalie Trebes and Aaron Mauck to talk about the complexities of today's market and what should be on a leaders' radar for 2023.

Read a lightly edited excerpt from the interview below and download the episode for the full conversation.

Rachel Woods: Well, there's a lot that we can talk about when it comes to the industry in 2023, but I want to start at the highest level. What are the essential things that every healthcare executive needs to understand to be successful in 2023?

Natalie Trebes: I think you nailed it when you said there's a lot, that is absolutely true. The amount of different urgent disruptive forces we have right now means everyone is not fully rested from the last year and entering this year with an unusually high number of still short-term crises that are on the table for them.

It's really chaotic in healthcare right now. I think if I had to boil it down, I would say everyone has an overwhelming deluge of things on their plate that are all distracting their strategic attention. Second, amidst that, some players are really making big moves to compete for strategic assets, really focusing on influencing how and where patient care is delivered.

Then, if we zoom out, we are actually at an interesting moment where we are on a crash course for some things in healthcare to really become unsustainable. We've known that for a long time, but I think a lot of pivot points are happening right now, and we're going to have to reckon with those disruptions as we make decisions at the moment.

Woods: Natalie, you just used a word that I didn't hear a lot when we talked about healthcare. We always talk about disruption, it's never a slow time in healthcare—that's something that anyone who listens to this podcast hopefully knows all too well—but you just used the word chaos. I've heard Aaron use the word crisis over and over again, people talk about extreme times, so to me, I feel like we have to start this conversation just focusing on the urgent priorities. Just focusing on what leaders have to do right now in the very, very short term in Q1 of 2023. Is that how we want to be focusing our time for this conversation?

Trebes: What's that blessing I've seen on the internet, may you live in precedented times? I think that's really true right now of the number of times I've caught myself having to edit unprecedented out of my writing and pick which one thing I'm going to point to as unprecedented, is probably unprecedented itself.

Aaron Mauck: Right, but we can't let the present come at the expense of some of the future planning that we do. So under crisis conditions, we have a tendency to run around with our hair on fire. And if you talk to strategic planners from across the healthcare sector, that's precisely what a lot of them are doing, worrying around short-term considerations, sometimes at the expense of long-term strategy.

I think the tension for us in 2023, is going to be balancing very acute short-term challenges, whether from a financial perspective, from a care delivery perspective, from a staffing perspective, with long-term strategy. Something that's going to sustain us not just in the next 18 months or 36 months, but really over the next decade as a lot of the challenges start to accumulate and we have to find broader solutions for them.

Woods: I want us to dig into these things in a little bit more specificity. Natalie, when we started off this conversation, you mentioned just the volatility in the market right now. I would hope that our listeners understand what that means. They've heard us talk about the financial pressures on the industry, they've heard us talk about workforce shortages, they've heard us talk about insurance coverage shifts, all high concerns for leaders today.

All that means that the industry basically has no bandwidth. Their hair is on fire, like Aaron said. That is happening at a time when demand for services is getting more varied and more complex. What do you want to make sure leaders know?

Trebes: I would emphasize when it comes to demand, stability is the word that comes to mind or rather, instability. It is not so much a concern about is there demand? We go back in time to the beginning of the pandemic, that was a really big concern, right? Did volumes completely plummet? Do we not know what's going to happen at all? We have more demand than ever. It's about how we keep up with it, and how do we manage it appropriately?

So we look at the healthcare system, especially the healthcare delivery system, directly. It is all a capacity problem. It is a care supply problem, especially when we look at staffing gaps, bottlenecks in the care continuum, especially when we're talking about the ED, post-acute settings, and all of that.

Mauck: We also see pretty significant challenges associated with site-of-care shifts. We see a lot of procedures moving out of the hospital space entirely, and that creates coordination challenges as well as supply challenges. And then we have disruptions from outside as well. You think about some of the regulatory dynamics that we've seen, or the legal changes that have come down in particular around, for instance, reproductive rights.

We're going to have to figure out strategies for addressing the care needs of different populations, and what we found is that we now have 50 different state approaches to the management of reproductive rights. That's leading to both supply changes, suppliers of services, clinical providers, having to navigate complex legal conditions or circumstances where they may not know what they're going to be able to provide legally, and also demand challenges as patients move from state to state, to receive certain services.

Woodsb: So demand is adding to the complexity of the challenges in the market, adding to the financial pressures, adding to the challenges with workforce shortages, etc. But my question is, if a volatile market is a challenge in healthcare, is that challenge at the same level for all healthcare organizations or for all stakeholders?

Mauck: Not necessarily. We've seen some providers be quite successful over the course of the last several years. You probably saw some recent data around for-profit system performance over the course of the pandemic, and some of them did quite well. In fact, they did better over the course of the pandemic than they were doing before the pandemic.

Many other providers, of course, and many not-for-profit providers have run into enormous challenges from a financial perspective. But then when you move outside the provider space, we know that some plans, and certainly some disruptive entrants have been quite successful over the course of the pandemic and have not found this to be as financially challenging as it might be. Sometimes chaos can lead to conditions that facilitate growth.

Trebes: And I would think about who has the bandwidth to take a second and sit back and maybe make some thoughtful decisions about strategic partnerships or acquisitions that they want to pursue.

Woods: Or has the capital to do that.

Trebes: Or has the capital. Everyone is dealing with problems. I don't want to pretend some organizations are not struggling in some way. Everyone's got challenges. It's just a question of who has the most challenges and who has a little bit of breathing room to make some thoughtful decisions and not be having to deal with the immediate firefighting.

Woods: And generally speaking, Aaron, you talked about an example that is an outlier, but generally speaking, we tend to see hospitals at the losing end of the power struggle right now, especially if I compare them to the healthcare giants, the big insurers, retailers, the big tech companies that are just still in a buying frenzy trying to build up these vertical ecosystems.

My question is, is that power shift or power change something that is just inevitable? Is this something that you want healthcare leaders to merely accept as reality, going into 2023?

Mauck: The idea that we will ever go back to the pre-pandemic moment of relative provider power, of hospital and health system power, is illusory. We're never going to go back to that pre-2019 reality. That has to be confronted by hospitals and health systems. They have to understand that the fixed capital structure that they play in, the overall challenges associated with site-of-care, are really going to just reshape the world for them.

It doesn't mean that hospitals are going away, but it certainly means that whatever the hospital footprint is going forward, is going to look incredibly different than it did 10 years ago or 20 years ago. That just is a reality that if you're a leader, you're going to have to confront and find solutions for. Whether that means diversification of assets, whether that means new care delivery models, whether that means partnership, that's a reality that is going to be the way forward.








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