Our team of more than 200 researchers continuously monitors the latest developments in healthcare to identify what forces really matter — and what they mean for providers, payers, life sciences organizations, health technology companies, and other stakeholders.  

Each year, we identify the trends stakeholders need to understand to successfully navigate the current healthcare climate and give them the tools they need to address the biggest healthcare challenges. 

Overall, the data in the report confirm many of our own predictions — from the structural decline in payer mix for health systems to the disintermediation of the patient relationship for incumbent players. 

Here are 10 trends shaping the current healthcare economy — and resources to help you think strategically about the challenges they present.

1. Ongoing erosion in the commercial insurance market

The erosion of commercial coverage aligns with what we've been talking about with our clients. As the number of commercially insured Americans declines, public payer coverage will grow. Payers and providers should take note because this gives regulators more power to increase scrutiny over healthcare spending.

We're already seeing this with moves to tighten the Medicare Advantage business model and challenges of the traditional pharmaceutical business. Health systems experiencing a structural decline in their payer mix will have to find new, more lucrative payers or dramatically shrink their fixed costs. 

To learn how employers are balancing cost, employee satisfaction, and administrative burden — and how misaligned incentives between employers and partners are limiting innovation, check out the three things to know about ESI — and download our ready-to-use slides to help guide your conversations about evolving trends in the employer-sponsored insurance market.

2. Americans' physical and mental health is declining

One thing we see across all these trends is amid the quality declines, coverage upheaval, and access challenges, the healthcare industry is pursuing scale at the expense of the patient.

The data shows that behavioral health demand continues to remain high and the share of pregnant patients who have complications such as preeclampsia is increasing.

However, we often see services like behavioral health and labor and delivery the first to be cut when hospitals and health systems must make tough choices in an increasingly pressured financial environment. This raises the question in today's increasingly saturated market of incumbents and new entrants — who is owning the duty to the patient and who is abdicating responsibility?

Without a radical shift in approach, we risk backsliding on progress toward behavioral health and health equity goals, having negative business implications across sectors. Our work uncovers the tangible steps leaders must take to meaningfully and equitably restructure the behavioral healthcare system.

To learn tactics for effectively managing behavioral health conditions to drive overall population health and reduce total cost of care, check out our behavioral health research.

3. Drug and diagnostic investments indicate emerging patient needs

The data suggests that there is a strong pipeline of emerging drugs in the oncology, cell and gene therapy, and weight loss spaces that consumers are really excited about — but it doesn't help purchasers and provider organizations prepare for a possible clash between patients, providers, and purchasers when it comes to delivery and coverage.

As an industry, we are going to have to grapple with the fact that therapeutic drugs are rising in strategic and financial importance across the healthcare system, shifting us away from a traditionally procedure-centric business to one focused on drug management.

Access our disruptive therapeutics and diagnostics watchlist to learn how to prepare for the adoption and uptake of new products — and check out the 4 things leaders need to know about high-cost drugs to hear potential solutions to ensure innovative treatments are accessible to patients in need.

4. Demand projections for healthcare services remain low

Since 2021, utilization has been declining in many care settings — and patient demand will likely remain low in the coming years.

According to the report, patient demand is highly dependent on local market conditions, including disease burden, demographics, consumer preferences, and access.

Our Market Scenario Planner tool shows you the types of services patients in your market are expected to use and allows you to customize projections according to five key growth drivers — disease prevalence, care management, insurance, readmissions and technology shifts.

5. Consumer behaviors are manifesting in patient decisions

Overall, Americans' view of our healthcare system is declining. According to the report, most Americans believe the healthcare system is subpar. As a result, consumers are increasingly turning to alternative sites of care and sources of healthcare information.

Consumer navigation is a changing landscape, shaped by a confluence of factors. Industry stakeholders must navigate complex trends to capture consumers' attention.

We've identified five key drivers that are shaping consumer preferences and behaviors across the industry, including workforce realignment and digital enablement. Read our insights to help your organization think about the present and future of consumerism — and prepare for the potential impacts each driver may have on your organization.

6. The traditional care pathway is shifting

According to the report, healthcare is becoming more disintermediated as new models of care and new players enter the landscape.

When thinking about disintermediation, incumbents need to increasingly ask themselves, "how many other organizations will your patient see before they come to you? And how many of those assets do you own, influence, or even know about."

Whether it's through physician aggregation, shifts in hospital market share, entry of new players, or challenges to legacy commercial and employer contracts, today's stakeholder relationships will be disrupted.

Access our disruptor reports on freestanding EDs and digitally enabled kidney care managers to see how some stakeholders are driving a shift in traditional care pathways.

7. New models of care are exacerbating provider supply issues

From 2018 to 2022, physicians stopped practicing at a higher rate than they started practicing, resulting in a 2.3% workforce reduction.

While the number of physicians has declined, competition for physicians has also increased as new entrants, including retail clinics and home health providers, work to recruit and retain top talent.

In the face of clinician burnout and labor shortages, leaders are searching for new solutions to support clinicians and fill staffing gaps at their organizations. It can be daunting to identify and understand all the technologies available to address workforce challenges. Our comparison charts serve as a resource for leaders to quickly index the state of workforce technology and how it can benefit their organizations.

As workforce challenges persist, virtual nursing is quickly becoming a powerful tool to supplement traditional bedside nursing. Our cheat sheet introduces to the basics of virtual nursing, its benefits, and potential challenges to implementing your own program.

8. The monopolistic impact of provider mergers and acquisitions are overstated

According to the report, market concentration is not linked with hospitals' financial metrics. For example, more than 20% of hospitals had negative operating margins in 2021 — regardless of market concentration.

Across the industry, stakeholders are increasing their spending on lobbying. Life science organizations are spending nearly three times as much as hospitals. However, physician groups increased their spending by 3.4% from 2021 to 2022, with a focus on influencing federal policy impacting mergers and acquisitions (M&A).

While we have seen a flurry of M&A in recent years, we've also seen an uptick in non-M&A partnerships that secure many of the same benefits of provider integration, without the financial and legal commitment.

The best way to assess any potential partnership your organization may be considering is on a case-by-case basis. To help you get started, we developed a four-part framework for rapidly identifying partnership opportunities and avoiding reactive deal-making.

9. Employers are paying more — and getting less

Employers face constantly rising healthcare costs. At the same time, they must provide quality and affordable healthcare benefits to employees.

Since 2000, the cost of care — including treatment, insurance, medical equipment, and prescription drugs — has increased by almost 115%. While the overall rate of inflation increased dramatically between January 2021 and June 2023, the gap between healthcare inflation and overall inflation remains.

Employers, brokers and consultants, and health plans haven't been able to reduce the costly burden of employer-sponsored insurance spend. Our infographic reveals the incentives and barriers that keep these groups from significantly reducing costs.

To learn how employers of all sizes and across sectors are responding to these pressures and positioning themselves for future success, explore our employer research.

10. The market rate is lower than anticipated

According to the report, healthcare spending is expected to continue rising through 2026 — a trend that will impact both public and private players.

Most stakeholders will likely face increased pressure to match the lower "market rate," which is now widely accessible through health plan price transparency data.

While transparency places increased scrutiny on healthcare prices, cost isn't the be-all and end-all for consumers. To learn more about how transparency shapes provider negotiations and consumer views, read our key takeaways from our panel discussion on price transparency.

Our healthcare landscape is constantly evolving. To learn more about the state of the healthcare industry heading into 2024 — including strategies to tackle the market forces and financial pressures facing healthcare stakeholders — visit our state of the healthcare industry research and insights page. (Adams, MedCity News, 10/3; Trilliant Health 2023 Trends Shaping the Health Economy report, 10/2023)

Our team of more than 200 researchers continuously monitors the latest developments in healthcare to identify what forces really matter — and what they mean for providers, payers, life sciences organizations, health technology companies, and other stakeholders. Stay up to date on what you need to know about the state of our industry.