The fragile state of healthcare

There are immediate pressures and uncertainties in the healthcare industry that are making healthcare leaders feel fragile and apprehensive, Trebes, Pai, and Yuen said. These challenges include workforce shortages, supply chain volatility, shifting payer mix, and increased scrutiny on core business structures.

"It's not so much that [leaders] are unaware of the situation," Trebes said. "It's that they're unaware of exactly how it's going to unfold for them."

Leaders "are feeling like they're on a tightrope trying to balance a lot," Pai said.

The healthcare industry has also seen declines in clinical quality and patient outcomes. For example, adverse events resulting in harm or death to patients have increased by 19%, and 73% of adults believe that the healthcare system is not meeting their needs.

In response, regulators and policymakers are increasing scrutiny on various aspects of healthcare, including Medicare Advantage, the pharmaceutical business, and employers' fiduciary responsibility.

Paradigm shifts

The healthcare industry has also seen a number of paradigm shifts, including a shift from a hospital-centric model to an ecosystem-based model, according to Trebes, Pai, and Yuen.

Large corporate entities are assembling a mix of assets to direct care management and standards at the market level, including partnerships with retail giants for convenient care options and capturing low-acuity care and pharmacy spend.

To compete with these new entrants, "health systems need to focus on patient relationships and engagement," Pai said.

Another paradigm shift the healthcare industry has seen is in who delivers care. The workforce crisis as well as technological advancements are driving the evolution of care teams. These care teams will become more dependent on technology, leading to a shift in the roles and responsibilities of healthcare professionals.

How care is financed is also changing, shifting from a procedure-centric model to a pharmaceutical-based model.

The emerging drug landscape as well as pharmaceutical innovations are driving the need for more personalized and tailored care. As a result, health systems need to adapt to this new era of bespoke care and align their models with the changing landscape.

What CEOs need to consider

According to Trebes, Pai, and Yuen, CEOs need to focus on understanding and adapting to the paradigm shifts within their market, particularly paying attention to changes in patient attribution for risk-based contracts, low acuity volumes, and specialty pharmacy volumes.

CEOs should also consider partnerships with retail entities to control top-of-funnel access and focus on acute and specialty care, similar to the partnerships seen between CVS Health and RUSH or Orlando Health and Walmart.

In addition, CEOs should align with integrated delivery networks to cement market positions and focus on value-based care, address access gaps and prevent the widening of disparities in care delivery, and monitor patient data management, ensuring a comprehensive view of patients despite the increasing number of players in the market.

"These corporations are still going to need to convince patients, get their attention, put other services in front of them, and convince them to choose those services if they want to cross-sell," Trebes said.

Advisory Board is predicting three seismic shifts in 2024 that will change where care is delivered, who delivers it, and how it is paid for. Join our webinar to receive strategies to tackle these shifts, get our full assessment of the current healthcare landscape, and prepare your organization for success in the years to come.