MAY 4, 2023
There’s no rest for the weary goes the proverb, and nowhere is this truer than in health care. The pandemic tested the sector’s grit and stamina, and providers and others responded admirably. But resting on one’s laurels is not an option. There’s a long list of big challenges to be managed, including inflation, rising premiums, provider profitability, care inequity, and, perhaps most urgent, a labor shortage that threatens the ability to deliver top-quality care. There’s also the fact that health care, like other sectors, is going to have to do more with less, which means rethinking and recasting long-standing processes and practices in many critical areas.
Some of the issues to be managed are current, such as fast-rising costs and access to labor and resources. Others are structural and long-term, such as challenges to profitability and the changing nature, make-up, and demands of the workforce. In this year’s compendium of relevant BCG thinking, we’ve compiled a selection of articles on the big issues facing health care in the near to medium term. These issues include the following:
At the top of the list may be the ability to build more resilient organizations that can turn adversity into opportunity, building sustained competitive advantage that provides a foundation of support through challenging times.
A chat with Sanjay Saxena, global leader of BCG’s health care payers, providers, systems, and services business, on the challenges facing US hospitals and health care systems.
Three global trends are driving a new resource scarcity for businesses. Capital is harder to come by as interest rates rise, a major shift from the last two decades. The post-pandemic labor shortages that health care has been grappling with the past few years are a prelude to more widespread and persistent labor scarcity. Supply chain shortages may also be early signs of more sustained resource depletion, scarcity, or price increases—challenges to which health care is no stranger. Health insurance premiums are expected to increase sharply in 2023 in most developed countries as a result of the care backlog and cost increases. Premium increases will further strain the families and businesses already under the most financial stress.
Ultimately, it will be the companies that use new constraints to their advantage that will succeed by creating new abundance.
Providers and payers face distinct challenges to their business and care models. The fundamental economic model of US hospitals is broken. Payers need to reduce costs, but facing labor issues, they cannot afford to lose hard-to-replace talent by resorting to the time-tested solution of cutting staff. As a new Center for Medicare and Medicaid Services regulation takes effect in the US, both providers and payers will soon be subject to unprecedented pricing transparency. Health systems and health insurers may both need to consider transformational responses.
The finances of the US health system are weak. If systemic issues are not resolved, the situation will worsen, with detrimental consequences for patient care and care equity.
A confluence of factors means the time-tested approaches to cost control won’t work. Insurers need to rethink how they achieve more with less while maintaining a strong customer focus and employee value proposition.
A new regulation makes detailed pricing data widely available for the first time. Providers and insurers need to prepare now for a changed competitive playing field.
The digitization of health care remains a work in progress. Digital technologies can improve outcomes, reduce costs, enhance the patient and provider experience, and deliver real value—but only if digitizing organizations apply appropriate design thinking and strategy, build robust technology, and learn to move forward in an agile way. The need for vastly better use of data is particularly acute among state public health departments, but these agencies need a new data operating model. In one respect, health care is leading digital evolution if not revolution: the metaverse and its underlying technologies, such as augmented and virtual reality, are spurring a transformation in the sector. Innovative companies backed by substantial funding are achieving that rare trifecta of increasing access, improving outcomes, and lowering costs.
With the right strategic thinking, health care systems will finally succeed in delivering the benefits that consumers have come to expect from other industries.
COVID-19 revealed the cracks in how public health departments use data to respond to a crisis. The fix doesn’t have to take years.
Next-generation technologies are already making an impact in health care. Providers and payers need strategies to ensure that these advances benefit them and their patients.
In addition to inflationary wage pressures, health care organizations—providers in particular—face acute and complex labor challenges. Pandemic burnout and the great resignation have taken a toll, especially in primary care and nursing. The sector’s workforce is also evolving toward more part-time workers and greater demand for more flexible hours and schedules. The rise of alternative delivery channels, both real-world and virtual, is further affecting staffing needs. Providers and others need to take a strategic approach to labor requirements.
The workforce shortage is rooted in employee burnout and inefficient care.
An employee value proposition can help companies keep current employees and attract new ones.
Care models are evolving, and astute providers and payers have opportunities to improve services to patients and members at relatively low cost. Advances in digital and clinical technology, such as predictive analytics that anticipate health problems, cameras and sensors that monitor patient safety, and telehealth for consultation and other services, as well as new models, such as aging in place, are changing the care game.
Innovative technology and practices are allowing payers and providers to give the elderly what they want most: better care at home.
How do digital health preferences of Medicaid members differ from those of commercially insured members? Our findings debunk outdated views that members do not have internet access, are not digitally savvy, and do not want to engage with their providers in digital ways.
The pandemic highlighted long-standing gaps in equitable access to health care, both globally and in individual markets such as the US. These disparities not only fuel political and social tensions, they threaten the ability of underserved populations to access new therapies going forward. Addressing this challenge requires greater emphasis on the social determinants of health and formulation of government policies to help protect vulnerable populations.
To meet people’s needs and make their health systems as efficient as possible, governments need a coordinated approach to care.
The pandemic exacerbated the crisis in youth behavioral health. The complexity of the health system is a significant barrier for families seeking treatment for their children. Public sector leaders need to spearhead development of a data-driven map of the current system’s supply, demand, and gaps to support perspectives gathered from youth and family. This can highlight urgent bottlenecks and reveal differences in need across regions and subpopulations.
A significant factor driving the crisis in youth behavioral health is the complexity of the health system.
Finally, the trend toward value-based health care continues. A new book by BCG experts examines the uber-question of how health systems can deliver patient-centered, value-based care worldwide, citing powerful case studies of public and private innovators in high- and low-income countries alike.
A new book by BCG experts examines the uber-question of how health systems can deliver patient-centered, value-based care worldwide, citing powerful case studies of public and private innovators in high- and low-income countries alike.
