The American healthcare industry is faced with thinning margins, skilled labor shortages, shifting consumer preferences, powerful new competitors and a host of other challenges both old and new. Health systems and hospitals are responding by recalibrating their strategic priorities and finding that successful patient financial engagement is relevant to them all.
Executives at health systems and hospitals across America are facing some formidable challenges. The pace and magnitude of change in the healthcare industry over the past several years has been intense. For professionals and organizations that struggle with change, it’s about to get a lot worse. The future of healthcare in America will depend largely on how these executives respond. Will they have the tools they need to get the job done?
In what can be best described as a healthcare tsunami - regulatory, economic, demographic and market pressures have all converged to expose many of our healthcare system’s most persistent flaws. These include high costs, the un- and under-insured, nonexistent price transparency, organizational inconsistencies and an overall failure to respond to modern consumer sensibilities. Perhaps most significantly, a seismic generational shift in patient preferences is under way, with younger patients choosing alternatives to the Primary Care Physician model of care delivery that has prevailed for generations.
Through it all, of course, everyone who consumes healthcare - and that includes all of us - continues to expect great care. Seeing an opportunity, upstart companies like Haven Healthcare, the recently formed joint nonprofit venture created by Amazon, JP Morgan Chase and Berkshire Hathaway, and CVS Health have emerged. These companies and others are intent on leveraging their considerable technical and/or network resources to disrupt the industry. With their consumer-centric, technology-intensive operating models and considerable access to capital, they threaten to steal market share from traditional providers by responding more nimbly to new market realities.
Health systems and hospital C-Suites are being forced to confront old challenges - some with new twists. They’re also facing all-new challenges that have seldom, if ever, been considered on their list of top strategic priorities.
Top Strategic Priorities for Healthcare Provider C-Suites and the Dimension that Unites Them All
Most health systems or hospitals face many of the same challenges. Consequently, their list of strategic priorities features initiatives intended to overcome those challenges. Interestingly, for every one of these challenge-related priorities, there is a financial dimension embedded in the challenge and the solution. These common priorities illustrate that fact:
- Develop a response to the expanding universe of competitors - Between Urgent Care Centers, Digital Health Providers, and retail providers like the above-mentioned CVS Health, new and transformed industry players are emerging, and patients are responding positively. Many of these new competitors have entered or will enter the market primarily to respond to growing patient demand for more affordable, more convenient care. Most traditional providers’ systems fall far short of patient expectations for more Amazon-like provider experiences. Financially, this challenge calls for better price transparency and payment options that focus more on what patients can afford, rather than merely what they owe. Providers who intend to grow or preserve market share will have to meet this standard.
- Ensure top-line revenue now that the patient is the “new payer” - For decades, healthcare provider finances were tied up between providers and payers (or payors) like Medicare and the private health insurance companies. More recently, patients have become a major source of revenue for most providers as deductibles have soared. Analysis published earlier this year by the Kaiser Family Foundation found that per-person deductibles have risen 150 percent in the last 10-years to $1,350. Insurance companies are famous, or infamous, for their coded, pre-approved, in-and-out-of-network policies and procedures designed to process and pay provider reimbursements. The problem is, patients aren’t like insurance companies. Collecting from them requires a more intimate, personalized kind of engagement. One that responds to their preferences - those that are expressed and those that can be inferred by analyzing their behavior.
- Attract and retain patients and patient revenue - Because patients are being asked to pay more out-of-pocket, they’re modifying their behavior. Some are avoiding or delaying care. Others are exercising their ability to choose. And more and more, their preferences are trending toward the newer, lower-cost alternatives listed above. Many recent regulatory proposals deal directly with patient consumerism, with the Center for Medicare and Medicaid Services (CMS) formally acknowledging its intent to “…give patients meaningful information about quality and costs to be active health care consumers.” And because patients exercise so much more power when choosing where to get care, providers who succeed in attracting them are in a position to exert much more influence over the payers that cover them.
- Recruit and retain quality personnel, particularly clinicians - The industry’s worsening shortage of skilled professionals grows more acute every day. According to this study from the American College of Physicians, “during the office day physicians spent 27% of their total time on direct clinical face time with patients and 49.2% of their time on EHR and desk work.” The industry must deal with physician burnout by taking steps to ensure that doctors and nurses are not burdened by excessive administrative responsibilities. More consumer-focused patient financial engagement helps ameliorate the stresses that impact caregivers by reducing the number of financially-related confrontations and reducing the instances of care abandonment. Additionally, because financially engaged patients aren’t as stressed about their personal financial exposure, they’re more likely to engage fully in their treatment and recovery.
- Improve operating margins - Whether the provider institution is a for-profit or a nonprofit, sufficient operating revenue is an inescapable imperative. Whether that revenue is used to bolster share value or to sustain the pursuit of a provider’s mission, every healthcare provider has to take in at least as much as it spends. That means controlling costs, improving efficiencies and making sure every revenue source is performing. Smaller and some midsize hospitals are closing at a record pace because of their inability to meet this challenge. Nearly all providers are struggling with underperforming revenue sources - especially patient pay. For some providers, better patient financial engagement could be a path to survival. Especially when their patient financial engagement strategy is powered by a technology platform that increases productivity, reduces work and removes the obstacles patients face when they want to pay their bills. For other providers, the focus has shifted away from cost containment to growth. An Advisory Board report detailing its 2019 survey of healthcare executives found that “Top priority has shifted from cost control to revenue growth.” In other words, hospital execs are thinking much less about saving their way to prosperity in favor of growing their way – largely through innovation.
- Deliver on Population Health Objectives - Consumers of healthcare in America fall into a number of special needs categories. There are growing numbers of older Americans, with age-related medical needs and Medicare coverage. There are younger consumers, many of whom have employer-sponsored healthcare but don’t demonstrate any loyalty to healthcare’s traditional Primary Care Physician delivery model and who would be just as happy to get their care online or at a nearby storefront. There is also a growing population of patients with chronic, lifestyle-related illnesses like diabetes. Providers who employ the systems and policies that respond to each patient’s medical and financial requirements are more likely to make a measurable impact on the health of their community.
- Continually improve clinical outcomes, patient satisfaction - Appropriately, high quality clinical care has always been the go-to benchmark across the industry. This will always be true. But as the industry moves toward more value-based models of care delivery, and as patients start flexing their consumer muscles, providers are being asked to demonstrate the connections between treatments, their costs, and the outcomes they yield. But the clinical experience isn’t the entire experience. More and more Americans are avoiding care because of concerns about cost. Others are frustrated and confused by their post-treatment billing experiences, which too often degrade the overall care experience. Here, it’s critical for providers to remember that for patients, it’s only one experience. Patient financial engagement makes it possible for providers to deliver quality care in every dimension - clinical, administrative and financial.
Overcoming the Obstacles to Healthcare Innovation and Patient Financial Engagement
In a previous article, we wrote that most providers already have the building blocks they need to achieve their strategic and operational objectives. These include Electronic Medical Record systems (EMRs) like Epic, Cerner and AllScripts; partnerships with Revenue Cycle Management companies like Parallon, Navigant and R1; patient intelligence from TransUnion Health or Experian Health and patient financing from CareCredit and others. Between these disparate systems, every element of the patient experience is addressed, assisted and recorded.
What’s missing for most providers is a way to combine these systems, and the patient-related data that reside in each of them. To improve patient experiences and impact operating results, farsighted healthcare networks like HCA Healthcare have joined forces with my company, Loyale Healthcare. Together, we’re collaborating to reduce costs, improve efficiencies, deliver better patient experiences and drive improved financial performance.
Technology is the Key to Winning in the New Healthcare Economy
In an analysis report from Deloitte titled “The value of patient experience”, researchers point out that “Hospitals with better experience levels earn disproportionately more than they spend compared to those with lower ratings.” For healthcare providers to remain competitive in an increasingly consumer-driven market, they must adopt the technologies that bridge the gaps in their existing systems. Gaps that too many patients are falling through today.
That means deploying a platform like Loyale’s Patient Financial Manager to combine the patient’s clinical, administrative and financial experiences - every dimension of care - into a single, seamless, manageable whole, then capturing and using the data these experiences generate to understand and continually improve. That’s what patient engagement is all about. Loyale is proud to partner with our clients at the forefront of this important industry transformation.