Healthcare Trends

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This article will differ from our past articles on key trends in healthcare in part as a result of the up- coming presidential election. The market land-

scape has begun to change since 2016 in the commercial and government sectors of the healthcare ecosystem. Factors contributing to the progress—such as relaxed rules for commercial insurance or Employee Retirement Income Security Act plans, administrative simplification, and the US Food and Drug Administration (FDA)’s effi- ciency in drug reviews and approvals—to date have been White House policy changes along with congressional inaction; administrative agency streamlining, downsizing, and outsourcing; and the emergence of state-level action in place of federal action on a number of key economic sectors related to, or including, healthcare.

Therefore, this article takes a top-level look at the 3 key themes of market dynamic (ie, commercial), state-, and federal (ie, government)-level trends as they affect healthcare trends by integrating cost, quality, and access to care. Some of these trends have been underway for some time but have not been very visible. The expecta- tion is that 2020 could create a tipping point for key economic sectors that will emerge more visibly should President Trump get re-elected. Even without that elec- tion outcome, some trends are likely to sustain them- selves through grassroots public support on healthcare.

Market Trends Are Increasingly Dynamic Consumerism and transparency in healthcare have

been trending for the past few years but will likely take on added significance in 2020. The growing costs for consumers show no signs of slowing down. Consumers, by necessity, have realized that they need to become more engaged in ensuring that they are getting the best value for their money spent on healthcare. They are be- coming more proactive in demanding transparency and choice in their care experience. Healthcare providers’ success will depend on their ability to meet consumers’ needs and expectations. Providers will need to manage the healthcare supply chain to offer consumers the best quality, access, and cost-efficient choices.

Several marketplace dynamics (Table 1) drive the increased interest in consumerism and transparency at

the state and federal levels. These include downside risk arrangements and increased out-of-pocket (OOP) costs.

Downside Risk Arrangements Healthcare providers continue to make progress in

adopting value-based care payment models. This success with programs that incentivize providers for delivering quality care has led providers to consider seriously taking on more financial risk as a strategy to succeed in the next 3 to 5 years. Providers will have day-to-day financial re- sponsibility for their patient population, with increased downside risk arrangements.

When deciding to take on the management of greater risk, providers will need to expand home and telehealth services in the face of a continued decrease in rural hos- pitals. Providers will need to factor in the importance of social determinants of health and increased transparency when developing programs to manage their sickest mem- bers. Site-of-care treatment becomes an increasingly important factor in a provider’s strategy.

Although taking on upside and downside financial risks through value-based contracts is still years away, according to a recent survey of healthcare leaders con- ducted by HealthCare Executive Group and Change Healthcare, this trend will take on increasing impor- tance in healthcare.1

Out-of-Pocket Costs In an analysis by TransUnion Healthcare, patients’

OOP costs for inpatient services increased, on average, by approximately 14% between 2017 and 2018.2 Patients’ deductibles and copays averaged $4659 for an inpatient visit in 2018 compared with $4086 in 2017. The outpa- tient OOP costs averaged $1109 in 2018 versus $990 in 2017, an increase of approximately 12%. In 2018, the average OOP bill for a trip to the emergency department was $617, 7% more than the $577 cost in 2017.2

How consumerism plays out in the real world varies widely. For example, healthcare companies of all types are placing increasing importance on their value com- munication strategies. Employers focus on their benefit offerings as part of their value with the workforce, and manufacturers are increasing their investment in the

Key Trends in Healthcare for 2020 and Beyond By F. Randy Vogenberg, PhD, and John Santilli, MBA Dr Vogenberg is Principal, Institute for Integrated Healthcare, and Board Chair, Employer-Provider Interface Council, Greenville, SC; Mr Santilli is President, Access Market Intelligence, LLC, Trumbull, CT.

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creation of value-based scientific and marketing materi- als, as well as in their stakeholders. Despite this, little actionable research has been done on the challenges and opportunities with these communications or with the people involved in value communication and their in- tended audience.

The continued increase in healthcare costs has result- ed in insured consumers paying more of the bill for their healthcare in premiums and OOP costs. The growing total cost to consumers is resulting in a demand for more insight and transparency into healthcare costs. This de- mand has resulted in additional information necessary for consumer comparison shopping, now that the Centers for Medicare & Medicaid Services (CMS) has required hos- pitals to post their standard charges online, and health plans are using consumer experience and patient-reported outcomes measures, among other market changes.

At the same time, reimbursement pressures have re- sulted in increasing numbers of hospital closures since late 2017.3 This market trend, especially in rural areas, portends a different issue for healthcare access that could be partially addressed through telehealth, along with the expansion of community-based clinic offerings that in- clude retail pharmacies as health spots. Likewise, ad- dressing social determinants of health takes on added importance to rural and urban areas as part of a compre- hensive population health strategy (Table 2). Social determinants of health are conditions in the local pa- tient environment in which people live, learn, work, worship, and play that affect a wide range of health, functioning, and quality-of-life outcomes and risks.4

State-Level Trends Are Increasingly Important The multiyear shifting of federal controls over select

healthcare-related decision-making has emboldened state legislatures to act when Congress has been unable to do so. As a result, laws requiring pharmacy benefit management registrations have been on the rise, while faster approvals that allow the broader use of prescription drugs (eg, naloxone) are addressing fast-changing public health issues, such as the opioid crisis, in most states. In addition, regulatory changes resulting from the Afford- able Care Act (ACA) have also contributed to state-lev- el engagement in healthcare change. Coupled with the current “healthcare for all” movement and select cases decided by the federal courts that support further ACA changes or elimination of the ACA, less federal control over state matters seems likely.

Rather than focus on illness, the healthcare industry is moving toward wellness as part of a value-based sys- tem of care.5 Virtual care and the use of technology will allow a continued focus on population health, which is an increasing challenge for states in balancing their

urban versus rural areas. Similarly, challenges remain with balancing the economics of healthcare delivery with state financial obligations (eg, pensions, Medicaid, infrastructure services) and the politics of running a state government.5

Other aspects of market change, such as pharmaco- genomic testing, have increasingly been incorporated into medical plan coverage through state insurance com- mission–approved plan offerings. Allowing more testing for targeting appropriate drug use has gained acceptance, along with paying for related services that will create delivery system efficiencies and cost-savings.

Harnessing technology to aid the management of healthcare costs remains a standard strategy for states as purchasers and payers of care. At the same time, subtle changes in government oversight or regulatory control contribute to the ripple effects of change in the health- care ecosystem (eg, allowing for the increased use of technology or removing regulatory requirements that cost administrative time and/or money while still achiev- ing desired clinical outcomes).

Federal Trends Focus on Market Administration and Government Programs

The US Department of Justice has allowed more horizontal and vertical integration of health plans (eg, CVS and Aetna, CIGNA and Express Scripts). How that plays out in the marketplace remains to be seen

Table 1 Marketplace Change in Context of Dynamic Healthcare Issues

Cost of care Access to care Quality of care

Downside risk arrangements

Decrease in rural hospitals or healthcare

CMS monitoring shifts

Increased OOP costs Expanding home and telehealth Transparency promoted for patient use

More HSA-eligible plans and high-deductible health plans

Evolving pharmacy-based primary care services

Social determinants of health incorporated into health-system reimbursement

CMS indicates Centers for Medicare & Medicaid Services; HSA, health savings account; OOP, out- of-pocket.

Table 2 Government in Context of Dynamic Healthcare Issues Cost of care Access to care Quality of care

Allow for a wider variety of shared risk arrangements

Dealing with rural hospital or medical care “deserts”

CMS monitoring shifts, evaluating new measures

Allow for more health plan alternatives to traditional or ACA-eligible plans

Expanding home and telehealth: telemedicine and telepharmacy

Information transparency promoted for commercial plan and patient use

Allow for more HSA- eligible plans and determine opportunities to expand patient choice

Evolving pharmacy and community care–based primary care services

Social determinants of health support services encouraged for coverage in health-system reimbursement

ACA indicates Affordable Care Act; CMS, Centers for Medicare & Medicaid Services; HSA, health savings account.

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from the perspectives of economic and healthcare out- comes improvement.

The FDA has launched pathways toward faster ap- provals for generic or biosimilar drugs, as well as digi- tized medicine (ie, drugs, devices, diagnostics) and precision medicine, including approvals for niche or rare conditions or for applications with nonspecialty drugs. The rapid growth, administration, and breadth of use of personalized medicines are challenging tradition- al insurance administration processes beyond the costs of care only.

Artificial intelligence, cloud computing, and block- chain healthcare applications are poised to grow rapidly in 2020 and beyond. Such computing ease and innovation have already begun to challenge the existing safeguards for personal health data, while also facilitating increased in- sights gleaned from available data, at a faster pace.

As a result of the increasing use, applications for, and storage of data, cybersecurity has emerged to be even more important than before for healthcare providers and health- care systems that are entrusted with that personal informa- tion under the HIPAA (Health Insurance Portability and Accountability Act) and the Health Information Tech- nology for Economic and Clinical Health Act. Contain- ing the legal flow of data and the chain of control beyond the patient as a user of these data are becoming more complex. This flow of data represents a positive develop- ment, by enabling patients to become more engaged in their treatments, as well as a negative step, as the techno- logic innovations offer ever increasingly easier or simpler transfers of data that can be susceptible to hacking.

Conclusion Not all aspects of the coming industry trends in

healthcare are covered here. Instead, we identified a high-level context of trends that are likely to emerge or grow to maturation. The amount and pace of change in most aspects of healthcare mirror other sectors of the economy, but these were not readily apparent until the passage of the ACA in 2010 refocused attention on this economic sector.

Transparency has been elevated as consumerism marches forward in the face of steadily increasing health-

care costs. Nonetheless, full transparency regarding all the costs of care remains difficult to achieve or to act on to facilitate further changes.

State responses to the shifting of federal controls over decision-making boundaries have emboldened state leg- islatures to act when Congress has been unable to do so. From alternative benefit plan options, hospital closures, marijuana access, and opioid treatment legislation to healthcare infrastructure issues, states have increasingly acted when the federal government has allowed them.

Federal policy proposals or regulatory changes have already reshaped the commercial insurance landscape for 2020, while allowing longer-term change to emerge at a more incremental pace through federal programs man- aged by CMS. Commercial markets continue to be fa- vored for the introduction of innovation, while CMS moves to make its changes where and how it can in Medicare and Medicaid.

Finally, the wild card of a presidential election re- mains to be played out, but change will certainly happen. Whomever occupies the White House and holds con- gressional majorities certainly will have a critical influ- ence on healthcare trends for late 2020 and beyond.

Author Disclosure Statement Dr Vogenberg and Mr Santilli have no conflicts of interest

to report.

References 1. LaPointe J. Value-based contracts with risk 3 to 5 years away for providers. RevCycleIntelligence.com. March 19, 2019. https://revcycleintelligence.com/ news/value-based-contracts-with-risk-3-to-5-years-away-for-providers. Accessed August 26, 2019. 2. TransUnion. Out-of-pocket costs rising even as patients transition to lower cost settings of care: new TransUnion Healthcare analysis found that most pa- tients face a $500+ cost burden. June 25, 2019. https://newsroom.transunion. com/out-of-pocket-costs-rising-even-as-patients-transition-to-lower-cost-settings- of-care/. Accessed August 26, 2019. 3. Ramesh T, Gee E. Center for American Progress. Rural hospital closures reduce access to emergency care. Center for American Progress; September 9, 2019. www.americanprogress.org/issues/healthcare/reports/2019/09/09/474 001/rural-hospital-closures-reduce-access-emergency-care/. Accessed October 23, 2019. 4. HealthyPeople.gov. Social determinants of health. www.healthypeople. gov/2020/topics-objectives/topic/social-determinants-of-health. Accessed Au- gust 26, 2019. 5. Deloitte. 2019 global health care industry outlook: shaping the future. www2. deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health- Care/gx-lshc-hc-outlook-2019.pdf. Accessed August 26, 2019.

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