Evolving Healthcare: Six New Realities for the C-Suite

By Mark Dixon  /  02 Dec 2014

With the pace of healthcare evolving at rapid speed, executives in the C-suite are preparing for big changes still to come for the industry. As we begin to think about the year ahead, the C-Suite should keep in mind these six realities of the healthcare landscape:

  1. Healthcare consumerism on the rise. Dramatic changes to healthcare insurance brought about by the Affordable Care Act means that our patients are facing greater copays, deductibles and out-of-pocket expenses. Since our patients now have more skin-in-game in reducing the costs of healthcare, they’re becoming even more educated about the costs of care.


  1. Population health driving value over volume. The vision of population health may not be realized yet, but we’re moving in that direction. New financial models are driving changes to how hospitals and health systems get paid – and how they deliver care. In response, providers are changing care models to deliver higher value instead of focusing on volume. These organizations are fundamentally changing care pathways for specific diseases – like diabetes, congestive heart failure, COPD and other conditions that are costly and have poor quality outcomes – by implementing proactive health management strategies to keep these patients healthier.


  1. Physician engagement becoming even more critical. Physicians direct and order the majority of the care. Without their buy-in, it’s nearly impossible to make the fundamental changes required in moving to value-based care. In order to reap the benefits of new technologies and care models, C-suite leaders will not only need to continue to increase their engagement with physicians, but must also find ways to align their interests, goals and strategies with the broader healthcare organization.


  1. Consolidation leading to bigger organizations. Population health management requires organizations of scale to reduce costs, waste and redundancy. It’s impossible for small players to survive for long in this new world of healthcare. Scale will win. Smaller healthcare organizations are getting bought out by bigger ones – and even the larger organizations are merging together to create super regional mega systems. At the same time, big players from across the market – payers, providers, vendors, etc. – are increasing collaboration and developing partnerships to leverage both size and expertise to improve care outcomes.


  1. IDNs making more decisions. We can no longer afford the luxury of multiple-decision makers. When 500 people are making decisions independently, it leads to cost variations and waste. Integrated delivery networks are responding to this, evolving from holding companies to operating companies. Instead of operating as 500 practices of one physician, IDNs are now operating as one practice of 500 physicians. This shift means decisions on capital, supply and operations will be made at a centralized level, leaving less room for local decision-making.


  1. Cutting costs is primary driver. Spending for healthcare still accounts for about 18 percent of our GDP, but regulatory changes and market forces are squeezing money out of the system. Providers are facing reduced reimbursements from Medicare, as well as private payers. To make up for the reduced reimbursements, provider organizations are using every tool at their disposal to cut waste and variation while increasing value to patients. Providers are leveraging their new size to negotiate better pricing, increasing operational efficiencies, and engaging with physicians to develop and implement new care models that can provide quality care and lower cost.

The past few years have been a challenge for the healthcare industry and the journey to realign ourselves to meet key regulatory goals will take some time. As executives in the C-Suite contemplate their next few years, they must think about these “new realities” if they are to be successful.

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