RamaOnHealthcare November 3, 2023
The Pace is Fast, The Appetite Strong, and Regulation Increasingly Hostile
Today, RamaOnHealthcare talks with Dr. Paul H. Keckley, Managing Editor of The Keckley Report, a weekly analysis of trends and issues in US healthcare, and Managing Partner of The Keckley Group with advisory services to health systems, medical groups, and healthcare investors.
RamaOnHealthcare (ROH): Welcome to RamaOnHealthcare! Let’s get into it! What is the destination for the U.S. system in the next ten years and beyond?
Dr. Paul Keckley (PK): The destination is unknown, but signals point toward a reckoning between the:
- STATUS QUO, aka the sustainability of the complex, fragmented, expensive collection of codependent sectors that operate semi-autonomously in pursuit of growth and
- SYSTEMNESS driven by public disgust with the lack of transparency, equitable access, affordability, and status quo performance.
The FORMER is acceptable to insiders so long as regulatory guardrails facilitate growth and return on capital for investors.
At the same time, the LATTER is preferred among reformers who think the system is irreparably flawed and the integration of financing + delivery + health + social services is a structural imperative. State and federal regulators and private investment will be more prominent in either scenario. However, the latter will drive rationalization of public and private funding away from traditional facilities like hospitals and long-term and diagnostic clinics.
ROH: In your writing and research, you mention that “lag indicators” are of diminishing value in defining the future of the U.S. system. Why do you feel that way?
PK: Industries in which lag indicators are of most use in forecasts and opportunity assessments are those in which:
- the pace of technological change is modest,
- the public’s appetite for “newer or better” is measurable and relatively constrained and
- regulatory oversight supports the commercial interests of its major operators.
In healthcare, the pace is fast, the appetite strong, and regulation increasingly hostile toward incumbents and welcoming for outsiders and new entrants. Lag indicators about disease prevalence, facility, provider, and prescription drug utilization remain helpful. But process improvements, data-driven decision-making, and technology-enabled care management, including self-care, significantly alter the operational structures and workforces.
…process improvements, data-driven decision-making, and technology-enabled care management, including self-care, significantly alter the operational structures and workforces.
Lead indicators necessary to complete a picture of the future must invest more attention in consumer behaviors outside conventional assumptions about ‘patient care’ as an industry prone to disruption.
ROH: Are organizations prepared? Why or why not?
PK: Some are, most aren’t. The one’s best-prepared use is a dashboard of near-term financial and operational KPIs (key performance indicators). It is an ongoing, robust, broad market surveillance process whereby future-state scenarios are considered, alternative strategies are tested, and resources are invested in non-core bets. But most organizations do an incomplete job in market surveillance, an inadequate job in deliberating future-state scenarios, and default to their CEO’s judgment rather than engaging energetically and objectively at the Board and C Suite levels.
The one’s best-prepared use is a dashboard of near-term financial and operational KPIs (key performance indicators).
ROH: What role will technologies play? Is their role a shift from the current emphasis?
PK: Judicious evaluation of technology and its focused integration into the workflows of organizations are the functions that define an organization’s prowess in harnessing technology. Historically, these efforts focused on administrative decision support, workflow process improvement, and data engineering, i.e., AI, customized therapeutics, etc. That’s today, and at best, it’s only a start. The enablement of self-care in homes, schools, and workplaces; the synchronous widening of inputs from innovative environments; the addition of non-allopathic therapeutic best practices; and the use of transactional data beyond claims will elevate the case for technology from ‘cheaper and faster’ to ‘better.’
will elevate the case for technology from ‘cheaper and faster’ to ‘better.’
ROH: In your five impact zones – clinical innovation, technology, capital, regulation, and consumers are the major shifts. To which do health organizations need to be most attentive?
PK: Changes impacting every sector of healthcare result from trends manifesting in five zones of activity. In each, at a high level, the directional signals are evident:
- Clinical innovations: More dependence on biologics and companion therapies, more attention to chronic care management models with intensified focus on self-care and behavior modification, fewer but sicker patients requiring beds, and more.
- Technological changes: Adding smart devices, self-care applications, upgrading administrative decision-support tools, robotics, virtualization, and continued miniaturization.
- Capital markets: More dependence on private capital even as debt becomes problematic to many, more funding variability across states and local communities, more constraint on private investments in health services, more dependence on consumer out-of-pocket, and more.
- Regulatory influence: Continued Congressional antipathy toward the industry, increased role of state oversight, increased impact of court decisions and executive orders, and direct funding constraints vis a vis Medicare, Medicaid, CHIPs, VHA, HIS, et al. And trade policies and commerce directly impact global politics and supply-chain procurement. And…
- Consumers: Dissatisfaction, bad debt, and Net Promoter Scores for most incumbents are low, while disruptors and upstarts are poised for market growth.
Changes impacting every sector of healthcare result from trends manifesting in five zones of activity.
Changes in each zone are asynchronous, and the pace varies widely. It is a complicated market to monitor.
ROH: In thinking long-term, which sectors are less conducive to these changes? More advantaged?
PK: There are opportunities for forward-thinking organizations in each sector, but some are advantaged more than others:
- Large national private insurers and investor-owned hospital chains (like United, Humana, and HCA) have access to capital and sufficient scale to take advantage of market volatility.
- Large HIT solution providers (i.e., Epic, Oracle) have the advantage of scale likely to impact smaller competitors negatively. And…
- Data solution providers that integrate administrative, clinical, and financial data in user-friendly point solutions.
There are opportunities for forward-thinking organizations in each sector….
ROH: Dr. Keckley, thank you for discussing an insider view of Healthcare and the challenges, opportunities, your perspective, and details within the bigger picture! We wish you all the best!
More about Dr. Keckley
He has significant executive leadership experience in the public and private sectors and is a frequent speaker and advisor to healthcare organizations. He is Managing Editor of The Keckley Report (The Keckley Report – Paul Keckley), a weekly analysis of trends and issues in US healthcare, and Managing Partner of The Keckley Group, which provides advisory services to health systems, medical groups, and healthcare investors. He has also published three books.
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