Trend | Healthcare Business Trends

7 top macro trends impacting providers, insurers and healthcare consumers today

Trend | Healthcare Business Trends

7 top macro trends impacting providers, insurers and healthcare consumers today

Consideration of the key trends driving the rise of consumerism in the U.S. healthcare system is important because they provide an essential context for a provider’s consumer-focused pricing strategy. At least seven emerging trends are affecting providers, insurers and healthcare consumers, as detailed below.

  1. Increasing demand for narrow or tiered networks. National data shows a decline in the availability of broad networks as purchasers trade-off network size for lower premiums. A major pricing design question involves determining at what price point consumers will buy a narrow network product with similar or enhanced benefits, relative to a broader network that might include a majority of physicians and hospitals in the community.1  Before participating in any narrow network product, providers require a methodology to solve for the correct price point, which may include consumer household surveys and focus groups to test various pricing propositions by service. 

  2. Expanding government business and managing payer portfolios. Facing expanding government business (e.g., through Medicare and Medicaid), providers are exploring new approaches to increasing their commercial mix among regional and national payers to optimize financial performance in the commercial segment. These approaches include, for example, focusing on marketing to commercial segment and triaging patients with payer mix as a higher priority after accounting for medical need.

  3. Blurring of traditional payer-provider boundaries. Providers are rethinking insurance risk in how they contract with health plans (e.g., pursuing more pay-for-performance contracts and shared savings contracts), partner with health plans (e.g., participating in global budget contracts and private-label product partnerships) or go-it-alone (e.g., forming provider-sponsored health plans).

  4. Growing interest in direct-to-employer arrangements. In 2019, the nation saw an increase in businesses contracting directly with healthcare providers. Of these arrangements, 18% involve contracts directly with centers of excellence and 11% involve contracts directly with accountable care organizations (ACOs). 

  5. Accelerating vertical integration. Payer-provider partnerships continue to  grow, with 22 new partnerships in 2018, and some 217 since 2013 (examples include Canopy Health’s partnership with UnitedHealthcare in San Francisco, Banner Health's joint venture with Aetna in Arizona, and Cleveland Clinic's partnership with Oscar in Northern Ohio). Many of these partnerships offer co-branded or joint venture products, and most launched in the past two years include value-based payment to improve access and reduce costs for patients.

  6. Transitioning from volume to value. The pace and extent of the shift from fee-for-service to fee-for-value continues to face a well-known conundrum: Fee-for-service priced above variable costs creates an incentive to attract more volume, whereas value-based payment creates an incentive to eliminate unnecessary utilization and invest in wellness and prevention. The trend toward value is widely supported, but fee-for-service continues to be prevalent. 

  7. Optimizing the delivery system continuum. In either circumstance, health systems embrace the idea of incorporating new delivery platforms that shift and optimize sites of care delivery, with the following percentage increases cited among leading platforms:
  • Urgent care locations up 19% from 2015 to June 20183
  • Virtual consults up 62%4
  • Freestanding emergency departments up 80%5
  • Retail clinic locations up 445% between 2006 and 20146

About the Authors

Kevin B. Sears, MHA,

is a director, BDC Advisors, Cleveland.

Robert A. Dickinson, MBA,

is a director, BDC Advisors, San Francisco.

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