The worsening and unrelenting pressure under which the healthcare industry has been operating is only going to intensify in 2023, and it’s forcing new treatments for an ailing business model.
Staunching the flow of red ink won’t be easy in 2023.
Grappling with pandemic-driven revenue losses and skyrocketing expenses has taken a financial toll: As many as two-thirds of U.S. hospitals and health systems will be in the red for 2022.
As they curtail their care delivery amidst a shortage of caregivers, revenues suffer and competition gets stiffer: There’s been an explosion in standalone (and increasingly diverse) patient services – a $20 billion market. Walgreens and Village MD are an example of aggressively expanding new alliances, shooting to open 700 full-service stores by 2025. And telehealth is expanding into new niches, such as Plume’s provision of virtual transgender services.
For all the challenges facing healthcare, the cures are there. Here’s what’s ahead.
Making healthcare professions attractive again
No question—the shortage of healthcare professionals has long been a plague on the industry that’s now at emergency levels. For nurses alone, the shortfall should hit 1.1 million by the end of 2022.
The causes are rooted in the healthcare system itself, societal forces, and public policy.
Stressful working conditions and sometimes inadequate workplace safety policies have been magnified with the pandemic. When skilled nurses remain in the field, it has led to a shortage of qualified educators. The increasingly high-cost education itself is a deterrent. Public policy also has contributed to the shortage; senior care staffing levels, for example, are short due to immigration curtailment.
People need to be given a reason to work in healthcare. Improved pay and benefits will boost recruiting and retention, but healthcare employers should attune their benefit strategies to the times. Personalized benefit programs designed to meet the needs of individual employees give employers a competitive edge.
And hospitals, in particular, are competing with employers in other industry sectors. They need to find ways to balance the negatives of their high-stress environment. This will take policies that meet people where they are at, with flexible scheduling, childcare and eldercare support, and well-being programs that emphasize mental and financial health.
Ensuring trust in healthcare delivery
Providers must remain trusted to deliver optimal, quality care, whatever the circumstances. Doing so will be the challenge in 2023.
Those that manage the basic blocking and tackling of the healthcare business, with a keen eye to current and potential risks, will maintain resiliency and be in the best position to thrive.
And there’s a lot to manage.
Start with new payment models, like value-based care. While providers remain largely reliant on fee-based payment, the transition to this incentive-based payment approach is underway – and inevitable. The shift has an impact on revenues, cash flow, and costs as well as how profitability and growth are managed long-term. Those that haven’t started the transition already should get it underway in 2023, or risk financial failure.
Disaster preparedness, for example, has never been more important. Property insurance may jump 20% or more, especially in areas most at risk to environmental catastrophes, whether severe storms, wildfires, drought or record heat.
Managing cyber risks is another area requiring ever-tighter risk management as cybercrime grows in tandem with healthcare’s growing technology dependence. Over two-thirds of U.S. healthcare organizations experienced a ransomware attack in 2021, and attacks nearly doubled from 2021 to 2022.
About the author
Pete Reilly is the practice leader and Chief Sales Officer of global insurance brokerage Hub International’s North American healthcare practice.
In this role, he directs and coordinates HUB’s healthcare planning, growth and strategic initiatives. He also works with other leaders and experts within HUB to develop and introduce proprietary products that will help healthcare organizations and providers across the care delivery spectrum.
Pete has been a featured speaker at numerous professional conferences, including ASHRM, the Bermuda Captive Conference as well as having been a guest lecturer on topics of insurance and risk management at The Wharton School, a Metzger-Conway Fellow at his alma mater, Dickinson College and he has been twice recognized as Med Pro Group’s Buffett Award winner. Additionally, Pete has served on numerous insurance carrier Agency Advisory Councils and various ASHRM National Advisory Committees.