Healthcare consumerism was already on the rise before the pandemic hit. The provider-patient power differential was already beginning to shift, with more high-deductible health plans being offered and employers shifting the burden of managing healthcare expenses to individual employees. Before COVID-19 entered our shared lexicon, patients were beginning to take a more active role as purchasers and managers of their own care.
This year’s explosion in telehealth, brought about by the COVID-19 pandemic, has dramatically upped the ante in terms of competition, enabling budget- and value-minded patients to shop for their care unfettered by geographical restraints. The turn to digital care isn’t one that will be undone after the pandemic, either. Eighty percent of patients say they’re likely to continue utilizing virtual visits with their doctors, even after the pandemic ends.
Providing an ever-more-discerning patient population with a new, vast array of providers has disrupted the longstanding monopoly hospitals held over their local patient populations. The fallout has come in the form of widespread network leakage and lost revenue. By October, in fact, revenue for hospitals in the U.S. was down 9.2% year-over-year. Able to select providers from the comfort of home and with an ever-increasing amount of personal health data at their fingertips, patients have far more freedom in 2021 to choose the provider that works for them.
That means that to compete, traditional providers have had to adapt quickly, training staff on remote care and making telehealth an option for every patient. According to McKinsey, health systems, independent practices, behavioral health providers, and others have reported 50-175x jumps in the number of telehealth visits since the pandemic began.
Having the technology to compete in the telehealth arena won’t be enough, however, for mainstream providers to compete, not to mention recover any lost revenue. Patients often don’t feel the same kind of brand connection or loyalty to hospitals that they might to other products or organizations. To keep patients in the network, we’ll see a new push in 2021 toward marketing, patient experience, and most importantly, loyalty.
The joint venture just announced between Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. is anticipated to bring profound transformation to the healthcare industry. By joining forces, these three giants hope to leverage their technological, sales, and investment expertise to address and resolve the many inefficiencies in the current U.S. healthcare system. The objective of this partnership is to harness their considerable scale and operational efficiency to manage healthcare’s rapidly growing costs, placing greater emphasis on providing high-value healthcare services.
Regardless of whether the partners are successful in disrupting the healthcare industry, one positive outcome is the strength these new players bring the comparative weakness of the fragmented American healthcare system into sharp relief. In the press release, Berkshire Hathaway Chairman and CEO Warren Buffett explains the primary motivator of the joint venture with the now-infamous phrase, “The ballooning costs of healthcare act as a hungry tapeworm on the American economy.” With healthcare accounting for 17.9 percent of the gross domestic product in 2016, the “hungry tapeworm” of exploding healthcare costs is fueled by the widespread inefficiencies of the U.S. healthcare system.
Addressing the “Tapeworm Effect,” as Buffet mentions, presents a blue ocean for disruptive innovation. The paradigm shift from fee-for-service to value-based care models requires healthcare systems to become increasingly patient-centric. To lower their costs, healthcare systems must eliminate variations and inefficiencies in their care processes that lead to poor patient outcomes, such as hospital-acquired infections and 30-day readmissions. By investing in data-driven technology, healthcare organizations can create systemic improvements in care delivery at every touchpoint across the patient journey.