2020 will likely be the year of the consumer for health plans and health systems

For health plans, hospitals, and health systems, 2020 will likely be the year of the consumer…or at a minimum, the year of greater consumer influence. While Congress and the administration have been pushing for more interoperability and greater price transparency for drugs and for hospital costs, these changes are actually being pushed by, or at least inspired by, consumers. Our Global Health Care Outlook paper notes that consumers are no longer passive participants in the health care process, but rather are demanding transparency, convenience, access, and personalized products and services.

The Deloitte Center for Health Solutions recently interviewed health plan and health system CEOs to determine which factors they thought would have the most significant impact on the health sector. While a variety of influences are pushing and pulling the sector, the vast majority of leaders we interviewed said consumers—who are becoming increasingly proactive—would be major change drivers during the next 10 years.

There is a recognition among sector leaders that they need to navigate a changing landscape that has new rules and more and different competitors. In response, many of them said they are trying to determine how to improve convenience and access, reduce costs, and transition to more of a digital and actively engaged consumer experience. But the consumer isn’t the only factor that CEOs expect will have an influence on health plans, hospitals, and health systems in 2020 and beyond. Here are five more:

1. Value-based payment models: Seema Verma, administrator of the US Centers for Medicare and Medicaid Services (CMS), recently warned that business models focused solely on increasing volume—rather than improving health outcomes, coordinating care, and cutting waste—would not succeed in the changing health care environment.¹ However, many CEOs in our prior studies had predicted they would be much further along in adopting value-based payment models than they are today. Making the transition from the fee-for-service model to a model based on value has proven more complex than expected. As value-based payment models become more common, organizations that invest in consumer-engagement technologies, virtual health, and care coordination will likely be well-positioned. Even if value-based care only trudges along, those same organizations could wind up in a stronger competitive position with consumers. While the CEOs we interviewed recognize that CMS, Congress, and state legislators will likely help push the migration from volume to value, many of them told us they prefer to set the course themselves rather than be mandated by regulation.
    
2. The transition from inpatient to outpatient: The inpatient business has historically driven hospital revenue and results. In 1995, outpatient revenue accounted for about a third of hospital revenue, according to our Global Health Care Outlook. In 2017 (the most recent year for which data are available) US hospitals generated $472 billion in outpatient revenue and only slightly more—$498 billion—in inpatient revenue.² Outpatient business is on track to reach parity and surpass inpatient revenue in the next year or two. Moving care to less expensive settings could improve affordability and value. We expect more care will continue to migrate to outpatient settings in 2020, and the transition to value-based care could cause it to accelerate. Moreover, the more illnesses can be prevented or diagnosed earlier, fewer inpatient beds will be needed. Health plans are also influencing some of this change through their fee schedules and reimbursement schedules.
    
3. Consolidation and integration: Consolidation will continue, although I expect it will be at a slower pace than we’ve seen over the past few years. We might also see more vertical integration (e.g., consolidation, affiliation, collaborations, joint ventures). Some commercial health plans, for example, have acquired provider networks in an effort to reduce inpatient visits by encouraging regular check-ups, prevention, and home health care. On the provider side, while some health systems are getting bigger through consolidation, they are also becoming better connected vertically by affiliating with doctors, skilled nursing, rehab, and other types of clinical care.
    
4. Non-traditional players: CEOs acknowledge that large technology and consumer-focused companies are making inroads into the health sector. These companies have a deep understanding of consumers, data analytics, and virtual care capabilities that could disrupt traditional business models. While hospital and health system CEOs agree that the industry is ripe for disruption, many of them feel strongly that their core businesses will remain intact. Some of them are forging partnerships with these outside organizations. We expect this trend will continue in 2020 as health systems look for more secure ways to store data and as large technology companies move deeper into the health care space. Some technology companies are also working to make electronic health records (EHRs) and other patient data readily available to consumers. Readily available data could arm consumers with the tools they need to make better—and presumably less expensive—decisions about their care.
    
5. Interoperability: CMS and the Office of the National Coordinator for Health Information Technology (ONC) published proposed interoperability rules in early 2019. While final rules were expected before the end of the year, the release was recently delayed. Under the proposal, Medicaid, the Children’s Health Insurance Program (CHIP), Medicare Advantage (MA), and qualified health plans sold through public insurance exchanges would need to ensure patient data can be accessed via application programming interfaces (APIs). As I noted in a My Take last spring, many health plans and systems still have a long way to go in making their data interoperable. Despite the delay, organizations should continue their drive toward interoperability.
    

In 2020, I expect consumers will continue to demand seamless, more personalized, and better integrated health care experiences. In the not-too-distant future, these capabilities will likely become table stakes for both health systems and health plans. Consumers are becoming an influential and driving force of change in the health sector—both directly and tangentially—and health plans and health systems should continue to work to meet or exceed their expectations.
 

Innovation starts with insight and seeing challenges in a new way. Amid unprecedented uncertainty and change across the health care industry, stakeholders are looking for new ways to transform the journey of care. Our US Health Care practice helps clients transform uncertainty into possibility and rapid change into lasting progress. Comprehensive audit, advisory, consulting, and tax capabilities can deliver value at every step, from insight to strategy to action. Our people know how to anticipate, collaborate, innovate, and create opportunity from even the unforeseen obstacle.

Learn more at www.deloitte.com/future