Five Ways The Healthcare Industry Will (and Won’t) Change in 2018

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In 2017, the healthcare industry in America held its breath, and braced for change.

Politically, it was the most bitterly contentious, suspenseful, erratic year for healthcare since the passage of the Affordable Care Act in 2010. Businesses across every sector felt the shocks. But for all the debate — policy stayed more or less the same.

That’s not to say, however, that change isn’t coming. Whether reacting to word from Washington, or innovating on their own terms, healthcare businesses are trying to anticipate what could happen next year.

Here are 5 predictions for what 2018 holds for them

1. Facing ACA Uncertainty, Leaders in Healthcare Benefits and Plan Design Will Play it Safe

Even after a full year of debate, the question of the Affordable Care Act’s future is far from resolved. Efforts continue to either stabilize Obamacare or repeal it.

Whether they’re rooting for repeal, or hoping the ACA survives, healthcare leaders will not enjoy the lingering uncertainty. We expect them to adopt conservative approaches for their organizations, as long as the debate rages on.

This certainly applies to employers as well. Across the political spectrum, the ACA’s Employer Mandate is one of the law’s least popular provisions. We can expect at least some modification to it in 2018. In anticipation, employers are likely to pursue safe strategies in benefits design.

For small-to-medium employers, this could mean less generous benefits packages for employees. For large self-insured employers, this could mean narrower networks of approved providers. More on this below.

2. Employer Narrow Networks Will Surge in Popularity

So far, many employers have been skeptical about adopting narrow networks for their employees. The financial data just hasn’t been strong enough to support them. But, a particular type of narrow network, the ‘high-performance network’, looks more promising.

Ordinary narrow networks are built with cost-savings in mind. They’re designed to drive patient volume to a select group providers, in exchange for steep discounts on high-volume procedures.

High-performance networks, though, focus on outcomes first. Instead of just looking for the best deals, employers with high-performance networks first look for the best doctors. The idea is that employee trust and acceptance is higher, favorable bundled prices can still be negotiated, and in the long run, good healthcare outcomes will pay for themselves.

Although only 19% of employers are planning on developing high-performance networks in 2018, we expect that number to rise as employers devote more resources toward network optimization. 2019 will see a surge of narrow network deployment.

3. Higher Costs Will Yield More Conservative, Judicious Patients

Last year saw a breathtaking shift in the financial burden of healthcare. For the first time, direct payments from patients accounted for 35% of provider revenue — putting them behind only Medicare and Medicaid.

Payers, policy-makers, and providers share responsibility for this issue. Health-insurance deductibles have risen in step with the sticker-price for care. This means bigger proportions of bigger bills have been foisted onto patients.

With so much of their own money at stake, patients will pay close attention to the value they get for their dollar. They will have elevated expectations for service in hospitals. Which, as The Atlantic covered, does not necessarily mean a commensurate improvement in care.

However, they will also shop around more carefully, and make efforts to choose providers with the best possible health outcomes for their specific condition. Providers that can prove their performance to patients will have a strong edge over their competitors in 2018.

4. Hospitals Will Continue to Keep Outcomes Close to the Vest

But that transparency may not be forthcoming. A dysfunctional aspect of the healthcare industry will linger on in 2018 — the tendency for hospitals to be opaque about their outcomes data.

And unfortunately, more and more physicians are convinced that this acceptable. According to the 2016 Medscape Ethics Survey, only 78% of physicians said it is always unacceptable to cover-up their mistakes. That’s down from 95% only six years ago.

Again, it’s a case of misaligned incentives. Providers face severe penalties for underperformance, both in terms of decreased reimbursement, and subsequent drops in patient volume. This discourages them from being completely forthright about the quality of their care. Even if the consequences of hiding mistakes can be tragic.

We predict that, barring a major policy change, this trend will continue to worsen in 2018. Perhaps even more evidence will emerge of physicians or hospitals covering up significant errors in care. If that proves to be the case, other actors — journalists, employers, analytics firms — might pressure providers into transparency.

5. Inappropriate Surgeries Will Decline

Patients are not entirely powerless, though. Thriftier and more savvy, they’re also paying attention to a major problem in the industry: inappropriate surgeries.

Under the fee-for-service model, surgeons are incentivized to over-recommend surgeries, needlessly exposing patients to surgical risk. This is famously true in orthopedics. One study found that up to 1/3 of total knee replacement surgeries were inappropriate.

But as bundled payments have become more popular, hospitals more risk-averse, the public more aware of the issue, and patients more liable for costs — this trend should plummet in 2018 and beyond.

This is a spot of good news for the industry. Incentives are finally beginning to align against unnecessary surgeries, which will save providers time and money, and keep patients safe.

Forward to Next Year

2018 could be a tough year for many types of healthcare organizations. The decline in inappropriate surgeries shows, however, that it’s possible for smart systems to drive down costs and improve patient safety.

Everyone wins when the healthcare system unites around quality care. And, ultimately, we’re optimistic that next year’s healthcare leaders will strive for it.