Rae Woods (00:02):
From Advisory Board, we are bringing you a Radio Advisory, your weekly download on the biggest challenges happening in healthcare. My name is Rachel Woods, you can call me Rae.

(00:15):
Look, it's no secret that the healthcare industry is facing an uphill battle on many fronts, rising costs, heightened competition, staffing shortages, changes in demand, fragmented policy, and that's just to name a few. I hate to say it, but those challenges aren't necessarily going away in 2023, or even beyond that. I know we're at a time where everything feels urgent. So for the next two episodes, I want to spend some time unpacking all the things you need to know to be successful in 2023 and beyond. I've invited two Advisory Board experts to do that, Natalie Trebes and Aaron Mauck. Hey, Natalie, hey, Aaron, welcome back to Radio Advisory.

Natalie Trebes (01:03):
Thank you.

Aaron Mauck (01:04):
Thanks.

Natalie Trebes (01:05):
Good to be here.

Rae Woods (01:06):
Let me be hopefully, the first to tell you Happy New Year.

Natalie Trebes (01:09):
I hope you're not the first, this is so late in the year.

Rae Woods (01:12):
Maybe I'm the last to tell you Happy New Year.

Natalie Trebes (01:14):
Happy New Year, Rae.

Aaron Mauck (01:15):
Happy New Year.

Rae Woods (01:17):
Are you ready for what the next year is going to be like for healthcare? Are you rested and ready to jump back into things?

Natalie Trebes (01:24):
I am doing my usual over-ambitious planning of how I'm going to solve all of my problems at work in the industry. Everyone is telling me that I'm doing too much and I need to reign it in. But that's how I work. Can't wait to slash some plans about Q2.

Aaron Mauck (01:44):
Oh yeah, and Q4. I'm all ready.

Natalie Trebes (01:44):
Oh, no.

Rae Woods (01:58):
Well, there's a lot that we can talk about when it comes to the industry in 2023, but I want to start at the highest level. What are the essential things that every healthcare executive needs to understand to be successful in 2023?

Natalie Trebes (02:13):
I think you nailed it when you said there's a lot. That is absolutely true. The amount of different urgent disruptive forces we have right now means everyone, I think, is not fully rested from the last year, and entering this year with an unusually high number of still short-term crises that are on the table for them. It's really chaotic in healthcare right now. I think if I had to boil it down, I would say everyone has an overwhelming deluge of things on their plate that are all distracting their strategic attention. Second, amidst that, some players are really making big moves to compete for strategic assets, really focusing on influencing how and where patient care is delivered. Then, if we zoom out, we are actually at an interesting moment where we are on a crash course for some things in healthcare to really become unsustainable. We've known that for a long time, but I think a lot of pivot points are happening right now, and we're going to have to reckon with those disruptions as we make decisions at the moment.

Rae Woods (03:14):
Natalie, you just used a word that I didn't hear a lot when we talked about healthcare. We always talk about disruption, it's never a slow time in healthcare. That's all something that anyone who listens to this podcast hopefully knows all too well, but you just used the word chaos. I've heard Aaron use the word crisis over and over again. People talk about extreme times. So to me, I feel like we have to start this conversation just focusing on the urgent priorities. Just focusing on what leaders have to do right now in the very, very short term in Q1 of 2023. Is that how we want to be focusing our time for this conversation?

Natalie Trebes (03:54):
What's that blessing I've seen on the internet, may you live in precedented times? I think that's really true right now of the number of times I've caught myself having to edit unprecedented out of my writing and pick which one thing I'm going to point to as unprecedented, is probably unprecedented itself.

Aaron Mauck (04:13):
Right, but we can't let the present come at the expense of some of the future planning that we do. So under crisis conditions, we have a tendency to run around with our hair on fire. And if you talk to strategic planners from across the healthcare sector, that's precisely what a lot of them are doing, worrying around short-term considerations, sometimes at the expense of long-term strategy.

(04:33):
I think the tension for us in 2023, is going to be balancing very acute short-term challenges, which from a financial perspective, from care delivery perspective, from a staffing perspective, with long-term strategy. Something that's going to sustain us not just in the next 18 months or 36 months, but really over the next decade as a lot of the challenges start to accumulate and we have to find broader solutions for them.

Rae Woods (04:57):
I want us to dig into these things in a little bit more specificity. Natalie, when we started off this conversation, you mentioned just the volatility in the market right now. I would hope that our listeners understand what that means. They've heard us talk about the financial pressures on the industry. They've heard us talk about workforce shortages. They've heard us talk about insurance coverage shifts, all high concerns for leaders today. By the way, if you didn't hear those episodes, we can add those to the show notes. All that means that the industry basically has no bandwidth. Their hair is on fire, like Aaron said. That is happening at a time when demand for services is getting more varied and more complex. What do you want to make sure leaders know?

Natalie Trebes (05:42):
I would emphasize when it comes to demand, stability, I think is the word that comes to mind or rather, instability. It is not so much a concern about is there demand? We go back in time to the beginning of the pandemic. That was a really big concern, right? Did volumes completely plummet? Do we not know what's going to happen at all? We have more demand than ever. It's about how we keep up with it, and how do we manage it appropriately?

(06:08):
So we look at the healthcare system, especially the healthcare delivery system, directly. It is all a capacity problem. It is a care supply problem, especially when we look at staffing gaps, bottlenecks in the care continuum, especially when we're talking about the ED, post-acute settings, and all of that.

Aaron Mauck (06:23):
We also see pretty significant challenges associated with [inaudible 00:06:27] care shifts. We see a lot of procedures moving out of the hospital space entirely, and that creates coordination challenges as well as supply challenges. And then we have disruptions from outside as well. You think about some of the regulatory dynamics that we've seen, or the legal changes that have come down in particular around, for instance, reproductive rights. We're going to have to figure out strategies for addressing the care needs of different populations, and what we found is that we now have 50 different state approaches to the management of reproductive rights. That's leading to both supply changes, suppliers of services, clinical providers, having to navigate complex legal conditions or circumstances where they may not know what they're going to be able to provide legally, and also demand challenges as patients move from state to state, to receive certain services.

Rae Woods (07:17):
So demand is adding to the complexity of the challenges in the market, adding to the financial pressures, adding to the challenges with workforce shortages, etcetera. But my question is, if a volatile market is a challenge in healthcare, is that challenge at the same level for all healthcare organizations or for all stakeholders?

Aaron Mauck (07:35):
Not necessarily. We've seen some providers be quite successful over the course of the last several years. You probably saw some recent data around for-profit system performance over the course of the pandemic, and some of them did quite well. In fact, they did better over the course of the pandemic than they were doing before the pandemic. Many other providers, of course, and many not-for-profit providers have run into enormous challenges from a financial perspective. But then when you move outside the provider space, we know that some plans, and certainly some disruptive entrants have been quite successful over the course of the pandemic and have not found this to be as financially challenging as it might be. Sometimes chaos can lead to conditions that facilitate growth.

Natalie Trebes (08:17):
And I would think about who has the bandwidth to take a second and sit back and maybe make some thoughtful decisions about strategic partnerships or acquisitions that they want to pursue.

Rae Woods (08:28):
Or has the capital to do that.

Natalie Trebes (08:29):
Or has the capital. Everyone is dealing with problems. I don't want to pretend some organizations are not struggling in some way. Everyone's got challenges. It's just a question of who has the most challenges and who has a little bit of breathing room to make some thoughtful decisions and not be having to deal with the immediate firefighting.

Rae Woods (08:46):
And generally speaking, right, Aaron, you talked about an example that is an outlier, but generally speaking, we tend to see hospitals at the losing end of the power struggle right now, especially if I compare them to the healthcare giants, the big insurers, retailers, the big tech companies that are just still in a buying frenzy trying to build up these vertical ecosystems. My question is, is that power shift or power change something that is just inevitable? Is this something that you want healthcare leaders to merely accept as reality, going into 2023?

Aaron Mauck (09:21):
The idea that we will ever go back to the pre-pandemic moment of relative provider power, of hospital and health system power, is illusory. We're never going to go back to that pre-2019 reality. That has to be confronted by hospitals and health systems. They have to understand that the fixed capital structure that they play in, the overall challenges associated with [inaudible 00:09:47] of care, are really going to just reshape the world for them. It doesn't mean that hospitals are going away, but it certainly means that whatever the hospital footprint is going forward, is going to look incredibly different than it did 10 years ago or 20 years ago. That just is a reality that if you're a leader, you're going to have to confront and find solutions for. Whether that means diversification of assets, whether that means new care delivery models, whether that means partnership, that's a reality that is going to be the way forward.

Rae Woods (10:15):
And I should say that those giants that I mentioned that are buying up assets, is driving competition and is changing how care can be delivered, who can be delivering care, where a patient might be able to get care, which is adding to this power-shift that you're talking about on the hospital side.

Natalie Trebes (10:34):
When we talk about power and the hospitals losing power, I think it's important to define what we mean there a little bit, or zoom in on what power we're talking about. I think it's really the power to control procedural volumes and patient flows, and the power to determine what partnerships and what M&A moves are happening. We've seen the FTC pressure a lot of the horizontal consolidation that hospital systems have tried to do. There's some restrictions coming there increasingly. And then we've seen a lot of movement from, especially insurance and big retail entities to add a whole suite of assets. I'm sure we'll talk about that, but that is really what's this countervailing force on controlling patient volumes. That's the push-pull happening in the hospital space right now.

Rae Woods (11:22):
And I should be clear, these new entrants, these big giants, aren't necessarily guaranteed to succeed either, right? They're buying up assets, physician or otherwise, but that doesn't necessarily, automatically mean that they're going to be successful in their goals, right?

Natalie Trebes (11:40):
That's right. I think they have to move from owning multiple businesses to actually coordinating multiple businesses. Anybody who's been in healthcare for a while, especially with any merger or integration effort, actually making the assets work together, play well together, have a coordinated strategy, is the whole ballgame there. I don't think it is definitely written in stone that this will actually turn into all of the dramatic influence we think it might. I think the pieces are there, and it really comes down to what goals are these organizations actually prioritizing and translating across all of their different pieces.

Rae Woods (12:22):
Anyone who's ever owned or operated a physician enterprise knows how difficult it is to get a clinical workforce all moving in the same direction. Frankly, I think that's a nut we haven't successfully cracked in the industry, period. Now that's going to be Amazon's challenge and some of these other big players.

Aaron Mauck (12:40):
Herding cats, doesn't even begin to describe it.

Natalie Trebes (12:44):
The physician space, I think is a really good example. A lot of the most interesting acquisitions of the last year are physician groups that are really well established, really progressive, and have the secret source that everybody points to, nailed. Will they be able to translate that across the broader organization? Will the owner now impose new standards? Does that disrupt what was magic about that physician practice, to begin with? I think these are really hard questions to wrestle with of how much autonomy these organizations are giving them.

Rae Woods (14:23):
I feel like we're circling around this big idea that competition in healthcare is perhaps bigger than it's ever been, and that competition is spurred in part because physician ownership is changing, but also when we think about some other assets that are changing care delivery, are there a couple of areas that you are watching that we should be paying attention to?

Aaron Mauck (14:47):
Yeah. Two areas that are of particular concern for all of us are going to be home-based care and telehealth. New modalities essentially, that have the potential to reshape the way in which we engage in care delivery, but also a lot of unknowns associated with them at present that we're going to have to manage. So when we think about home-based care, for instance, although there's a lot of potential for this, and we see really the entire industry looking to the future in which home-based care plays a much more prominent role than it does at present, there's lots of different clinical modalities that we have to tease out when we're thinking about where we might go. Some of these are easy targets. Things like home infusion, which is already happening, has been growing by leaps and downs. And then there are a bunch more complicated and comprehensive approaches, whether it's hospital at home or sniff at home, which may work for certain markets, may work for certain population segments, but are going to be hard to apply generally to their whole American population.

(15:42):
Telehealth is the same way. When we think about some of the dynamics around telehealth, telehealth certainly has the potential to round out and glue together elements of the care delivery system in ways that would be constructive for patients and ultimately yield lower-cost care, ideally, and better patient outcomes. However, we see a lot of different point solutions when it comes to telehealth, most of which are of course competing for consumer attention. That may yield actually, more chaos than continuity.

Rae Woods (16:12):
But if I think about the difference between home-based care and telehealth, and telehealth is a subset of home-based care, it is a way that people can receive care away from a physician's office or even a hospital. If I compare the two, it seems like the momentum around home-based care continues, whereas telehealth, things maybe have cooled off a little bit. Does that mean that folks should maybe take their foot off the gas on telehealth?

Natalie Trebes (16:38):
When we look at telehealth as a large category of technologies and modalities, the industry is still in the very early stages there, especially when it comes to remote patient monitoring, asynchronous applications. These are mostly in pilot phase, especially when you compare it to the massive amount of virtual visits that happened over the last couple of years. Everyone is very familiar with that and understands how those are being used. Way less use of these other technologies.

(17:05):
Aaron alluded to this, but together, all of those represent new ways in which we can actually improve what happens in healthcare, right? You can add touchpoints with remote patient monitoring. The setup of the device, the interactions of getting the data back to the provider, the messaging to the patient, these are all things that did not happen in healthcare in the past. If we're looking at this future application of this, that represents new ways we can maybe prevent conditions from arising and maybe redirect where patients go, that also represents new ways that different organizations can have a relationship with a patient.

(17:43):
That introduces, again, in this competitive field, new organizations, clinicians, etcetera, who can influence what patients are thinking and doing and what they care about. What their next steps are in healthcare. That has ramifications for the rest of their journey.

Rae Woods (17:58):
What advice do you have for real leaders that are trying to size how much of this is actually going to be happening in 2023? Whether it's actually integrating more home-based care, more telehealth into their offering, partnering with another entity, reimbursing for these services, etcetera? What advice do you have for real people when it comes to determining how much of this should happen in 2023?

Natalie Trebes (18:20):
I would go back to what is your actual goal for what you're trying to accomplish? Are you trying to route volumes back into your organization, or direct where patients go for downstream care? Or are you trying to manage a chronic condition, for example, or participate in some sort of risk-based payment model, and work on more population health coordination?

(18:43):
There's a variety of different goals you can go after. I think all of these things will happen. It's important for you to know what is actually important for your organization as you're designing what you want to invest in.

Aaron Mauck (18:53):
I completely agree. These technologies are just technologies, right? They can be directed in any direction we choose to direct them in. That can mean for payers a very different approach, for instance, when they're acquiring telehealth or home-based entities. They're going to approach those very differently than a provider organization would, that may be interested, for instance, in routing volumes back to the hospital because they want to use it to ultimately sustain their bottom line.

(19:19):
We're seeing, therefore, a lot of diversity in terms of how different players from across the healthcare sector are using these technologies. In some ways, this is great. That means these are technologies that can be used for a variety of purposes, and ideally, we'll achieve ends that further benefits to the consumer. Whether that means improved health outcomes or lower cost. It also could mean that there's a lot of chaos when these technologies get put in play. And that from a consumer perspective, you're getting a lot of divided attention and incoherent or competing goals with the use of these technologies.

Rae Woods (19:55):
To me, this all says that despite years, even before the pandemic, that we've invested in, trying to nudge consumer decisions, make them better shoppers, make them smarter, make it like what they would do in retail, etcetera, etcetera. Create a consumer marketplace that, first of all, we haven't actually done that. And second of all, there's still a ton of competition. That's the theme of what we've been talking about around who can actually influence consumer decisions.

Aaron Mauck (20:28):
If anything, consumer attention from a healthcare perspective is more divided than it's ever been. We've seen such a proliferation of point solutions, such a proliferation of companies aimed specifically at the consumer. As a healthcare consumer, it represents a consistent and pretty pronounced challenge for everybody to try to grab consumer attention. Those on the losing end may in fact be incumbent providers, for instance, which were slow off the mark to grab consumers, and are only now trying to devise strategies to garner their attention and to maintain loyalty.

Natalie Trebes (21:05):
And Rae, you said something interesting around consumers not being good shoppers in healthcare. We've talked about that for a really long time, but we've continued to try to drive towards, let's work on making consumers better shoppers. I think in the last year or so we've started to see a little bit of a shift towards the goal is to actually design an environment where consumers can't necessarily make a mistake, per se.

Rae Woods (21:32):
Right.

Natalie Trebes (21:32):
And it's more about who is going to be best at crafting that default choice situation for a consumer. I've seen strategies starting to break down into, I would categorize it into two different lanes here. One is around trying to make the choices infinite. So making it really obvious every time you have a choice in healthcare. Now, a lot of times you go into your doctor's office and you've accidentally made about 50 choices that are going to show up on your bill later.

(22:00):
You didn't know that at the time. You just thought you were saying yes to what the doctor said. Some organizations, I think, are trying to push out in front of you ahead of time exactly what decisions you're going to have to make in those settings and make that really obvious, and make it really obvious which choice is best for you. The other set of strategies we see are really around trying to make you only have to make one choice. So where am I starting my healthcare journey? And then someone is going to guide me every step of the way to where I want to go. So I think about centers of excellence strategies that employers are using. I think about the virtual first products from health plans where you start with a virtual PCP and then get routed through the health plan network, accordingly. So two different flavors, but all of this is about, we're not going to leave consumers on their own to figure this out, we're going to try to change the world that they're navigating.

Rae Woods (22:51):
What that tells me is that the levers that some of these organizations or stakeholders are pulling in order to win consumer attention, look very different in 2023 than in previous years.

Aaron Mauck (23:03):
Absolutely. We're seeing folks become more savvy around those realities around consumer attention, and we expect that to continue and probably accelerate as the consumer replaces the patient as the principal target of the healthcare industry.

Rae Woods (23:19):
When it comes to what executives and CEOs in particular, need to know going into this year. There's this set of, dare I say, more obvious factors that admittedly, we brushed over, right? The financial reality, certainly what's happening when it comes to workforce shortages, the nursing crisis, etcetera. These are things that executives have been feeling over the course of the last year. But where we've focused this conversation is on a different set of still very near-term challenges, which is how competition is driving changes in care delivery.

(23:56):
It's possible that the folks listening to this podcast were feeling those effects already, or if not, they will feel those challenges very soon. Maybe in some of the specific examples that we've talked about. Is that all that executives really need to be prepared to know in 2023?

Aaron Mauck (24:12):
No, there's an array of longer-term challenges that executives are going to have to confront, that we'll have to concern ourselves with, but probably in the next episode.

Natalie Trebes (24:22):
Yeah, I don't know if we have time to do that now.

Rae Woods (24:25):
So then let me ask you this, to end, maybe this part of our conversation. Everything we've talked about so far feels urgent, even the things that we didn't have time to go really deep into. What would you say to somebody who feels overwhelmed and doesn't know where to start?

Natalie Trebes (24:42):
I would probably start with recognizing that you're not going to do it all. There is a lot of competition and excitement out there, and it can feel like you need to go after every single one of these different areas. We talked about home care investments, we talked about telehealth strategy. We talked about trying to attract and influence consumers, and a bunch of different ways that organizations are working on those. You can't do it all. You need to know what is the characteristic of your organization that is going to make one of those strategies really work. They aren't all going to work for every organization, and you need to know what is your unique feature, whether that is really deep relationships with the community, or really specific skillset and specialization in a particular disease state and management, whatever that might be. You need to understand your specific asset and how that relates to some of these different competitive forces.

Aaron Mauck (25:38):
I completely agree, Natalie. Under conditions of crisis, the thing to be aware of is your own limits and your own identity. I've been out in the market quite a bit over the course of the last several months, and I ask every single organization I'm with, what their top priority is. I'm astounded by the diversity in the responses. This crisis is hitting folks in very different ways. Providers, of course, it's often enough staffing, but you're talking to some folks that are seeing huge opportunities for growth, and they're pursuing a very different set of priorities. Knowing enough about what you need to do, what your identity is, and what the future is likely for you in your market and in your sector, is probably the most important consideration.

Rae Woods (26:22):
Well, Aaron, Natalie, we'll have to talk again very soon about maybe where executives should be putting their attention a little bit further into the future, just a little bit further.

Natalie Trebes (26:34):
Sounds good.

Aaron Mauck (26:35):
Look forward to talking again soon.

Rae Woods (26:41):
In today's episode, we focused on urgent priorities, and frankly, we didn't even dig into all of the urgent priorities. That's in part because we've spent a lot of time on this podcast talking about how to deal with the financial crisis and how to deal with workforce shortages, and some of the other things we knew were going to be hitting this year because they were hitting us last year. So I've added some links to the show notes to make sure that you have what you need to be able to address those things, because remember, as always, we're here to help.

(27:14):
If you like Radio Advisory, please share it with your networks. Subscribe wherever you get your podcast and leave a rating and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Katy Anderson and Kristin Myers. This episode was edited by Dan Tayag, with technical support by Chris Phelps and Joe Shrum. Additional support was provided by Carson Sisk, Leanne Elston and Nicole Addy. Thanks for listening.