Top Healthcare Industry Trends for 2016
The healthcare industry continues to struggle with rising costs, access constraints and the burden of an aging population where 49% of Americans suffer from one or more chronic conditions. 2016 will see more innovations aimed at addressing these monumental issues. Some of the most exciting trends are helping speed the migration of the U.S. healthcare system from our traditional fee-for-service (FFS) model to a value-based healthcare delivery model with more emphasis on prevention, proactive management of chronic conditions and cost/quality tradeoffs.
Below are the trends we believe will make the biggest impact in 2016:
- Migrating Care to Lower Cost Settings - Estimated waste from unneeded emergency room visits is approximately $38B per year according to a study performed by the Network for Excellence in Health Innovation. New strategies are being developed to deliver care in lower cost settings including, new “bedless” hospitals, community-centered outpatient facilities, virtual care centers, retail clinics, and community hospital partnerships. These types of facilities are less expensive to operate and increase patient convenience, and hence, the likelihood of receiving care.
- Rise in Onsite/Near-Site Employer Sponsored Health Centers – Towers Watson reported that nearly 40 percent of large U.S. employers with onsite health facilities plan to add new centers and new services in 2016. Employers see these centers as a way to reduce healthcare costs, increase employee productivity, and attract top employee talent. While the origin of onsite health centers was focused on occupational health issues, newer centers are offering a full range of primary care services for both employees and their dependents.
- An Increase in Technology Powered Care - The percentage of American consumers with at least one medical, health or fitness app on their mobile device has jumped from 16% to 32% since 2015. From Fitbits to connected pacemakers, ECG monitors, glucose trackers and more, there has been an explosion in digital tools that enable consumers to better manage their health and providers to remotely monitor patient conditions. Forbes predicts the medical “wearables” market to top $6B in 2016.
- Expanding Reimbursement for Telemedecine Services - The Telehealth Enhancement Act of 2015 promotes and strengthens Medicare programs by removing significant barriers to the practice of telehealth. Formerly telemedicine services were not reimbursed or were reimbursed at significantly lower rates than in-office visits. In addition to increasing payment parity between in-person and telehealth delivered services, the Telehealth Enhancement Act has enabled the expansion of care across state borders. We’ve also seen an expansion in the list of approved originating sites to include urban critical care hospitals, sole community hospitals and home telehealth sites. These changes, coupled with advances in technology, are paving the way for significant increases in telehealth delivery.
- Growing Focus on the Importance of Behavioral Healthcare One in five adults are diagnosed with mental illnesses each year, but these issues have lingered in the background of the healthcare discussion. Employers and insurers are increasingly prioritizing behavioral health care as mental illness costs businesses over $440B a year. State and federal parity laws now require insurers to cover behavioral health services as they do all other medical treatment, but a shortage of mental healthcare providers means that access to these services is a major industry issue.
- Industry Players Get better at Calculating Costs CMS aims to link 90 percent of Medicare payments to quality programs and alternative payment models by 2018. To guarantee payment, providers are required to improve accuracy of coding and will increasingly be required to justify use of higher cost specialty drugs and treatments.
- Merger Mania Moves to Health Plans Healthcare systems have been consolidating at a rapid pace for over five years, and now health plans are getting into the game. Insurers are assuming that consolidation will create operating efficiencies, increase revenue and profit, and create competitive advantages. Several high profile mergers were announced in 2015 including Cigna-Anthem, UnitedHealth-Helios, and Aetna-Humana which, if approved, will result in three major players dominating the insurance market by 2017.
- Cadillac Tax Delay The recent omnibus 2016 budget agreement in Congress included a proposed two year delay of the “Cadillac” tax, a component of the Affordable Care Act that applies a 40 percent tax to the value of employer sponsored plans that exceed $10,200 for individuals and $27,500 for families. The pending tax has been cited as a reason for employers to shift more healthcare costs to employees. Proponents fear that repeal will result in employers investing less in cost control measures, while opponents believe employers have better options for cost containment.
The stakes are high. Healthcare costs rose 6.8% in 2015 and are predicted to increase another 6.5% in 2016. Initiatives like these are needed to reverse this trend and speed our migration toward value-based care.