Two major challenges set to face U.S. healthcare providers in 2021

The U.S. healthcare system and its providers have continued to face challenges over the past few decades, COVID being just one of them. In 2021, it's not enough to understand why and how these challenges have come about but also what solutions are available to combat them. With recent changes, the insurance-based profit-driven models are no longer viable to sustain healthcare providers. Instead, concepts that put the people and their health before profits will ultimately lead to these systems' survival, post-pandemic and beyond.

US Healthcare Provider Challenges and Solutions

This blog will address two major challenges and the emerging solutions that U.S. healthcare providers can leverage for success.

Healthcare’s fee-for-service addiction

Challenge 1: Healthcare’s fee-for-service addiction

What is fee-for-service (FFS) healthcare? Simply put, it is a method in which doctors and healthcare providers are paid for each service performed. Why is this ‘addiction’ dangerous? This payment model has healthcare providers dependent on it to fuel revenue and profits, providing as many individual healthcare services as possible, whether those services actually provide any additional care value to all its users. 

Understandably, businesses have to generate profit to operate successfully. The Affordable Care Act, which was introduced in 2010, included provisions encouraging doctors to focus on value rather than volume of health services. However, despite this, today, U.S. healthcare providers are still paid per test, procedure and treatment they provide. 

So taking away the mindset that healthcare systems were essentially created to do just that, provide "care" for its people's "health," in the long run, from a business perspective, this fee-for-service model is not profitable. 

The facts outline a solid picture of what's to come if this mentality of providing healthcare services is maintained:

Average annual national cost of health insurance for families

2020 can be considered an anomaly due to the government's drastic healthcare changes. Just as everyone's daily routines will start to return to some sense of normal and people get to go outside and socialize again post-COVID, who's to say that the 3% - 5% healthcare insurance cost increase from 2017 - 2019 won't return as well?

As the natural laws of inflation go, the cost of living will continue to increase, and over time, families will no longer be able to afford the fee-for-service model any longer. What solutions should U.S. healthcare providers consider to avoid being stuck at the tail end of this challenge?

Solution: Transition to a value-based healthcare model

As mentioned before, businesses need income to survive, scale and grow their services. In a study completed by Deloitte in 2020, almost all physicians in the study relied on FFS or salary for their compensation, whilst 36% drew compensation from value-based payments. 

In fact, it’s not that doctors and healthcare providers are so against value-based healthcare models. It’s more that they do not have the tools to facilitate this change. 

However, critics who characterize value-based health care distort the meaning of the term value, misinterpreting it as focused on cost. Value-based health care connects clinicians to their purpose as healers. The better outcomes from a value-based model include reduced spending and the decreased need for ongoing care. By improving healthcare outcomes, value-based health care reduces the complexity and progression of diseases or illnesses that drive the need for additional costs and care—a great win to healthcare's humanitarian nature. 

According to HealthAffairs, providers have been working through ways to reconcile value-based payments in a fee-for-service environment. Those doctors, physicians and healthcare providers who currently advocate and indulge in fee-for-service models due to the large personal compensation values they provide will ultimately not survive in the next few decades. As the cost of living increases due to inflation, and if the increase in healthcare cost seen so far continues, there will no longer be enough patients who can afford these FFS models and payment plans. Instead, the compensation currently being enjoyed by healthcare providers will ultimately die off. 

In the long term, value-based healthcare models are the way to go, not just from a patient’s perspective, but in the eyes of doctors and healthcare providers overall survival.

Challenge 2_163272761

Challenge 2: Decline of in-house consultations

This challenge can largely be attributed to the pandemic and the remote nature of healthcare that was essentially forced upon healthcare providers. Back in 2020, gone were the days where you could go to your local doctor's clinic for a healthcare check-up or visit the hospital for consultations or specialist appointments without risking, in emphasized terms, possibly catching COVID. 

As of January 2021, the average number of people that one person with COVID-19 is expected to infect in the US ranges from 0.84 in Georgia to 1.11 in Vermont

Gone are the days of traditional healthcare models that involve face-to-face patient consultations. So how are healthcare providers supposed to meet healthcare demands when state and nation-wide lockdowns continue to exist?

Solution: Introduction of non-traditional healthcare practices; digital health and interoperability of healthcare data

The challenge of meeting U.S. citizens' healthcare requirements in a remote setting has introduced non-traditional players into the healthcare market. Companies that may not have previously had much ground or investment in healthcare are now making inroads into the market, bringing their deep understanding of data analytics and virtual capabilities.  

A huge factor is the introduction of digital health practices with products and services to democratize and decentralize healthcare. 

For instance, HealthCatalyst states that companies such as Amazon and Sam’s Club are taking matters into their own hands by offering virtual and in-home consultations for their employees. Google is going one step further and hiring physicians to develop new healthcare solutions that may well take patients away from traditional hospitals and clinics.

What’s even more interesting is these new digital health systems are here to stay post-COVID. Although technological developments have taken advantage of the pandemic in introducing new methods to perform healthcare practices, the convenience of video consultations and healthcare at the touch of a button may prove too enticing for both practitioners and patients to stop using after the pandemic. 

To further add to the digitization of healthcare and how it can solve the decline of in-house consultations and personable healthcare experiences is the importance and use of patient data. 

Being unable to consult face-to-face is one thing, but merely storing patient data without the proper analytical tools to gain insight into these sets of data can retract from monetizing services and supporting overall population health management; a critical factor in 2021 with the pandemic still ever-present. 

To keep communication and valuable data insights prevalent, outdated legacy platforms will need significant investment, and cybersecurity and patient consent will also be an issue that needs to be tackled. Recent data interoperability rules released by CMS and the Office of the National Coordinator for Health Information Technology (ONC) require patient data to be accessed via application programming interfaces (APIs); however, many health plans and systems are still in the process of developing their platforms.

What’s more, according to Politico, many software developers and coders are losing interest in the healthcare industry due to the complexities and time required to integrate with electronic health records.

17% of people saw three or more health professionals for the same condition, of these 12% reported that there were issues caused by a lack of communication between the health professionals. In any case, digital health benefits far outnumber the significant upfront investments and costs it would take to create these digital consultation tools or data-sharing platforms. These include greater access to users' health information to support clinical decision-making, provide patient-centered care and diagnostic accuracy and treatment, and increase productivity and efficiency through streamlined processes and reduced waiting times. 

In any case, healthcare providers should be taking advantage of these non-traditional healthcare practices both now during the pandemic with limited contact with patients and also post, given the increased reliance on technology within our economy.

What next?

These challenges could make or break healthcare providers in 2021 unless they embrace the industry solutions to these issues. It all comes down to whether these companies and practitioners are willing to invest the time and money required to stay ahead of the game. The risks associated with not embracing these solutions far outway the risks of hoping things return to normal. 

Healthcare providers in the U.S. are undergoing major changes in the platforms they work with and how they deliver healthcare. These trends have only been further accelerated by COVID-19, and the challenges will just keep coming. Healthcare providers need to stay one step ahead of these future changes to healthcare delivery in the US for them to establish themselves in 2021 and beyond.