We hosted Colliers’ third annual National Healthcare Services Conference in November, right after the U.S. presidential election. There was no shortage of pressing topics on the minds of our clients and brokers in the health care space: What can we expect in terms of health care reform under the new presidential administration? Will the current trend around mergers and acquisitions continue? How can we stay ahead of the services and technologies disrupting the health care industry?
To provide fresh insight into these questions and many more, we brought in our partner, Senior Director Matthew Stevens from The Advisory Board, an organization providing research, technology and consulting to health care organizations worldwide. Event attendees loved the session so much, we wanted to bring some of the highlights to our Knowledge Leader readers.
MARY BETH KUZMANOVICH: Welcome, Matthew! You recently gave a presentation that really resonated with our conference guests. One of the topics people were most eager to learn about was what we can expect from future health care reform. Can you speak to some of the areas to watch?
MATTHEW STEVENS: Predicting the exact changes to health care under the Trump administration is a tough task. However, the recent nominations of Representative Tom Price as Secretary of Health and Human Services and Seema Verma as the Administrator of the Centers for Medicare and Medicaid Services may shed some light here. Discussions thus far appear to center around:
- An increased focus on Health Savings Accounts
- A shift in the individual insurance market away from subsidies and toward tax credits
- Expanding Medicare Advantage while increasing the age of Medicare eligibility
- Transitioning federal financing of Medicaid to a block grant
- Likely rolling back the role of the Centers for Medicare and Medicaid Innovation (CMMI)
Thinking about it at a high level, there seem to be four major themes:
- Reducing federal entitlement spending
- Pushing more control over health policy down to the state level
- Embracing free-market approaches
- Continuing to promote the cost and quality transparency necessary for consumer choice
MARY BETH: One of the key trends we highlighted in our 2016 Health Care Marketplace report was the continued rise of mergers and acquisitions in the health care industry. What are some of the implications of hospital and physician consolidation that you see coming down the pike?
MATTHEW: For the past few years, we’ve seen around 100 hospital consolidations per year and about a 25 percent increase in the median size of medical groups. We expect we’ll continue to see consolidations across the health care market, from insurers and hospitals to physician practices.
The implications really vary depending on the geographic market; some will result in excess capacity and the need to close or repurpose facilities, while others will result in improved coordination within and among health systems. At the same time, the recent litigation regarding the Advocate-Northshore and Hershey-Pinnacle hospital mergers, and the Aetna-Humana and Anthem-Cigna insurance mergers shows the Federal Trade Commission and Department of Justice are watching this trend with some skepticism.
MARY BETH: Like many industries, health care is facing a wide variety of “disrupters” in terms of new technologies and new service models. What are the key innovations you think the industry should be keeping an eye on?
MATTHEW: We think we’ll continue to see disruptions in the locations where care is provided. In addition, we expect to see more procedures moving toward outpatient, more complex procedures moving toward ambulatory surgery centers and the continued growth of “telehealth” options.
We’re also likely to see continued pressure from heath care customers for more consumer-friendly approaches, such as online appointments and convenient hours, as well as more transparent pricing and more understandable quality measures.
MARY BETH: A lot of those disrupting factors point to a trend in the “retail-ization” of health care. From the influx of retail clinics to consumers’ increasing use of services like Yelp to review and research providers, how do you think health care owners and operators can make the most of this shift?
MATTHEW: We think it’s important to embrace this shift and not to run from it. There will be winners and losers as health care continues to evolve, and the winners are likely to be those who understand what their customers are looking for and create cost-efficient means of delivering it. We often segment our patients by acuity level, and that will remain important. However, understanding how different patient cohorts define “convenience” and “quality” will become ever more important.
MARY BETH: We know that hospitals are changing their bricks-and-mortar strategies to gain scale and better serve their many stakeholders. Can you talk about what you see as the “evolving facility investment imperatives” and some of the health systems you see making decisions that others can learn from?
MATTHEW: The key here is “system-ness.” We see more health care providers evolving their thinking away from a facility-based service strategy and toward a service-based facility strategy. This requires a focus on determining the range of services the system wants to provide to patients and then making very deliberate determinations as to which facilities should provide which services.
Yale’s integration of the Hospital of Saint Raphael into their New Haven campus is a good example of this thought process. Intermountain Healthcare and Cleveland Clinic are also successfully employing a tiered approach across differing levels of acuity and complexity, depending on the size and demographics of the populations they serve.
MARY BETH: Matthew, thank you so much for sharing your insights. Is there anything else you think our health care readers should be watching as we gear up for 2017?
MATTHEW: Thanks for having me, Mary Beth. We are certainly in the midst of intense change and corresponding uncertainty in the health care world, particularly when it comes to government reform. But the true keys to success are less dependent on political particularities. Providing accessible, reliable and affordable health care will remain top priorities.
A fellow in the American College of Healthcare Executives, Mary Beth is also active in healthcare real estate professional organizations, serving in leadership roles with BOMA (Building Owners and Managers Association) for the Medical Office Buildings and Facilities conference and with the Urban Land Institute Health and Life Sciences Council. She also volunteers her time, having served on the boards of the United Way, North Mecklenburg Child Development Association, Davidson Land Planning Commission, Davidson Planning Board, and the Lake Norman Chamber of Commerce.