Sliding from a momentous 2023 in U.S. healthcare to a 2024 filled with uncertainty, challenges, and yes, opportunities, I’m pondering a number of questions in my mind, the answers to which can only unfold over time—perhaps not being fully answered even in 2024. Nevertheless, I have them—the questions, that is.
So, as we meet 2024 in U.S. healthcare, here are some of the top questions in my mind, ranging from policy to operations to technology, in no particular order.
Ø What will 2024 look like financially for hospitals and health systems?
Leaders at the Chicago-based consulting and analytical firm Kaufman Hall continue to track for all of us the month-to-month and quarter-to-quarter financial standing of hospital-based organizations nationwide, through their regular surveys. And it’s been a long, hard slog since the early days of the COVID-19 pandemic in the spring of 2020, when hospital finances collapsed, and patient care organizations and providers needed massive financial assistance to keep going. As of late in 2023, operating margins returned to just-barely-positive averages nationwide; but things are still feeling precarious, and a small number of smaller and rural hospitals actually closed in 2023, while a larger number of hospital-based organizations were forced to engage in layoffs.
So what does the near-term future look like in this area? On Dec. 7, I published my interview with Erik Swanson, senior vice president of data analytics at Kaufman Hall, to get his sense of where things are headed. When I asked him what kind of economic recovery we’re seeing in the hospital sector in U.S. healthcare, he told me, “Generally, what we are seeing is very, very modest improvement over time, and in general, we’re seeing better performance than in the last three years, albeit still diminished from pre-pandemic levels. Now, when you look at the hospitals, they’re split into different categories or types. Some are seeing performance improving at a moderate clip; others, just barely, and then some that are still diminished. And we continue to see a growing gap between the top and bottom performers.”
What percentages of hospitals are in those different groups? “Most are in the middle group, maybe two-thirds in the neutral zone, if you will, with maybe one-sixth in the upper and lower groups,” Swanson told me. “And there is not a single set of characteristics, but there are some general themes. First, generally, is the aspect of size. As we look at hospital-based organizations that are of larger sizes, we’re finding that larger size tends to protect a hospital organization from some of the greatest financial vulnerabilities. Alongside that and correlated with it, is payer mix. Those hospital-based organizations with poor payer mix or much higher percentages of government versus commercial, can fall into that difficult category; also ones in high-wage-rate areas.” And, per all of this, Swanson urged hospital and health system leaders to get a strong analytical handle on their labor costs in particular, and to devise longer-term strategies to address such ongoing issues as the nationwide nurse shortage. The bottom line? It’s never going to get “easy,” if anyone was looking for easy. But the leaders of the smartest patient care organizations can strategize their way towards longer-term success, if they’re smart and can optimally leverage analytics to help them sort through the issues facing them going into the future.
Ø What about those federal telehealth flexibilities?
Congressional action moved the termination of the federal policy and payment flexibilities around telehealth-based care delivery to December 31, 2024, but without congressional action in 2024, they could be ended. Indeed, there is the real possibility of setting back remote care delivery considerably, if Congress fails to act, as Medicare reimbursement continues to drive providers’ incentives nationwide. We are hearing, though, that there is broad bipartisan agreement that the flexibilities should be continued forward for the foreseeable future. But a divided Congress that is struggling to get basic legislation passed, will have to move this forward during a presidential election year.
We can all hope that Congress will get its act together in terms of the policy and payment changes that must be preserved through federal legislation in this area. Meanwhile, telehealth continues to prove its worth, over and over. As Senior Contributing Editor David Raths noted in a June 12 report, “Visits with a 24/7, co-payment-free telemedicine program established by Penn Medicine for its employees were 23 percent less expensive than in-person visits for the same conditions, according to an analysis published in the American Journal of Managed Care. The per-visit costs for the telemedicine program, called Penn Medicine OnDemand, averaged $380 while in-person encounters in primary care offices, emergency departments, or urgent care clinics during the same timeframe cost $493 to conduct, a $113 difference per patient, the researchers at the Perelman School of Medicine at the University of Pennsylvania found.”
Ø Where will the disruptors’ journey lead us all?
As contributing writer Geert De Lombaerde wrote on December 16, “CVS Corp.’s healthcare delivery businesses should grow at a double-digit rate through at least 2028, executives said recently, as they add to the number of patients and health plan members they steer to each other. Speaking at an investor day where they sketched out Rhode Island-based CVS’ 2024 and medium-term priorities and goals, President and CEO Karen Lynch and other senior leaders said the health care delivery group that comprises MinuteClinic, Oak Street Health and Signify Health is poised to grow revenues to $10 billion by 2028 from about $6 billion today. A key driver of that growth is referring members of the company’s Aetna insurance arm and MinuteClinic visitors to the value-based care clinics Oak Street runs or to home health services from the Signify team.”
I’ve said it many times before here on our website, as well as at our Healthcare Innovation Summits, and I’ll say it again: all the savvy consultants are telling senior hospital and health system executives straight out, the disruptor organizations in healthcare are going to grab some topline revenues through their ability to create alternative outpatient care delivery sites that are often more convenient and consumer-friendly than are some clinics and urgent care sites run by the bricks-and-mortar traditional health systems. There are of course many hospitals and health systems that are figuring out this new world of consumer-centric convenience; but many are assuming that historic loyalty from their patients will ensure future revenue streams—and that would be a bad mistake. Not all the disruptors’ innovative set-ups will prove successful; but some will. And the leaders of traditional hospitals and health systems need to prepare for that eventuality and plan accordingly.
Ø How will the medium-term and longer-term journey around TEFCA play out?
As Senior Contributing Editor David Raths wrote on Dec. 12, “The Trusted Exchange Framework and Common Agreement (TEFCA) is now operational. The Office of the National Coordinator for Health Information Technology (ONC) has led a multi-year process alongside its Recognized Coordinating Entity (RCE), the Sequoia Project, to implement TEFCA, which was envisioned by the 21st Century Cures Act. The idea is to create a “network of networks” for sharing health data across the country. The goal is that like wireless networks, electricity grids and ATMs, the user experience will become as if it's a single network. The Common Agreement, released in September 2021, includes six exchange purposes that organizations must support to be designated as a Qualified Health Information Network (QHIN). The exchange purposes include Treatment, Payment, Health Care Operations, Public Health, Benefits Determination, and Individual Access Services.”
And, as Raths pointed out, participation in the TEFCA framework remains voluntary for now. And more than 20 organizations are currently seeking QHIN status. But beyond some of the initial developments expected to take place in the next few months, the longer-term future of TEFCA remains rather foggy. And the biggest-frame question really is this one: will the implementation of TEFCA be a game-changer for interoperability and the appropriate sharing of patient data among clinicians and patient care organizations—or just one more “helper element” in the mix? Only time will tell.
Ø Will hospital-at-home prove itself to be a game-changer for care delivery?
Opinion is mixed on this. Some thought-leaders believe that the development and expansion of hospital-at-home programs will inevitably revolutionize healthcare delivery and will offer traditional hospitals and health systems the opportunity more finely craft their operations both to better serve patient needs and also to rethink their inpatient operations. But not everyone is convinced that hospital-at-home is part of the path into the value-based future of healthcare. Asked directly whether hospitals’ and health systems’ development of hospital-at-home programs could help tip them into participation in value-based contracting, Farzad Mostashari, M.D., CEO and co-founder of Aledade, the physician enablement company, told me in October, “No. The most important thing is setting the right benchmarking or trending approach. It’s always, you’re saving money compared to what? And that’s what CMS has been iterating in the MSSP, and we’re in a good place on that. Hospital-at-home is cool and it’s new, but it’s going to be only a tiny part of the change. And if you’ve aligned incentives, it can be a good tool, but it’s not an aligning tool itself.”
Even so, what’s clear is that hospital and health system leaders who are developing hospital-at-home programs are already learning important lessons about how to structure programs that deliver care to patients in their homes, including around how to staff clinically for those programs, and what some of the key process, operational, and technological needs are as those programs are developed. This area is absolutely a work in progress.
Ø What will the ongoing adoption of AI look like in 2024?
Artificial intelligence (AI) absolutely stormed U.S. healthcare in 2023, being adopted, at least initially, across a vast range of clinical and operational areas. Indeed, in some ways, 2023 felt a bit like the “Wild West” of healthcare AI. But experts believe that things will become a bit more organized in 2024. And the use cases are absolutely there. Indeed, Elizabeth S. Burnside, M.D., M.P.H., senior associate dean in the School of Medicine and Public Health at the University of Wisconsin-Madison, and deputy director of the Institute of Clinical Translational Science for Breast Imaging, at the University of Wisconsin, put it out there directly, in her plenary address on Nov. 27 at RSNA23, the annual global conference of the Radiological Society of North America, held every year during the week following Thanksgiving. As Dr. Burnside put it, healthcare leaders will use AI to manage “wicked problems,” as defined by Charlotte Roberts of the Naval Postgraduate School in 2000 as problems that “lack a definitive, standard problem-solving formula; straddle organizational and disciplinary boundaries; involve complex interdependencies, multiple stakeholders, and conflicting agendas; are time-intensive; and are never completely solved.”
Burnside told her audience at RSNA that AI can absolutely be leveraged effective, providing that three key elements are addressed: a commitment to engage stakeholders; analysis based on both quantitative and qualitative techniques; and decision-making continuously aligned among stakeholders and focused on outcomes. Among the key concerns, she noted, being expressed by clinicians and others in healthcare, include the fear of an eventual over-reliance on AI, with humans eventually losing their own analytical abilities; and the fear of the loss of the ability to engage stakeholders, listen to their concerns, discuss those concerns, assess them, and participate in collaborative decision-making.
What’s more, as David Raths noted in a Dec. 14 report, “A Dec. 14 White House statement lists 28 providers and payers that have pledged to advance ethical and responsible use of artificial intelligence technology in healthcare. The White House said that these voluntary commitments build on ongoing work by the Department of Health and Human Services (HHS), the AI Executive Order, and earlier commitments that the White House received from 15 leading AI companies to develop models responsibly.”
Raths noted that the health systems and payer organizations signing the pledge were “Allina Health, Bassett Healthcare Network, Boston Children’s Hospital, Curai Health, CVS Health, Devoted Health, Duke Health, Emory Healthcare, Endeavor Health, Fairview Health Systems, Geisinger, Hackensack Meridian, HealthFirst (Florida), Houston Methodist, John Muir Health, Keck Medicine, Main Line Health, Mass General Brigham, Medical University of South Carolina Health, Oscar, OSF HealthCare, Premera Blue Cross, Rush University System for Health, Sanford Health, Tufts Medicine, UC San Diego Health, UC Davis Health, and WellSpan Health.” And, he noted, “The commitments received today will serve to align industry action on AI around the ‘FAVES’ principles—that AI should lead to healthcare outcomes that are Fair, Appropriate, Valid, Effective, and Safe. Under these principles, the companies commit to inform users whenever they receive content that is largely AI-generated and not reviewed or edited by people. They will adhere to a risk management framework for using applications powered by foundation models—one by which they will monitor and address harms that applications might cause.” And all of that is good news, in terms of the coalescing of intentions and efforts around improving AI adoption going into the future.
