Transforming Facilities, Transforming Healthcare Delivery - Outlook for 2017

Part I - Trends to Watch and Consumerism

The year 2017 is underway with a new administration and Congress. The repeal and replacement of the Affordable Care Act (also referred to as Obamacare) and the healthcare industry's transition to value-based care will remain in the forefront of the discussions. What does all this mean for healthcare providers and how and where care is delivered in 2017?  

We recently spoke with Fred Campobasso, managing director and practice area leader of the healthcare real estate segment of Navigant’s construction practice. Fred weighs in with his perspectives in a two-part Outlook 2017 as to how the year for healthcare providers and their stakeholders may unfold.

 

Q. The new administration and Congress are in the early stages of formal planning regarding the repeal and replacement of Obamacare. How will this impact some of the key industry healthcare delivery trends that you see taking place this year?

A. First off, this is a year of uncertainty and opportunity, with many providers facing heightened uncertainty with respect to the future landscape. Those uncertainties will include timing of the continued shift from fee-for-service to value-based reimbursement; changes to Medicare, MACRA, and the impact on providers, hospitals, and physicians; and the role that states will play in Medicaid.

While many organizations may take a wait-and-see approach, others may take a do-nothing approach, especially if they’re compromised by market position, minimal operating margins, weaker balance sheets, and less than optimal clinical outcomes.
 
Most importantly, an organization’s culture, scale, and the ability to be nimble and adapt to change in a timely fashion is critical to long-term success. Those with a wait-and-do-nothing approach will lose to those that initiate and act.

Other Trends to Watch

  • The consumer – enabling the consumer/patient with more capabilities through retail health and digital engagement will be extremely important in a value-based world.
  • Brick and mortar – micro-hospitals, ambulatory care sites, free-standing AEDs, and alternative consumer-driven sites of care will incorporate virtual health, reduce costs, and differentiate/elevate the brand.
  • Alternative providers – consumers turning to retail-oriented, ambulatory care for convenience and quality healthcare at lower cost will fuel this burgeoning segment.
  • Solid balance sheets and scalable operations will attract new opportunities for contracting and strategic affiliations.
  • Clinical capabilities that are research-driven and organizations that are innovative and integrated, along with a solid reputation, will enjoy significant advantages.

Younger generations are looking at systems of health while older population is looking at physician relationships.  This is key to how healthcare providers react to the younger generations as well as continuing to serve the older population.

Facilities Meeting Generational Demands

Q. How will generational demands be met? Will providers focus on a specific demographic or continue providing access of care for the entire community?

A. Providers are looking at first and foremost financial stability, because without financial stability it's hard to perpetuate the mission. I think you'll continue to see both types of healthcare providers. We're not going to see a major change in the number of hospitals becoming “specialist.” Those that already have established brand, scale, and strong financials specializing in cancer, cardiac care, or orthopedics, as examples, will continue to thrive in those areas.

But the traditional small systems and/or standard community healthcare providers, with full services from infant to senior, will struggle financially, and potentially look to achieve scale through partnerships. All providers will continue to lean operations and be more precise in their facilities’ capacities, e.g., number of beds they offer for in-patient care, and what they don’t need, they’ll convert to other uses including ambulatory, wellness and prevention, and post-acute.

Providers will also be shifting emphasis to out-patient, post-acute care facilities, and partnerships. They’re moving very judiciously towards expanding their footprint to alternative sites where they can provide low-cost, high-quality immediate access care where the patients are, versus the patients having to travel to the main campuses where the costs are higher and often in less convenient locations.

Technologies and Population Health

Q. Since we’re on the topic of consumerism and population health, there’s increasing buzz about virtual technology, a.k.a., telehealth. Are we on the cusp or are we already well into telehealth usage?

A. I would say we're on the cusp. But it’s advancing quickly as technology and reimbursement change. For providers, gaining capabilities in digital engagement and emerging technologies will be key to those that will thrive going forward under value-based reimbursement. Telehealth uses the internet to connect patients/consumers with provider services saving time and expense by removing traditional barriers of geography. There’s significant care opportunities to deploy virtual health strategies beyond traditional ICU, radiology, and nursing unit care into ambulatory care, behavioral health, and post-acute care.

Provider networks across the country, be they hospitals or physicians, are going to have be willing to disrupt the manner in which they deliver care, expand strategic partnerships, and adapt, because next generation enterprises and new lifestyles will demand it. And if they don’t, others will do it for them. Consumers will expect technologies and innovations as part of their care. And, what providers will find as they integrate these technologies besides reducing costs, is the opportunity to elevate their brand because they can reach a larger patient population on a virtual basis.

 

Read Part II and Part III of the Outlook 2017 series:

Part II: Optimizing the Real Estate Portfolio

Part III: Healthcare Facility Financing

 

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