The 2022 McKinsey Healthcare Conference was held this summer and attended by over 200 participants, 180+ industry leaders, and 130+ institutions. Since attending, I’ve been thinking a great deal about the messaging and the outlook for healthcare.
Every year, the conference centers on one word to describe the state of the industry, and this year’s word was change. Presentations and conversations included reflections on the past two years of challenges and a look at the staggering number of new opportunities for positive change in the healthcare industry.
A storm on the healthcare horizon.
It’s become evident that the healthcare system we all know and have participated in is on the precipice of a necessary fundamental transformation. Consumer sentiment regarding healthcare is at an all-time low, and expectations for simplicity, transparency, and accessibility continue to increase. What consumers want and need is a healthcare experience that’s as smooth and streamlined as the rest of their digital lives; patient-centric journeys inspired by today’s most consumer-friendly applications (e.g., DoorDash, OpenTable, online banking experiences, etc.).
As Centene CEO, Sarah London, explained during her McKinsey Healthcare Conference fireside chat, “Healthcare incentives look nothing like other industries. We’re one of the only industries that has divided financial risk from clinical risk from decision rights. Those all sit at times with different stakeholders, but they all govern a single individual’s health journey. It feels like we as consumers are no longer tolerant of that. We don’t tolerate it in any other industries, so why would we tolerate it in healthcare? We want customization, convenience, and individuation in our experiences.”
Consumer expectations combined with numerous other pressures on the system—including a persistent talent shortage on the horizon, healthcare spending reaching its highest ever percent of GDP without an acceptable or sustainable output, an increase in morbidity from COVID-19 as well as COVID becoming endemic—suggest it’s time for a serious pause and reflection in the industry.
What’s fueling the storm?
McKinsey analysts cite 2010-2019 as the decade of the greatest level of calm in U.S. healthcare spending in 60 years. COVID ended that calm. The pandemic has created a permanent increase in overall morbidity and healthcare costs, and the pandemic is now becoming endemic. What that means for U.S. healthcare is ongoing treatment (with 100M symptomatic cases predicted annually), long COVID treatment, testing and vaccine costs, and exacerbated behavioral health crises related to COVID.
Additionally, we are facing elevated inflation in the United States, and McKinsey modeling through 2027 predicts that it’s unlikely these economic pressures will abate. As a result, healthcare costs are expected to rise substantially over the next five years.
So, who pays for these rising healthcare costs? Employers, by passing increases on to employees? Consumers, who will have to dip into their family savings? The government, whose federal debts are at an all-time high while interest rates continue to rise? None of the answers are satisfactory or sustainable, which means it’s time to turn healthcare “nice-to-haves” into necessities. However, with change, risk is unavoidable. And historically, healthcare has been risk-averse. We must take these indicators with urgency as a rallying cry—despite the risk—to develop new healthcare models and innovative ways of working. Additionally, with the continued landscape of economic uncertainty, change must be coupled with a financial equation that works and is sustainable.
How to successfully weather the storm.
McKinsey experts agree that the future of healthcare delivery can be revolutionized by these ten shifts:
- Enabled by new medical technologies. The adoption of innovations that make the healthcare journey seamless and intuitive.
- Care in the home. Shifting from bricks and mortar-based care to homecare options.
- Transparent and interoperable. Including both services and costs.
- Patient-centric. Care driven by patient needs versus economics or misaligned incentives.
- Value-based and risk bearing. Compensation is focused on quality of care provided.
- Driven by data and technology. Data sharing among providers is critical.
- Funded by private investors. To fuel growth in companies providing improved, innovative healthcare.
- Virtual. Care that is delivered without an in-person office visit as well as wearable care, including remote healthcare monitoring.
- Both fragmented and integrated. Highly collaborative care providers and seamless care delivery.
- Ambulatory. Advanced medical technologies and procedures provided outside of a hospital.
Other industry leaders agree.
Tony Ambrozie, Chief Digital Officer at Baptist Health South Florida (Miami) says, “Like innovation, we see data as telling us how to respond to the future rather than only revealing what has happened in the past. The information, trends, and feedback we gather from consumers and patients to clinicians and staff marks the goal post for where we want to go. If the data tells a story, we decide how we can make that story a better one.”
Adds Tom Barnett, Chief Information and Digital Officer of Baptist Memorial Health Care (Memphis, TN), “With respect to healthcare, I see digital transformation as a formula: simplified patient journey + streamlined employee workflow = a memorable experience. The ability to distill the patient touch points down to only what is necessary, make behind-the-scenes workflow less cumbersome (reducing silos and friction points), and accelerate the entire throughput with carefully selected and complementary technology is the essence of digital transformation. Process is always upstream from technology, and any digital effort should take that into consideration.” (Becker’s Hospital Review, December 2021.)
In addition to the voices of healthcare leaders at the McKinsey Conference, I continue to engage in an ongoing dialogue with healthcare leaders across the nation. The problems and opportunities are becoming more clear, but the answers and avenues still need to be more distinctly defined. Having worked in science and education, I’ve seen economic trends and challenges be the catalyst for transformation.
I look forward to sharing more thoughts around healthcare transformation and how organizations are preparing for change.