Top Five Trends in Healthcare for 2021
A Year to Remember and Time to Look Ahead
Every time we enter a new year, the same cliches abound; however, 2021 already feels entirely different as we leave 2020 and its unprecedented consequences behind. COVID-19 changed the entire world in just a matter of weeks, completely upending the status quo and requiring organizations and people to adjust their courses and expectations or fail to thrive going forward.Healthcare was no exception, and in fact, was one of the industries most impacted – not only from a clinical side but operationally as well. Thus, now more than ever, organizations are seeking insights into what 2021 holds. If 2020 taught us anything, we could not anticipate every forthcoming trend, but we can use the past to guide our strategies and begin preparing for the long-term impacts of 2020.Thus, Coker has polled its consultants and clients to determine what we believe will be the top five impactful trends for 2021.
Post-COVID Transactions
Pre-COVID, healthcare transactions were at an all-time high, with consolidation prevalent in virtually all areas. When COVID hit, these transactions slowed (with almost all stalled for Q2 2020); however, these transactions picked up later in 2020, moving into 2021. As many investors saw, healthcare is critical at all times and is a “sure thing,” even in an unstable economy.Further, many organizations were significantly financially impacted during COVID, which has required them to be more proactive in seeking a partner to stabilize them moving forward. Thus, we expect transactions to continue trending upward in the coming months – including private equity, hospital and health system acquisitions of private practices, and mergers (both horizontally and vertically).
Key Considerations for Organizations
- Affiliation and partnership strategies
- Compliance concerns and effects on transactions
- Valuation and due diligence impacts
- Analysis of go-forward stability and long-term strategic impact
Political Transition
Following COVID, the significant impact on U.S. organizations is the election of Joe Biden. At the time of writing this post, the Senate is still being decided with the run-off in Georgia, which will significantly impact the policies implemented under President-elect Biden. Regardless, the Biden administration will make changes to healthcare, with his agenda set to expand coverage (specifically Medicare), improve price stability and transparency, and combat COVID in the immediate term.The new administration will likely revisit the Affordable Care Act (Obamacare) as well, but again, this will be highly dependent on the outcomes of the Senate race.
Key Considerations for Organizations
- The economic impact of Biden administration initiatives
- Transactional considerations and compliance updates
- Payer contracting initiatives
- Long-term strategic planning based on policy changes
Value-Based Arrangements
Value-based care has had bipartisan support and will continue to remain in focus with the Biden administration in coming years (again, likely regardless of the Senate outcome). Thus, organizations expect to see an expansion of value-based arrangements and value-based reimbursement (“VBR”) with both government and private payers.Further, as organizations continue to cut costs and restore financial viability, a focus on value will be critical. Finally, COVID served as an alarming example of the necessity of population health and community management; thus, focus on these measures will remain.
Key Considerations for Organizations
- Evaluation of current strategies and internal infrastructure to support value-based care
- Data analysis highlighting outcomes and process improvement
- Development of clinically integrated activities and entities
- Transactional assignments driven by VBR
Operations and Efficiencies
As we have discussed, COVID impacted healthcare organizations acutely, with most taking massive financial hits – particularly in the months requiring a delay of “elective” procedures. While some organizations found a way to capitalize on the increase in testing, treatment, and procedures related to COVID to result in a relatively successful year, many are still struggling to recoup these losses.One of the groups hit hardest was smaller, independent, and rural hospitals. Unlike large, more urban institutions, these organizations did not have the influx of patients and critical care services to replace that lost revenue in the early months. Additionally, we expect to see some physician and executive compensation changes due to increased pressure to control costs. Thus, as organizations consider their plans for the next year, much will be focused on improving performance and operations and streamlining areas for improvement.
Key Considerations for Organizations
- Review of revenue cycle management activities
- Analysis of current expense structure and areas for improvement
- Staffing review and compensation considerations
- Contracting reviews and negotiations
- Optimization of leadership and administrative costs
- Utilizing data to highlight areas of opportunity
- Service line analyses
Telehealth
Many experts have stated that COVID increased the timeline of telehealth adoption by decades, forcing providers and patients to begin heavily utilizing these technologies overnight. While we will see a return to in-office visits in the immediate aftermath of COVID, virtually all organizations agree that telehealth will be essential to delivering healthcare moving forward and will be a crucial component of their ambulatory care strategy. With that said, the rush to implement these technologies will require organizations to take a step back and ensure they are correctly in place for the future.Thus, we expect to see more integration into current technologies, returning focus on compliance and HIPAA requirements, expanding payer acceptance, and increasing vendor options in 2021 and beyond.
Key Considerations for Organizations
- Analysis of provider base and telehealth utilization
- Consideration of strategic ambulatory strategic and impact of telehealth
- Telehealth business unit start-ups
- Selection of vendor and integration with current technologies
- Analysis of current utilization and identification of process improvements
- Review of processes and compliance assessment
Summary
We believe these will be the top five trends in 2021 for healthcare; however, we emphasize that many uncertainties remain and will continue to shape our future expectations. Regardless, there will continue to be a significant change in the industry in the next year as we continue to adapt to COVID and get back to a “new normal.” There are countless considerations for organizations in facing these challenges, and leadership should consider their response to each of these as part of their annual strategic planning.We are always excited and proud to be a small part of the healthcare industry, and now more than ever, we look forward to the opportunities this new year holds for our clients. While we have provided some information and insights here, Coker is available to assist in further detail for all of these areas, working on blending global trends with the nuances of an organization’s market and community. If you have additional questions, please feel free to contact us and request to speak with Taylor Cowart, MBA, Senior Associate, or Max Reiboldt, CPA, President/CEO.
