It is easy to predict that medical groups will continue to merge both vertically and horizontally in 2024. It is easy to predict that health systems will continue to get larger. However, as we look beyond these easy predictions, the crystal ball gets a bit foggier. That said, medical group leaders need to keep a keen eye on these five inevitable trends:
Unionization will become a big issue and may lead to varying approaches in how systems begin to rethink their relationship with their physicians and how they structure their physician enterprise. Given recent high-profile unionization efforts, any health system that does not worry about whether unionization may happen in their organization is certainly not performing necessary risk management. We believe those most attuned will do one or more of the following:
o Strive to better understand how groups must be managed, paying more attention to their physicians and how their physician enterprise functions. This includes conducting thorough engagement surveys in order to understand the perspectives of their employed physicians and then addressing the core deficiencies they find.
o Begin to view their physician enterprise as a solution rather than an underperforming asset or a “loser” in terms of financial performance. Given self-imposed financial structural issues (reassignment of ancillaries, operational and staffing challenges, overhead allocations, etc.), many physician enterprises are not structured inside systems in a manner that is conducive to generation of pre-acquisition margin. Smart systems will understand and embrace this insight as they seek to utilize physician enterprises for their true value—access and management of care. It is time for leaders to wake up and see their investments as part of the solution rather than part of their problems. A strong and well-structured physician enterprise should be a major infrastructure component of any health system, especially those involved in value.
o Evaluate varying structures to accomplish goals, rather than simply viewing employment as the preferred or only solution. We envision an environment where professional services agreements (PSAs) are explored, especially in relation to various specialties that are difficult to operate in a rational, balanced manner (given call requirements, for instance). California has decades of experience with the foundation model and has some of the nation’s best systems in terms of managing care and costs. It is time to learn how their models can be deployed in order to build systems of care without relying upon only employment.
2. Disrupted Disruptors
Niche players, disruptors, and venture capital/private equity firms will face uncertainty in 2024. While we may think at times that the non-traditional models/organizations have it relatively easy given their niche focus and unique attributes, including sector of market for some, they also have significant challenges and do not possess an easy-to-administer antidote to healthcare’s challenges. This year will likely see continued market exits for some of the notable players, given the continued high cost of capital, challenges with scale/securing large enough market share, and other issues. Provider organizations possess significant infrastructure and decades of developing their unique culture. While the disruptors hurt, we believe traditional organizations will remain strong and survive and thrive in the long run.
3. Medicare Changes
Foundational change will be further addressed, though not solved, regarding Medicare and, more acutely, Medicare Advantage (MA). There is simply too much noise around MA for there not to be some focus on substantive change. Will deficiencies be solved? Certainly not in 2024 or likely even 2025, but we predict there will be heightened focus and actual initiation of change in order to address current deficiencies, highlighted by some recent high-profile provider exits from MA. In order to really solve the challenges, the payment methodology, risk adjustment, and payment policy of the payors, as well as the funding mechanisms, must be retooled. A big challenge indeed. Again, we do not see full transformation in 2024, but enough of an alarm sounding that change will be initiated.
4. Concierge Medicine
Consumerism will continue to push traditional organizations to improve access and service, and one of several solutions will be an expansion of providers involved in concierge models. While many see this as a model for only the well-off, we believe there will be organizations that will scale solutions and offer successful models at reduced costs. This may be seen as a “have vs. have not” issue, but given current challenges with access to care, look for more concierge offerings in 2024.
Though it may create a bit of controversy, we predict that a new term for providers will hatch in the upcoming year. We’ve seen expansion of “ists” over the past few years, primarily related to hospitalists, such as OB-hospitalists and GI-hospitalists. Is it time to create a different type of “ist” related to chronic care, and we need a model where a focus on clinical care is provided by “chronicists.” As we continue to see major care models dedicated to caring for those with chronic conditions, is it time to create a new specialty classification for those providing this focus of care?
The future may be cloudy, but we believe these five trends will play out over the coming year and urge medical group leaders to focus on them as they develop strategic initiatives to thrive in 2024 and beyond.