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2023 Healthcare Trends: What Leaders Need to Know about the Latest Emerging Market and Policy Issues

  1. © Health Catalyst. Confidential and Proprietary. 2023 Healthcare Trends: What Leaders Need to Know about the Latest Emerging Market and Policy Issues Tim Zenger, VP of Market Insights and Dan Orenstein, General Counsel
  2. Agenda 1. Workforce Management 2. Privacy Trends – Dobbs and 42 CFR Part 2 3. Macro Economic Trends 4. The Administration’s Healthcare Agenda 5. Patient Disengagement 6. 118th Congress and the Republican Healthcare Agenda 7. Transition To VBC 8. Price Transparency Enforcement 9. Analytics Maturity 10. Sunset of the COVID-19 Public Health Emergency
  3. © Health Catalyst. Confidential and Proprietary. Workforce Management: A Tough Environment to Be Operating in 3.4 0 5 10 15 20 US Unemployment % US Bureau Of Labor Statistics January 1969 Tech companies only make up 6- 8% of total US employment 5,825 23,057 29,359 21,731 21,425 10,841 24,164 50,593 40,486 108,080 48,000 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 # of Tech Employees Let Go As of March 2023 Trueup Did not return to workforce, 17% Moved to different industry, 48% Took a new job in same industry, 35% Status of employees who quit their job April 2020-2022 n= 1831 McKinsey
  4. © Health Catalyst. Confidential and Proprietary. Macro Economic Stressors: There Is a Lot Going On 53% 23% Burned Out Depressed Are you burned out and/or depressed Medscape 2023 n=9,100 MD’s 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Under 25 25-34 35-44 45-54 55+ Prefer Not To Answer How would you rate your current emotional health? American Nurses Foundation n=11,964 RN Very emotionally healthy Emotionally healthy Neutral Not emotionally healthy Not at all emotional healthy 19.6% 18.3% 16.8% 14.2% 13.1% 13.7% 14.3% 15.3% 15.5% 16.2% 16.7% 16.6% 18.0% 18.8% 19.6% 23.0% Overall turnover, including PRN, per diem, casual - MEDIAN​ Advisory Board n=224 RN Vacancy Rate NSI n=272 2018 2019 2020 2021 2022 < 5% 15.8% 21.9% 19.3% 23.9% 6.5% 5-7.49% 30.5% 22.8% 18.2% 13.8% 3.6% 7.5-9.9% 28.4% 31.6% 30.7% 26.6% 8.6% 10-12.49% 12.6% 12.3% 15.9% 22.9% 12.2% 12.5-14.9% 7.4% 5.3% 4.5% 3.7% 7.9% >15% 5.3% 6.1% 11.4% 9.2% 61.2% Average 8.2% 8.0% 9.0% 9.9% 17.0%
  5. © Health Catalyst. Confidential and Proprietary. Privacy Developments—The Dobbs Decision and Part 2 Alignment • Supreme Court decision: Dobbs v. Jackson Women’s Health Organization. • Use of social media to gather information on violation of state bans. • HIPAA compliance in information requests. • CA response to out-of-state warrants seeking information on abortions. • President’s executive order to support access to reproductive healthcare.  FTC proposed rulemaking on commercial surveillance and data security practices.  OCR issued a bulletin to outline the HIPAA requirements when using online tracking technologies.  Additional federal guidance on protecting reproductive health care information is likely. • 42 CFR Part 2 – Proposed rule to synchronize HIPAA with Part 2 rules on the confidentiality of substance use disorder information. • Provides for a consent to enable HIPAA permitted uses and disclosures. • Other provisions to synchronize with HIPAA.
  6. © Health Catalyst. Confidential and Proprietary. Part 2 Alignment—Other Provisions to Synchronize with HIPAA • Permit redisclosure of Part 2 records as permitted by HIPAA by Part 2 programs, covered entities, and business associates, with certain exceptions. • Create patient right to an accounting of disclosures, right to request restrictions on disclosures for treatment, payment, healthcare operations. • Align Part 2 Patient Notice with HIPAA notice of privacy practices. • Apply the same breach standards to Part 2 as under HIPAA. • Establish a complaint process.
  7. © Health Catalyst. Confidential and Proprietary. Is The Current Financial Environment “The New Normal”? -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% Kaufman Hall Operating Margin Index YTD by Month 2023 could represent a new normal for hospitals. -Kaufman Hall ($4.5B) ($2.3B) ($1.2B) ($916M) ($837M) ($715M) ($428M) ($515M) ($378M) ($370M) ($275M) ($232M) ($178M) ($111M) Notable Health Systems Full Year 2022 Net Income Performances
  8. © Health Catalyst. Confidential and Proprietary. Costs from Inflation Are Projected to Increase, Not Decrease -1.0 -0.5 0.0 0.5 1.0 1.5 1-Month % Change CPI for All Urban Consumers (Inflation) US Bureau Of Labor Statistics Buying gets more expensive Buying gets less expensive Buying gets WAY more expensive Buying stays expensive, but doesn’t increase as fast 29 29 22 22 21 15.5 15 14.5 12 9 5.7 0.51 France UK Netherlands Japan Canada Italy Belgium Sweden USA Germany Switzerland 21-22 Fed Reserve Predictions Number of years for inflation to return to 2% after a breach of 5% Bloomberg, BofA Securities. 1960-2022 G-10 Average Healthcare could add an extra 143% in additional costs associated to inflation over the next 5 years. McKinsey Hospital services costs have increased 242% over the last two decades. US Bureau of Labor Statistics
  9. © Health Catalyst. Confidential and Proprietary. Poll Question
  10. © Health Catalyst. Confidential and Proprietary. How Long Can Hospitals and Health Systems Continue to Operate with Their Current Business Model? 40% 46% 41% 43% 42% How long if your business continued on its current paths, would it remain economically viable? % of those who answered 10 Years Or Less Korn Ferry n=4,400 CEO's
  11. © Health Catalyst. Confidential and Proprietary. Biden Administration Healthcare Priorities - 2023 • Cancer “Moon Shot”—To address screening gap, environmental exposure, prevention, research funding, patient and caregiver support. • Clinical research: (1) clinical trial networks, (2) new data systems that integrate data. • Further steps to reduce smoking. • ARPA-H – Advanced Research Projects Agency for Health—To focus on breakthrough research on a number of diseases. • Lowering prescription drug costs – Addressed in the Inflation Reduction Act. • Reducing veteran suicide. • Housing, mental health support, and employment support for veterans. • Tackling the mental health crisis. • Beating the opioid and overdose epidemic & cracking down on fentanyl trafficking.
  12. © Health Catalyst. Confidential and Proprietary. Patient Disengagement % of participates who avoided telling a clinicians each type of information MTurk n=2011 SSI n=2499 Disagreed with clinician's recommendations 45.7% 31.4% Did not understand clinician's instructions 31.8% 24.3% Had unhealthy diet 24.5% 20.3% Did not take prescription mediation as instructed 22.5% 17.6% Did not exercise 22.2% 21.6% Deliberately did not mention a certain medication 15.5% 10.4% Took someone's else's prescription medication 13.9% 8.8%
  13. © Health Catalyst. Confidential and Proprietary. Poll Question
  14. © Health Catalyst. Confidential and Proprietary. Who Will Be Able to Consistently Meet Patients’ Expectations and Needs? Bain capital predicts by 2030 30% of primary care will be delivered by nontraditional providers 64% 25% 69% 79% 65% 52% 70% 70% 41% Us adults who have never sought out pricing for healthcare services YouGov n=2000 US adults who have switched providers in last 12m because of poor experience Accenture n=11,000 US adults that experienced frustrations during medical appointments BDO n=3,000 US adults that encountered frustrations in seeking medical care BDO n=3,000 US adults that ranked their trust in payers negatively Zelis n=800 US adults who view US healthcare quality as fair/poor Gallup n=1020 US adults tried online scheduling in the past year but were redirected to a phone call OnePoll n=1,005 US adults say the US handels mental healthcare not at all well AP-NORC n=1,505 US adults who have some form of healthcare debt KFF n=2,375 Recent Research Findings
  15. © Health Catalyst. Confidential and Proprietary. 118th Congress – Healthcare-Related Committee Leadership
  16. © Health Catalyst. Confidential and Proprietary. 118th Congress – Healthcare-Related Committee Leadership
  17. © Health Catalyst. Confidential and Proprietary. Healthy Future Task Force and the Republican Agenda in the House in 2023 • Empower employees to have more choices, with an emphasis on more flexible plan options, enhancements to HSAs. Empower small businesses to join together in Association Health Plans to increase their market power. • Continue to enforce price transparency rules and move forward with more price transparency initiatives such as the “Advanced EOB.” • Leveling the playing field: Payment parity for clinics and hospitals, allowing physician- owned hospitals.
  18. © Health Catalyst. Confidential and Proprietary. Bipartisanship – Is it Possible to Get Anything Done? • Where do the agendas potentially overlap? • Are there other areas of potential collaboration? • Potentially less controversial items, such as:  Reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA) – Set to expire on September 30, 2023.  Reauthorization of FDA User Fee Programs.  Medicaid access.
  19. © Health Catalyst. Confidential and Proprietary. Move to VBC Has Historically Shown Over the Last Decade to Move Slower than Anyone Predicted 53.7% 52.3% 39.4% 14.9% 11.8% 7.6% 3.8% 44.9% 31.9% 32.3% 31.5% 34.3% 2.6% 7.8% 25.3% 5.9% Commercial Medicaid Medicare Advantage Traditional Medicare 2021 Category 1 Category 2 Category 3 Category 4 1.5%-3.5% for 5 years 3B: 8-10% *HCPLAN 2022 Measurement Effort ** EmlemHealth
  20. © Health Catalyst. Confidential and Proprietary. Organizations Are Slow to Adopt Mechanisms to Support Physician Accountability for Cost and Quality and Full Capitation Risk *Numerof Population Health Survey Report - November 2022 57% 65% 49% 46% 65% 35% 37% 55% 70% 56% 48% 62% 39% 37% 58% 64% 53% 47% 59% 37% 34% 55% 67% 59% 50% 65% 39% 35% 55% 67% 60% 48% 66% 40% 32% We have established standardized care paths for one or more high-cost procedures We have physician order entry systems (e.g. CPOE systems) designed to make variation from the care path of one or more procedures an exception We provide information to physicians regarding patients at risk for high cost/ high utilization We are using a formal process to work with physicians who are outliers on cost and/or quality for one or more procedures We provide at least some physicians with comparative cost and/or quality data We are using a formal process to identify variation in cost and/or quality at the physician level for one or more procedures We pay at least some physicians based on their ability to manage variation in cost and/or quality (includes cases in which only a portion of pay is determined by cost/quality) Data indicates percentage of respondents reporting these mechanisms being used routinely at their organization 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 Median % of revenue at risk 10% 10% 10% 10% 15% 10% Median % of capitated revenue 5% 0% 5% 5% 5% 0%
  21. © Health Catalyst. Confidential and Proprietary. Price Transparency Rule Enforcement • Since Jan. 1, 2021, hospitals have had to make public their standard charges for items and services they provide. The standard charges include gross charges, discounted cash prices, payer-specific negotiated charges, and de-identified minimum and maximum negotiated charges. • Congress and the Administration to prioritize enforcement of the Hospital Price Transparency Rule. • Letter from Energy and Commerce Committee leaders asking the Government Accountability Office to investigate hospital non-compliance. • CMS has said it will take “aggressive additional steps” to identify hospitals lacking required pricing information on their websites. • To date, there have been: • Two enforcement actions against hospitals. • Over 500 non-compliance warning letters.
  22. © Health Catalyst. Confidential and Proprietary. Does Your Data Have the Right Environment to Reach its Full Potential? 1% 5% 30% 62% 2% All employees are highly data literate Most employees are highly data literate Most employees are data literate Most employees are not data literate Almost no employes are data literate What would you say is the average level of data literacy within your organization?* *Carruthers and Jackson Data Maturity Index October 2022 Fully embedded with high levels of data maturity within the organization, 1% Well embedded with adequate levels of data maturity within the organization, 24% Our data strategy sits on the side of our operating model, 46% We have no data strategy, 29% How embedded is your data strategy within your business processes?*
  23. © Health Catalyst. Confidential and Proprietary. Elements of Enterprise Data Intelligence 20% 40% 30% 10% *IDC 2021, n=1,170 Enterprise data intelligence aligns Data Governance, Data Quality, Data Literacy and Business Value
  24. © Health Catalyst. Confidential and Proprietary. Poll Question
  25. © Health Catalyst. Confidential and Proprietary. The COVID-19 Public Health Emergency (PHE) Is Ending—How Will that Impact Healthcare Delivery? • The Biden Administration intends to end the PHE on May 11, 2023. • Wind-down of federal supports for Medicaid programs. • Continuation of some telehealth waivers are in question. • Waivers that are continuing:  HHS extended a number of telehealth flexibilities in the 2023 Medicare Physician Fee Schedule Final Rule for 151 days following the end of the PHE.  Flexibilities include waiving originating site restrictions, allowing audio-only coverage, expanding the list of telehealth practitioners).  FDAs emergency use authorizations for tests, vaccines, treatments for COVID-19.  Acute hospital care at home waiver extended through December 31, 2024. • Waivers that may be sunsetting:  Certain Medicare and Medicaid telehealth flexibilities, such as waiver of copayments and deductibles, virtual direct supervision, HIPAA enforcement flexibility.
  26. © Health Catalyst. Confidential and Proprietary. Questions for Consideration 1. What are our goals for leveraging data and analytics in healthcare, and how do we measure our progress toward these goals? 2. What are the key capabilities and skills required to become a data-driven organization, and how can we assess our current level of maturity in these areas? 3. How can we ensure the quality and accuracy of our data, and mitigate the risk of errors or biases in our analysis? 4. How can we promote a culture of data literacy and fluency throughout our organization, and ensure that everyone is equipped to make accurate data-driven decisions? 5. How can we promote better communication and understanding between patients and physicians, and create a culture of mutual respect and trust? 6. How can we empower patients to take a more active role in their care and make informed decisions about their health? 7. How can we better align incentives and priorities between patients, physicians, and the healthcare system as a whole? 8. How do we de-risk the move from FFS to VBC? 9. How can we balance the short-term and long-term financial implications of the transition to value-based care, and ensure the sustainability of our healthcare system? 10. What types of contracts does it make sense to engage in more upside and downside risk and in what contracts doesn’t it make sense? 11. How can we use data and analytics to inform and augment our decision-making and identify opportunities for cost savings? 12. How can we balance our focus on cost containment with our mission to provide quality care to patients? 13. What strategies beyond money can we implement to improve staff retention rates and reduce turnover? 14. How can we leverage technology and automation to streamline workforce management processes and reduce administrative burden? 15. Will policy changes at the federal level have a significant impact on my organization? 16. Should my organization prepare for policy changes? 17. Should my organization take steps to prepare for the sunset of the PHE? 18. Will my organization’s use of telehealth be impacted by the end of the PHE? 19. With the hospital at home extension should our organization consider starting or expanding a program?
  27. © Health Catalyst. Confidential and Proprietary. Questions? Tim Zenger, Vice President of Market Insights, Health Catalyst Dan Orenstein, General Counsel, Health Catalyst

Editor's Notes

  1. Education and health services Healthcare has about 54% of employees leaving the industry. are top employment industries.
  2. The NPRM proposes to: Permit Part 2 programs to use and disclose Part 2 records based on a single prior consent signed by the patient for all future uses and disclosures for treatment, payment, and health care operations.
  3. The operating margin index appears to be cyclical with occasional months dipping into the negative, the recent trend is unique at least since 2019
  4. The January jobs report showed nonfarm payrolls increased by 517,000, far higher than the 187,000 market estimate.
  5. JAMA 2018 file:///C:/Users/TimZenger/Downloads/levy_2018_oi_180228.pdf
  6. We as a country pay more of a premium than any other country yet our delivery is lacking
  7. Patient Days Private : 60% Medicare:: 29% Medicaid: 11% 74%** of patients have never heard about value-based care?
  8. Failure to provide a “machine readable” file of standard charges was one of the top non-compliance items. Also, failure to provide adequate lists of shoppable services.
  9. Put frost and Sullivan says low digital maturity organizations try to utilize their EHR as their digital and data source of truth.