What Are Healthcare Executives Thinking? – Burda on Healthcare

I write a lot about what healthcare organizations and companies do, and I make educated guesses on why they do what they do based on my experiences, industry knowledge and gut feelings gained from covering the healthcare industry as a reporter and editor for 36 years now.

But I don’t really know why they do what they do because I’ve never run a healthcare organization or company. That’s why I’m always drawn to surveys of healthcare executives. They’re the closest I get to being inside their heads and their offices.

Over the past few weeks and months, a number of different organizations, all, too, trying to figure out what execs are thinking, released a spate of surveys of healthcare executives. Let me run through some of the surveys for you. Then, I’ll tell you what I think is going on in healthcare c-suites across the U.S. It may help explain why they’re doing what they’re doing.

Based on surveys released by 10 different organizations, here are 10 things healthcare executives are thinking:

1. They are thinking that they need to find new sources of revenue.

That’s the takeaway from the Advisory Board’s survey of 90 hospital and health system C-suite execs. “Revenue growth” topped the execs’ list of strategic priorities for 2019, cited by 21.1 percent of the respondents. It nudged out “population health and ACO strategy,” cited by 20 percent of the execs. A distant third was “cost containment,” cited by 13.3 percent of the execs. Cost containment was last year’s top strategic priority, cited by 24.5 percent of the execs in 2018. Maybe it’s easier to make your margins by generating more revenue than by cutting more expenses. Where will the new revenue come from? Outpatient care! The top three tactics to increase revenue were: “increasing ambulatory access,” “strengthening primary-care alignment” and boosting outpatient procedural market share.” You can download the Advisory Board’s survey here.

2. They are thinking that vertical integrators in the outpatient care space are their biggest threats.

That’s the message from a Kaufman Hall survey of more than 200 hospital and health system execs. The respondents cited UnitedHealth Group/Optum and CVS Health/Aetna as their two biggest competitive threats over the next five years. Sixty-seven percent said UnitedHealth Group/Optum was an “extreme” or “strong” threat, and 66 percent characterized CVS Health/Aetna the same way. As you know, Optum has been gobbling up medical groups and physician practices around the country. And CVS health has been rolling out expanded primary-care services at its traditional retail pharmacy sites in a number of its markets across the country. This answers the “why” hospital and health systems see outpatient care as their new battleground and source of revenue growth. You can download the Kaufman Hall survey here.

3. They are thinking that industry consolidation is the biggest trend that they have to deal with now.

That worry comes from a survey of more than 1,000 healthcare executives by Definitive Healthcare.  The execs came from a variety of industry sectors, including provider, biotech, financial services, staffing, life sciences, health IT and consulting. Industry consolidation topped the list of the most important trends this year, cited by 25.2 percent of those polled. I’m assuming that consolidation includes both vertical integration across sectors and horizontal industry within a sector. Rounding out the top five trends on the ranking were consumerism a distant second at 14.4 percent followed by telehealth (13.8 percent), artificial intelligence and machine learning (11.4 percent) and staffing shortages (11.1 percent). You can download the Definitive Healthcare survey here.

4. They are thinking that the need to generate additional revenue will drive innovation.

That’s the hope from a survey of c-suite executives from 29 health systems conducted by The Center for Connected Medicine and The Health Management Academy. “Additional revenue generation” topped the execs’ list of primary strategic drivers of innovation at their health systems. Fifty-two percent said the desire to bring in more money was innovation’s biggest catalyst. More revenue was followed by “cost reduction strategy” at 33 percent, “quality improvement” as 33 percent, “diversification strategy” at 19 percent and “consumer experience and engagement” at 19 percent. Whatever health systems are using innovation for, don’t expect things to happen overnight. Sixty-two percent of the execs described the speed of implementing and scaling innovation at their health systems as “somewhat” or “very” slow. The inability to react quickly will make vertical integrators even more of a threat to health systems. You can download the CCM/HMA survey here.

5. They are thinking that they need better technology and tech skills to achieve their financial goals.

That’s the insight from a survey of nearly 1,600 hospital and health system CFOs conducted by Black Book Research. Their top two priorities for 2020 will be managing organizational cost reductions and predicting the impact of new payment models, cited by 91 percent and 85 percent of the respondents, respectively. To do both, the CFOs said they need better technology and better analytics skills. The top two sought-after skillsets in hospital and health system CFOs next year will be  “technology acquisition and implementation,” cited by 89 percent of the respondents, and “data analytics,” cited by 85 percent of the respondents. Ninety-two percent said they believe that the hospital or health system CFO of the future must “do a better job leveraging technology and staff with IT skills for health providers to succeed financially.” You can download the Black Book Research survey here.

6. They are thinking that their workforce is technically savvier than their organizations as a whole.

That humbling admission comes from a survey of 221 healthcare executives from the U.S. and Canada conducted by Accenture. Seventy-seven percent of the execs agreed that their employees were more “digitally mature” than their own organization and were “waiting” for their organizations to catch up to them. So what are the healthcare organizations run by these 221 execs doing to catch up to everyone walking past their c-suite doors? Eighty-nine percent said their organizations are experimenting with one or more DARQ technologies. DARQ stands for: distributed ledger technology; artificial intelligence; extended reality; and quantum computing. Sixty-eight percent said a combination of one or more of the DARQ technologies will have a “transformational” or “extensive” effect on their organization over the next three years. For example, 68 percent agreed that every one of those tech-savvy staffers  within the next three years have access to a team of “bots” to help them do their work. That’s if they still have a job, I guess. You can download the Accenture survey here.

7. They are thinking that their c-suite can handle the pace of tech advancements, for the most part.

The lukewarm endorsement of the technology acumen of their peers comes from a survey of c-suite executives from 70 hospitals and health systems conducted by Korn Ferry. When asked if members of their c-suite can handle the rapid pace of technological advancements in healthcare, 60 percent said, “Yes, to some extent.” Only 25 percent said, “Yes, to a great extent.” Fifteen percent said, “No, to some extent.” Also of note is the 56 percent of the execs who felt that their organization had an effective CEO succession plan in place “that develops internal candidates to meet future business needs.” The balance didn’t feel that way, which is an ominous sign for the sustainability of hospitals and health systems at a time when their business models are under attack from new market entrants and vertical integrators. You can download the Korn Ferry survey here.

8. They are thinking that they need to tap nurses more as sources of care delivery transformation.

Well, at least that’s what this survey of 104 clinical leaders and 172 business leaders co-sponsored by the University of Pennsylvania School of Nursing said. The other co-sponsor is The BDO Center for Healthcare Excellence & Innovation. HealthLeaders Media surveyed the clinical leaders, who were from hospitals, health systems, home-health agencies, skilled-nursing facilities, physician organizations and hospice providers. FierceMarkets surveyed the business leaders, who were from health insurance, pharmaceutical, biotech and medical device companies. Whew! I just wanted to make sure you knew where this came from. The five areas where the surveyed clinical leaders felt that nurses had the most opportunity to transform care by 2025 were, in order: adult/geriatric care specialization; chronic-care coordination; mental health, including addiction; innovation; and population health. You can download the Penn Nursing/BDO/HealthLeaders/FierceMarkets survey here.

9. They are thinking that optimizing the performance of their supply chain can improve profitability.

Well, at least that’s what this survey of 100 hospital and health system supply chain leaders by Syft and Sage Growth Partners said. Sixty-five percent of those polled said supply chain management is a “high” operational improvement priority for their hospital or health system. Thirty-three percent described it as a “medium” priority. Fifty-two percent said a better supply chain could “modestly” improve margins at their hospital or health system with another 35 percent saying it could “significantly” do so. How? By reducing supply costs and eliminating waste—cited by 66 percent of the respondents. But alas, supply chain management ranked fifth out of five as a priority for operational improvement. Beating it out, in order of operational investment priorities, were: patient throughput/flow; process improvement; perioperative environment; and staffing turnover, retention and management. You can download the Syft/Sage Growth Partners survey here.

10. They are thinking that the most value-based contracts won’t feature two-sided risk for a few years.

That reality check on the evolution of value-based reimbursement models comes from a survey of 185 healthcare executives by Change Healthcare and the HealthCare Executive Group. The largest share of the respondents—30 percent—worked at health plans. When will the majority of value-based payment contracts contain both upside and downside risk for healthcare providers? Some 26.7 percent said it won’t be for another one or two years. And 39.8 percent said it won’t be for another three to five years. The results mirror a number of other studies, reports and surveys that indicate that the pace of VBR adoption and development of new VBR risk models is slowing down as fee-for-service medicine is proving much harder to replace than many prognosticators believed. You can download the Change Healthcare/HCEG survey here.

We’re all adults here, and we all know that survey sponsors design questionnaires to elicit responses that support what the sponsors are selling. Did you ever read a survey by a nursing organization that said the answer to all of the industry’s problems isn’t nurses? I didn’t think so.

That said, the 10 surveys do give us an idea of what’s being discussed at all those closed-door meetings on the executive floor. And what they’re discussing is business. Not healthcare business but business.

They’re talking about competitive threats. They’re talking about diversification and new business lines. They’re talking about new sources of revenue. They’re talking about cutting expenses. They’re talking about contract terms. They’re talking about technology. They’re talking about workplace innovations. They’re talking about their employees and their own job security.

They’re talking about all those things because healthcare is a business just like any other business. To be successful in any other industry, a business must be laser-focused on meeting the needs of customers. If you run a healthcare business, you need to be laser-focused on meeting the needs of all your patients. That’s what those conversations behind closed doors should be all about.

Author

David Burda is a columnist for 4sight Health and news editor of 4sight Friday, our weekly newsletter. Follow Burda on Twitter @DavidRBurda and on LinkedIn. Read his bio here.