A bumpy road for healthcare providers

Having weathered the immense hardships of COVID-19 in recent years, medical groups and health systems leaders will not be given a break in 2023. These leaders face tremendous challenges in the coming year in many areas – finance, operations, clinical practice, and workforce. However, progress is possible as some will leverage the multiple strengths of their organizations to create more adaptable, focused systems of care that better serve the needs of their patients, providers, and communities. Here are some of the critical issues they will face.

Staff, staff, staff: Labor shortages, particularly among staff in non-professional roles, will remain an acute pain point for pension schemes. Competition for talent with entry or technical skills will remain fierce, and systems will continue their efforts to improve recruitment and retention. In the short term, we will see large wage increases, efforts to improve the work environment, and the creation of novel career development opportunities. In the longer term, companies will increasingly seek partnerships with community colleges or technical schools to build their own pipelines for the next generation of healthcare workers.

Financial turmoil: Operating margins will remain under pressure due to increased labor and procurement costs combined with flattening revenues. Cost savings will be on every executive’s to-do list, and everyone will be looking for ways to streamline processes, trim unnecessary or unprofitable service lines or programs, and automate or outsource where appropriate. Redesigning care will be a priority, but with a greater focus on operational efficiencies and staff reductions – all while improving access to care.

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Value-based payments: Interest in participating in value agreements will increase in both the federal and commercial arenas. Risk-based payments are considered less risky than relying on feeable volume, especially when the economy goes into a downturn. Look for systems to invest in care management, advanced analytics and leadership development to create the competencies needed to transition to value creation. In addition, medical groups and healthcare systems will expand their pool of GPs and Advanced Practice Providers (APPs) to provide a strong population health foundation. Health equity treatment is being built into many of these more recent contracts.

Integration: After years of mind-boggling mergers and acquisitions, many healthcare systems are pausing to better align their practices. Creating a cultural fit between the disparate and often geographically separate entities will be paramount to achieving business goals. Many will work to improve their purpose-driven culture by having leaders speak and act with more clarity and heart. However, difficult decisions, such as reducing duplicate services and standardizing care flows across the system, can no longer be delayed.

Internet security: Healthcare IT systems will continue to require higher investments just to keep up with increasing threats from bad actors. Early warning systems, tabletop simulations of cyber incidents, and vastly increased employee training and involvement are becoming the norm as cyber insurance costs continue to soar. Expect the federal government to take on a stronger role in combating the cyber threats to healthcare systems.

This unstable environment offers new opportunities for innovation and growth, but requires clear strategies and the ability to quickly adapt to changing conditions. Maneuvering through this maze of complex problems will test the skills of any medical group or system leader. Let’s prepare as best we can.

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Jerry Penso, MD, MBA, is President and Chief Executive Officer of AMGA (American Medical Group Association), a trade association representing medical groups and other organized systems of care.

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