Future Frame Discussion Blog Post: The Road Ahead

The dominating stories of 2020 have been the pandemic and the presidential election, but will 2021 be the same kind of rollercoaster? As the vaccination campaign begins, how quickly will we see stability? As a new president takes the reins, what will his healthcare priorities look like both for COVID and beyond it?

On Thursday, December 17, 2020, Andrew Croshaw, Governor Mike Leavitt and Futurist Ian Morrison, held a LinkedIn Live broadcast on the state of healthcare, what everyone should be thinking about, and what lays ahead for the healthcare industry in 2021.

Priorities of the Biden Administration

President-elect Biden’s health priorities start foremost with fighting COVID-19, but also include restoration of the ACA and addressing health disparities. Governor Leavitt provided a framework to understand Biden’s nominee for Secretary of Health and Human Services (HHS), outlining the criteria any nominee must meet to be successful:

1) Ideologic alignment with the President-elect –

2) Knowledge and experience working with Congress

3) Passionate defender of the Affordable Care Act (ACA)

4) Experience working with states

Both Governor Leavitt and Ian agreed that California Attorney General Xavier Becerra meets these criteria and is well positioned to succeed as the new secretary, noting that his background allows him to speak with authority on important priorities such as health disparities and social justice. Ian added some additional commentary on Becerra’s legal action in California to take on a healthcare provider in northern California whose scale was driving up costs, another potential flag.

Key Lessons from Health System Executives

As we begin to understand the economic consequences of the pandemic, we can start to identify the factors that led some health systems to surprising success. Ian pointed out the examples where mission-focused leadership and ingenuity led some systems to emerge from 2020 in a stronger position. Pre-pandemic trends toward consolidation and scale as a means of cost reduction provided financial stability that these leaders acknowledge got them through the year. It was a very remarkable year, and the bravery and professionalism of front-line workers was unparalleled.

Governor Leavitt also pointed out just how much the COVID pandemic revealed how much we have allowed our public health systems to go to seed – state legislatures have not invested enough, federal funding has been there but, in some cases, it has been too targeted. His hope is that leadership in the private and public sectors will acknowledge this gap and find new and improved ways to fund public health and better integrate it into our systems of health care delivery and finance.

What will 2021 Bring?

While the vaccination rollout is heartening, it raises important questions about how quickly we will “return to normal.” Realistically, we are facing another three to five months of difficult times before spring could bring a reprieve. By the end of 2021, things could start to feel very normal again. President-elect Biden’s number one priority will be to get through the worst of the pandemic, but at the same time oversee major health care initiatives that include addressing health disparities and restoring the ACA. At the same time, the level of debt and creditworthiness of the United States will affect his agenda particularly as it relates to the impending expiration of the Medicare trust fund. The economic imperative will lead to stark options for Medicare – do we raise taxes and/or cut provider rates, or do we more aggressively pursue value-based payment mechanisms to bend the curve.

The good news is that private payers, including self-insured employers, are more ready to demand value-oriented solutions. Payers have to be willing to do something with the risk they hold, notably to share the risk with providers to change how care is delivered, sharing some of the financial incentives associated with value. In the near future, payers will need to either own providers or be owned by providers in order to provide the right outcomes-based incentives to reduce costs.

Five Strategic Areas of Focus in 2021

Healthcare focused businesses would be well served to consider the following as they re-evaluate their strategies in 2021:

  • Federal Policy Change: Keep a pulse on federal developments – new personnel, stimulus funding, and policy changes could have implications for your business.
  • Return to Normal Strategies: Think about how public health initiatives help your employees and/or customers safely “return to normal”, identifying opportunities to better align public health and the business of healthcare.
  • Evolving Payment Landscape: Understand and map your business opportunities and threats to the shifting payment landscape as the ACA is restored, the individual market is reinvigorated, and the payer mix shifts toward a higher proportion of government funded or subsidized insurance. Increasing employer action on cost pressures may pressure commercial reimbursement as well.
  • Defining and Redefining Your Market: Identify opportunities to merge, partner, or launch new lines of business to meet changing and evolving needs. In 2020, there have been new entrants into healthcare, along with provider consolidation and new partnerships in some cases hastened by the pandemic. Don’t assume demand will be the same as it was pre-pandemic.
  • Value-Based Solutions: Figure out your role in driving value-based solutions. Direct-contracting, primary care redesign, bundled payments and other value-based models will continue to be driven by CMS however private payers will add important momentum to the transition to improve quality and lower costs through value.

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Our mission at Leavitt Partners is to advance value to make health care more affordable, sustainable, and effective. We invite community members and industry experts to join us in future dialogue on the health care climate. View our upcoming schedule of Future Frame discussions here and join us for our next broadcast on Thursday, January 14, 2021 at 11:00 am ET on LinkedIn Live. Andrew Croshaw, Jennifer Colamonico and Brett Glover from KPMG will discuss the 2021 Investment Outlook for the Healthcare Industry.