Healthcare 2023: Expectations for the Next Ten Years

Recent developments in healthcare have revealed the probable and definite changes to come over the coming years, the next decade in particular. This report specifically will cover the implications and expectations relative to a small doctor’s office practice. The prisms evaluated will include social, legal, regulatory, and the value chain of health care. While advances in healthcare are undeniable, the current and coming regulatory and societal challenges facing healthcare, smaller healthcare offices and other operations in particular, will in a large amount of challenges and opportunities over the next ten years.

Value Chain

The value chain is an imperative part of the health care process and framework, both in terms of efficiency and quality of care. The exponential growth in healthcare costs over the last generation or so has put a huge squeeze on the bottom lines of for-profit healthcare operations as well as the personal bottom line of consumers who are often struggling to keep up with the growth in healthcare costs. Many people, consumers in particular, are likely not aware of what the value chain by name but know what it is if it is explained to him or her. A consumer wants quality health care at a cost that is reasonable and as small as possible. Consumers are able to use savings accounts and other measures to mitigate their tax and healthcare bills.

In a similar fashion, a small office practice that is the point of reference for this analysis has to enforce and codify a value chain as well. When speaking of a small practice, the margin of error to protect the consumer from sticker-shock while at the same time protecting the profit margins and ongoing operations of the practice can be challenging. This is especially true when speaking of patients with little to no ability to pay but yet have major healthcare concerns and/or interactions and compliance with the laws and medical frameworks of the federal government like Medicare and Medicaid as well as the equivalent or at least similar state and local operations. The lowered reimbursement levels for Medicare and Medicaid, brought on the increasing insolvency of those programs, will put a squeeze on a small practice and may preclude the practice from even accepting participants relying partly or solely on either or both programs. There are societal and demographic factors that influence this and will be covered more in-depth later. However, to put a fine point on the value chain part of the coming years of healthcare, it will be quite difficult for small practices to retain their competitive edge given the way in which healthcare costs will put a pinch on operation and administrative costs and functions. Part of this is systemic and part of it is a matter of laws and requirements from the federal or state governments. Regardless, small practices will have to find a way to accept and be available to as many patients as possible while not exposing the practice to losing money due to people not being able to afford increased costs as well as lower and/or more difficult-to-retrieve reimbursements for government-subsidized treatments, operations and procedures. In terms of what the value chain will mean to small medical practices over the next ten years, it is clear that keeping operations efficient yet effective will be essential to reinforcing and displaying the value chain to both internal and external customers while at the same time remaining in the better graces of governmental agencies of all sizes and shapes including the Occupational Safety and Health Administration (OSHA), the Department of Health and Human Services (HHS) and so on.

Legal & Regulatory

Although far from being the only potential pitfall and challenge to a small practice, the recent large speed bump in the healthcare sphere is the recent passage and current implementation and ramping up of the Patient Protection and Affordable Care Act, otherwise referred to as ObamaCare. The HealthCare.gov website has mostly been an unmitigated disaster and many facets of the program including the employer mandate as a few other parts like the small business setup deadline and the deadline to comply with the minimum insurance policy standards that were part of the Patient Protection and Affordable Care Act have all manifested themselves over the last year or so (Hays, 2013). This all influences the small medical practices of the United States in a number of ways. First, there are already millions of people that are losing their employer and/or individual insurance policies due to their pre-existing policies not being compliant with the new requirements of the Patient Protection and Affordable Care Act. This phenomenon will increase the number of people that will not have insurance and/or will not have the coverage that they did before due to affordability concerns. This will increase the number of payment plans and other credit arrangements that will be necessary unless it’s just not financially feasible for a small practice to extend a large amount of credit.

However, between the Great Recession and the growth of healthcare costs levels that has far out-stripped regular inflation rates for years now have created plenty of issues on their own completely independent of ObamaCare or any related concerns. This has been compounded in recent years by the increase costs and taxes brought on by ObamaCare along with the increased belief that healthcare is a human and/or civil right rather than an elective purchase that just happens to be done by a vast majority of the country. The coming years will probably reflect a shift from employer-based healthcare plans to ones that emanate from private or government-ran “exchanges” that market different healthcare plans from different companies. There has been a massive amount of resistance to this including from state governments that are actively resisting the trends being brought on by ObamaCare as well as healthcare companies that do not see any financial incentive (and/or see a financial drain) in getting involved with ObamaCare or any similar state frameworks. Over the next ten years, and especially ObamaCare continues to evolve and be implemented, small medical practices will need to weigh whether they should (or even can) see patients with government insurance as the viability of doing so on any large level will be increasingly difficult for small medical practices in the coming years.

Society & Culture

A huge factor, if not the main one, in the current healthcare environment and the decade to come, and this is true of all levels of healthcare service and demand, would be the changing perceptions, needs, demographics and so forth of society. The aforementioned insolvency of Medicare and Medicaid is largely being caused by a rather high amount of older and aging Americans nearing or in retirement as compared to the number of people actively working in the workforce. This was caused by the huge birthrate of the late 1940’s and 1950’s bottoming out in the 1960’s and staying quite low during the ensuing generation or so. In short, the birth rate dropped by half from the 1950’s to the early 1970’s and the rate has never returned to the 1950’s level since then, hence the term “baby boomers” made in reference to the massive of amount of children born after the conclusion of World War II. This ebbed off greatly due to the social upheaval of the 1960’s and the economic challenges of the 1970’s and early 1980’s. The economic boom of the late 1990’s and part of the 2000’s helped mitigate this birth rate drop a bit. However, as noted before the rate has never been as high as it was in the 1940’s and 1950’s since the apex that occurred back then and the Great Recession did little to help that (Draper, 2013).

What this means for healthcare and related programs like Social Security is the ratio of people paying into the program to fund it as compared to the people using the program has swung widely and there is not a lot overlap between the two sides as the recipients are usually retirees and are thus not paying much (if anything) in taxes as they received much (if not all) of their income and healthcare from the federal government (Roy, 2012). This condition puts the politicians and the recipients in quite a pickle because taxing the programs into solvency is a non-starter due to the reactions and limitations of the private sector and the associated revenue stream and cutting benefits (or the suggestion thereof) incurs a litany of invective and vitriol from all corners of society that is the least bit concerned with the social safety net frameworks of the United States and the impacts to the wallets of people with fixed and/or limited incomes..

As far as how all of this figures into the work and coming years of a small practice, the same affordability and access to health care issues brought on by other dimensions mentioned in to this report apply to the social and cultural constructs as well. The size and scope of the affordability and service access vortex is seismically large as compared to the resources and options that a small practice would have. That being said, the size of the effect and how it manifests would vary a lot based on the prevailing affluence, resources, tax base and general health patterns of an area. For example, if there is systemic weakness in the healthcare community at a given time due to recession or something similar, it would be felt more swiftly and strongly in a low-income area and/or urban area than it would be in a rich suburb or an area where the concentration of healthcare providers and other services is quite high. What this means to small practices is that they need to be cognizant of the societal and cultural trends vis-à-vis health care and what it will mean to their bottom line and the perceptions from the community regarding healthcare as a service and/or a right as time wears on.

Steps in Service

Whether one is speaking of a small practice, the focus of this report’s perspective, or a larger practice, the different steps in the service chain have to be taken into account when considering what is to come over the next ten years. The three main parts of the service chain, of course are pre-service, time of service and after-service. Time of service is generally handled well by providers of all sizes and shapes but the preceding and following steps are both neglected quite a bit and/or are otherwise not fully taken advantage of in terms of quality of care and preventative measures both preceding and following the need for healthcare. For a small doctor office practice, this chain would certainly hold to be accurate. Pre-care would involve if/when a person comes into a doctor or nurse for assistance. The reactionary nature (or lack thereof) of the events preceding a proposed or actual doctor’s visit can vary due a number of factors. The aforementioned access to care and cost of care can lead to people that really should be going to doctors for care not going due to affordability and/or insurance concerns. However, some people are entirely too willing to go to a doctor’s office or even an emergency room for the slightest thing. Patient educating regarding when a “wait and see” approach is best versus “get to doctor now” approach is more called for is pivotal is vital in terms of catching things early enough to get rid of it quickly/before someone’s life is threatened versus someone who is basically a hypochondriac and is wasting their own money/time as well as that of the doctors on staff.

Time of care, while the most common-sense step of the chain, can be a challenge as well for a small practice because doctors often see a lot of patients back-to-back-to-back and this can lead to patients not getting the care they deserve or need. At the same time, this rapid-fire sort of approach is somewhat necessary because dilly-dallying can lead to less revenue per day and this can prevent a practice from being profitable. In short, a small practice needs to be efficient but they need to be thorough. Throwing everything and the kitchen sink at the slightest symptom is wasteful (and potentially dangerous) but so is treating what could be a nasty disease or disorder as nothing when it is definitely not can also be dangerous. Government regulation and guidelines chipping away at the margin of error with small practices is only going to hurt the amount of time spent with patients and this will hurt quality of care and outcomes in general.

Post-care is the last piece of the service chain and is also important. This can be as simple as a quick follow-up call to make the patient is recovering or progressing OK or it can also be a reminder at the next proper interval to do another screening such as a yearly mammogram, Pap smear or colonoscopy. This practice can ensure better patient outcomes and more reliably revenue streams for the doctor of a small practice but it also takes time/resources from necessary or preferable tasks and this can matter with a staff of hourly people on a limited payroll budget. Small practices have to be cognizant of best practices of the patients and their follow-up/progression from each procedure or service but going too wild on non-value added activities is unwise. As with most things, either extreme is not helpful but finding the true and proper balance can be problematic enough on its own.

Governance & Operational Changes

As noted before, the passage and implementation of the Patient Protection and Affordable Care Act has turned into a logistical and bureaucratic nightmare and a lot of the fallout has turned out to be a current or potential future problem for many industries and this sort of impact would be felt most strongly by small businesses with small medical practices in particular being hit harder than most people and industries. One pressure bought to bear is that the amount that firms must pay for insurance if/when they offer it and who must/should qualify for insurance is going to pressure employers and employees alike, so small employers like single-office medical practices are going to be getting pressure from both ends in a lot of ways as they are a processor and an provider of insurance, with the former pertaining to patients and the latter relating to employees of the doctor’s office.

State insurance agencies also have a role in the governmental and regulatory dynamic as states are the primary or one of the arbiters of insurance cost increases and regulatory enforcement. In addition, the aforementioned minefield of Medicare and Medicaid (the latter particular is controlled and funded in large part by the state and not the federal government a lot of the time. The crux of the issue that all businesses and medical practices must face, smaller ones more than larger ones, is the triad of cost pressures that are government regulatory compliance costs, operational expenditures and revenue streams from insurance and patients. Balancing those three together and at all times in a way that keeps a small medical practice profitable and operational can be quite a challenge. Indeed, there is a brain drain of sorts that is leading to a doctor’s shortage as the professionals leaving the field are not really being replaced by those that are entering it.

Concurrently, not unlike the farming industry, there is a fairly prevalent trend of doctors and specialists forming groups and conglomerates that pool their resources and efforts and thus lower the costs for everything. Farming out of activities and tasks like blood testing, other lab work and so forth is done to get needed work done for lesser cost and hopefully the same outcome. This sort of outsourcing can also be done to help with compliance and regulatory issues. For example, a small practice might elicit the services of a payroll and/or human resource company like ADP or Paychex to keep the administrative and operational costs down for that part of the business and this allows doctors and other professionals to bother themselves more with actual medical care issues. Another benefit is that less staff is needed for purely administrative functions. Rather than hiring multiple people to do each task, it can be instead whittled down to one or two people to cover what the outsourcing partner cannot or should not be concerned with like who to hire, strategic company decisions and so forth.

Strategic Resources

A lot of what can be said about strategic resources has already been covered or mentioned in other sections of this report, but a separate section for strategic resources is still called for. Efficiency, evidence-based practice and vigorous compliance efforts are all part of keeping a small medical practice operating well. Engaging in this activity effectively requires and involves the strategic use and planning of how to use and harness resources such as equipment, supplies, vendors, people, and so forth. Even intangible and hard-to-measure aspects like human capital, succession planning, ownership/corporate structure and so forth are also important to consider. This is what is manifesting when one sees doctors form collectives in one or more offices and/or outsourcing of non-medical tasks and/or tasks that can be done cheaper and/or better by another party are partitioned out to get the best results for the smallest amount of money spent as possible (Quinn, 2013).

However, the word “strategy” is important to focus on because over-reach is always possible and it happens quite often. Other times, small businesses only cut costs and are concerned with expenditures when times are tough and they treat the process and idea of keeping things lean and clean as an afterthought when economic and regulatory times are good. However, it is best practice of any firm, especially small business firms like small medical practices, to be vigilant and diligent at all times, in good times and bad. Doing so allows margins to always be the best that they can be and the pains of a recession or other economic, legal or regulatory challenge will not hurt quite as much. Getting the right people or vendors in the right roles and at the right time is simply a good way to run a small practice and this general idea should take on greater importance and will become more and more prominent over the coming ten years.

Conclusion

As part of this report, the author was asked to answer to a number of quick questions. As for what changes should be expected in pre-care, current care and post-care, it is important to focus on all three. They should be met with equal weight because they are all important. Pre-care is necessary because proper preventative care helps prevent costly care down the road and that benefits the entire medical frameworks at the public and private levels. Current care quality is important for reasons that don’t need to be explained and post-care follow-up is necessary to ensure that everything with the medical care happened it should. Doctor’s offices, even small ones, can leverage email, social media and automated phone notifications to give people notice of what they should do without spending a lot of man-hours or efforts on reaching people that do not want to be reached, which does happen with some people.

The service aspect of the value chain should be attention to detail, evidence-based results, a soft touch and voice and ensuring that patients are treated like people rather than cattle to be rushed through the system. Any changes to this as well as the service chain should be based on what is quick, what works and what ensures best quality of care. Changes that are needed should be implemented through round-tables, scholarly research and buy-in from the involved parties and stakeholders. Structures should be hierarchal and clear-cut but need not be extensive or expansive for a smaller practice. Accessibility and openness should be the order of the day as squelching feedback and not being ready to assure others will lead to resistance to any change. The two main things that will assist in all of this is leveraging the right people and the right resources up to and including heavy use of vendors and outsourcing that are competent and effective at what they do. The advent of social media, the internet in general and computer and phone technology will enable all of this to be done quickly and effectively.

References

Draper, E. (2013, March 11). Decline in birth rates breeds future worry, author says. - The Denver Post. Retrieved from http://www.denverpost.com/ci_22761931/no-kids-no-worries-doesnt-work-after-few

Hays, E. (2013, November 7). What the Healthcare.gov Disaster Means for Your Website. Forbes. Retrieved from http://www.forbes.com/sites/gyro/2013/11/07/what-the-healthcare-gov-disaster-means-for-your-website/

Quinn, F. (2013, August 21). Why outsourcing medical billing will bring success at your doorstep? MedCity News Why outsourcing medical billing will bring success at your doorstep Comments. Retrieved from http://medcitynews.com/2013/08/why-outsourcing-medical-billing-will-bring-success-at-your-doorstep/

Roy, A. (2012, April 23). Trustees: Medicare Will Go Broke in 2016, If You Exclude Obamacare's Double-Counting. Forbes. Retrieved from http://www.forbes.com/sites/aroy/2012/04/23/trustees-medicare-will-go-broke-in-2016-if-you-exclude-obamacares-double-counting/