By Randena Hulstrand
The increase of nontraditional disruptors in the healthcare industry — whether tech, private equity, venture capital-backed firms or payer providers — have forced legacy providers to take careful note on how they can compete.
But as Casi Roethler, associate principal at Sg2, a Vizient company, shares in her recent blog Disrupter downfall: Do legacy providers prevail?, recent developments have seen numerous disrupters like Walmart and Walgreens significantly alter their healthcare strategies — or, in some cases, exit the sector entirely.
While she warns "providers must avoid the urge to latch onto overly broad storylines based on timing of market exits or pivots made in quick succession among new entrants," she says there are lessons to be learned.
"Market dynamics in the healthcare disrupter sector demonstrate the free market in action, where competition and failure are as common as they are pivotal," Roethler said. "The importance of scalability in elements such as risk-based payment models, access to premium dollars — revenue stream from insurance premiums less cost of care — and robust pharmacy operations cannot be emphasized enough."
Brian Esser, Sg2 principal, reiterates that for traditional providers to get as close to the premium dollar as possible, they must evolve their business models from traditional fee for service.
"Moving the needle on population management while positioning the organization to benefit from downstream earnings on a value — or risk basis — is really the goal," he said. "That could be a contractional partnership with Medicare Advantage or commercial payer, a joint venture insurance offering or a provider-sponsored health plan. Those who slowly flip their operations from fee for service to value at the pace the market is ready will be best positioned to win."
Explore what some of our other experts have to say about remaining relevant in an increasingly competitive healthcare market:
Deepen understanding of patients as customers
Think like tech: Lessons for healthcare organizations: Vizient CEO Byron Jobe shares examples of tech companies' game-changing tactics that healthcare organizations can use to better adapt to digital disruption, avoid patient leakage that impacts market share and better understand every step of the patient journey.
Transforming access strategies: Think like a retail giant to improve access: Drawing inspiration from the success of Amazon's customer experience strategy, Sg2's Yelena Bouzaiz says, "Access is crucial for a positive healthcare experience that ensures availability, convenience, understanding, affordability and respect. Before people can receive great care, you have to help them get to you first."
Strengthen physician networks
Leveraging network integrity to achieve customer loyalty: Understanding and improving referral patterns has an immediate impact on a healthcare organization's revenue and customers," says Sg2's Tara Gallagher. "Physicians who refer patients to affiliated practitioners are telling their patients not only that they trust these physicians, but also that they trust their organization to provide the best care. As customer loyalty develops, so does customer stickiness."
Optimizing healthcare network referrals through "blended family" approach: As the healthcare industry is seeing record numbers of mergers and acquisitions, often among competitors, keeping physician referrals in network is key to their success. Sg2's Christine Sasser-Perry says organizations can increase near-term revenue during and post-mergers by "utilizing data, building relationships using outreach teams and implementing an organizational reporting structure that allows leadership to mitigate issues quickly, so providers feel heard."
Forecast with data and insights
Strategically listening through human-centered metrics and insights: By using data and insights to find intersections of human experiences and desired business outcomes, organizations can reduce costs, improve care quality and maximize growth most effectively. Sg2's Tek Vu says, "Done well, health systems can inform and align targets that drive transformative growth, deliver exceptional care and experiences, and generate loyalty both internally and externally."
Vizient's new pharmacy site of care database helps providers formulate alternate site of care strategy: Vizient's Carina Dolan says that the tremendous growth of the home infusion market and specialty pharmaceuticals has made it challenging for providers to delineate which medications can be administered safely at an alternate site of care. Vizient Pharmacy Solutions' new database is here to help.
The time is now: Invigorating path for growth with consumer-driven digital transformation: Sg2's Jon Barlow emphasizes the need for healthcare systems to move beyond measuring standardized KPIs to look at instead of their market share, the share of wallet — all the dollars available for that patient to allocate to certain care. "This provides a clearer picture of patient retention and churn in, as well as individuals' loyalty based on their spend allocations among competing health systems."
Determine right degree of risk with payer strategy
Value-based care disruptors: What can health systems learn from their successes and failures?: While disruptors typically focus on a particular "missing link" in value-based or consumer-focused care, Vizient's Kimberly Radel says success follows the ability to make rapid decisions about what's working and what isn't. "Companies that are nimble and not afraid to fail are structured to recover quickly and adapt their business models based on what they've learned."
Elevating employer-provider relationships: Exceeding employee expectations: "By embracing a proactive approach to care management, prioritizing the patient experience, leveraging technology and incorporating value-based care concepts, providers can become indispensable in promoting employee well-being through partnerships with healthcare payers and providers," Vizient's Karen Decaran-Voigt said.
Vizient hosts congressional briefing on Medicare Advantage: Learn more about a recent Vizient-hosted congressional briefing where a panel of experts highlighted the ongoing challenges with certain Medicare Advantage plans, such as confusion among beneficiaries about their coverage, excessive prior authorization denials, reimbursement issues and gaps in data reporting to the Centers for Medicare & Medicaid Services — and offered solutions.