With a new year upon us, healthcare leaders are busy finalizing their plans for 2023 and reflecting on the lessons of 2022. At MMG, we have a unique vantage point – with clients ranging from hospitals and health systems to individual and group practices to behavioral health – that lends us visibility into the trends impacting healthcare as a whole, as well as the nuances affecting individual sectors.
With this in mind, we asked our leadership team to weigh in with their predictions and insights for the year ahead. Each offers their unique perspective below.
In 2023, I expect to see a distinct split between physician providers that are entrenched in the fee-for-service (FFS) model and those physicians that go all in on the Value Based Care model (VBC). The ‘foot in two boats’ practice of dabbling with VBC and still being in FFS will no longer work, as the expectations of VBC contracting will require dedicated processes, infrastructure, and reporting to be successful.
Healthcare leaders need to be aware of proposed CMS payment cuts and should review all internal expenses, as well as their payor mix to know what percentage of overall revenue is Medicare. They should also check current commercial contracts to see if they are based on Medicare rates and for what year. These may need to be renegotiated. From a coding perspective, leaders should familiarize themselves with the significant updates to more of the Evaluation and Management Services that are going into effect January 1, 2023.
As we head into the new year, we’re keeping a close eye on the performance of rural and small hospitals and health systems, as many are at risk of closing their doors due to losses in patient revenues, high expenses and low financial reserves. Leaders in these settings will need to focus heavily on improving financial performance in order to survive. With soaring interest rates and a rising cost of capital, we’re also anticipating a consolidation of private equity and venture capital investments.
I see three major trends continuing into 2023. The first is the use of AI, both in clinical and back-office applications, which stands to benefit both patients and providers in terms of quality, convenience and efficiencies. The second is the further development and utilization of home health delivery concepts, which can enhance patient experience while also improving outcomes and reducing cost of delivery. Lastly is the ongoing influence of consumerism. Patients deserve and demand access and convenience, which we’ll see translated in trends in retail healthcare delivery, home health alternatives, remote and tele / video interaction and wearables.
In 2022, we saw behavioral health providers studying alternative payment models due to low commercial payor reimbursement rates. I anticipate that continuing this year, as providers seek ways to maintain their financial edge in a challenging market.
Payor reimbursement cuts, staff shortages, increased virtual patient visits and home care, which we’ve all become familiar with, will continue into 2023.
Medicare Advantage plans will continue to be a focus in 2023, bringing with them the need for more stringent coding practices and expertise. I also expect to see a continued convergence of tech and retail in healthcare delivery, as healthcare is an attractive marketplace for non-healthcare companies looking for a new source of top-line revenue. Lastly, home-based care and patient remote monitoring are likely to continue, as digital solutions make at-home care the growing norm.
Managing change. Changes in our healthcare delivery model are being driven by cuts in reimbursement, new technology, telehealth and unlikely competitors (Walmart, CVS, and Private Equity, for example). 2023 will require leadership that is not just managing to a bottom line but shifting the practice’s business model to adapt to the changes.
Expect decreases in revenue from payors and increases in operating and staffing expenses. To combat this, proactively work on tightening up processes, becoming more efficient with less staff. Be in tune with how to offer virtual patients visits if that’s not something you’re currently providing.
As things like AI grow in popularity and more and more people rely on patient portals to connect with their doctors, healthcare leaders will need to budget more for improving security.
While opportunities abound in 2023, healthcare leaders can also expect their share of challenges, led by labor issues and wage inflation, supply chain pressures, consumer demands, downward pressures on reimbursements and heightened compliance standards and requirements. The aging base of healthcare professionals (both providers and nurses) and the continued drag of legacy infrastructure costs should also be considered as leaders think through their plans for this year and beyond.
Healthcare leaders should perform an honest assessment of their business model now to determine strengths, weaknesses and growth opportunities. Then, set a plan building on the strengths and fixing the weaknesses. The traditional habit of ‘doing business as usual’ will not be successful in 2023.
Now is the time to tighten up processes relating to patient visits. Check that patient coverage is verified prior to visits, assure needed referrals are in place, collect copays and any patient balances upfront, implement a patient portal on your website for ease of payments and appointments, etc. Being knowledgeable on appropriate coding and documentation for your patient visits is also crucial in being reimbursed for the work you are providing.
We’ll no doubt continue to see changes in our healthcare landscape this year, but leaders who stay attuned to these changes and are proactive in their efforts will be better positioned to succeed.
Q: Any other thoughts on the state of healthcare or what’s to come in 2023?
Now three years out from the start of Covid, the healthcare delivery model has not yet recovered. We’re seeing ongoing issues with access to specialty care, plus unacceptably long wait times for testing, surgery and behavioral health services in urban and rural areas. As we kick off a new year, I’m hopeful that healthcare leaders across the board will lean into to help solve for these issues.
I feel there will be a continued increase in virtual patient visits, as well as a bigger push toward home healthcare in the coming year. Being educated on the appropriate coding requirements and documentation is very important to assure you are being reimbursed for these services.
More so than ever, the business of healthcare needs to be actively managed. A passive approach to strategy development and execution will not suffice in the face of current market challenges. Only the most intentional and proactive of healthcare business leaders stand to turn current market challenges into opportunity.