November 12, 2021

The Weekly Gist: The Fruit and Flowers Edition

by Chas Roades and Lisa Bielamowicz MD

We’ve got an exciting anniversary coming up next week, as Gist Healthcare turns four years old! A Google search reveals that the 4th anniversary is the “fruit and flowers” one—and indeed, startup life has been both rosy and bananas! It’s been an incredible journey so far, and we’ve learned so much and been so blessed to have interesting work to do, supporting healthcare leaders who are making a difference in people’s lives. And of course, having the opportunity to share our thoughts with you here, in the Weekly Gist!

In the weeks ahead, we’ll be pulling up to review what we’ve learned from producing this newsletter. We want to make sure we’re delivering more of what you find compelling: timely, relevant perspectives; data-driven infographics; insights from our work with members; and (of course) a dash of music, movie, and TV recommendations. More to share in the new year; in the meantime we’ll continue to send along new graphics and tales from the road in the handful of editions left for 2021. Stay tuned for more updates.


GRAPHIC OF THE WEEK

A key insight or teaching point from our work with clients, illustrated in infographic form.

Outpatient surgery tops ten-year growth forecast

Over the last year and a half, the pandemic has driven significant short-term shakeups in volume—but we’re watching to understand whether care patterns will shift permanently. In the graphic below, our colleagues at healthcare strategic intelligence firm Sg2 share their 10-year hospital volume forecastOutpatient surgical volume is expected to see the sharpest increase, driven in large part by surgical site-of-care shifts. Orthopedics and neurosciences account for five of the six highest-growth procedures across the next 10 years, with knee replacements alone expected to increase three-fold. Ambulatory surgical centers (ASCs) will see the majority of this new volume; Sg2 predicts that over a third of total knee replacements may be performed in ASCs by 2029. We anticipate the Centers for Medicare & Medicaid Services will continue to implement policy changes to incentivize this shift. Movement to site-neutral payment has been broadly supported by both the Trump and Biden administrations. And despite the Biden team’s reversal of the Trump administration’s removal of the inpatient-only procedure list, we anticipate fewer and fewer procedures will fall under this designation over time. Developing a path to safely move surgeries to the outpatient setting will be critical for health systems, lest they lose volume entirely to ambulatory-only competitors.

Looking at inpatient care, hospitals will be left with sicker patients, needing higher-acuity, specialized care as consumers shift to new, lower-cost care sites for lower-acuity needs. With an aging population carrying a higher incidence of chronic disease, patients coming to the hospital will have more complex challenges, driving up demand for tertiary-level inpatient care, with demand for general inpatient care remaining relatively flat. Emergency department volumes are not expected to fully bounce back as we exit the pandemic, as consumers shift to new access channels and lower-cost sites of care for minor acute needs. If the future forecasted here comes to fruition, health systems will likely need to shift bed allocation and clinical workforce staffing plans toward greater critical care capacity.


THIS WEEK AT GIST—ON THE ROAD

What we learned this week from our work in the real world.

Questioning the connection between recessions and benefit changes

Along with scores of other healthcare consultants, we predicted that the deep economic recession spurred by the pandemic could usher in a change in the benefits market. The logic was that high unemployment would provide employers with “cover” to redesign health benefits to save costs. When the market is hot, rich benefits are an important lever to lure talent. But in a downturn, employees might more easily stomach narrower networks, or even a shift to defined contribution health benefits, because they might feel lucky just to have a job. And there’s precedent to draw on: the recession of the early 1990s ushered in a change in retirement benefits, with most companies moving from rich pensions to 401(k) and other defined contribution vehicles. A seasoned benefits consultant recently shared an alternate perspective with us. “I’ve now been through three big recessions over 30 years in this industry, and I’ve come to realize what we’ve been saying is wrong, despite the obvious logic,” he said. He posited that health benefits are more immediate, and unlike retirement savings, feel like a pressing need during a time of economic crisis. And most importantly, he said, “if you’re already laying off 20 percent of your workforce, the last thing you’re going to do is get skimpy on health insurance with the remaining 80 [percent]”, when morale has been shaken and you’re asking people to work harder.

But if recessions don’t change employer benefits, what could, we asked. We agreed with his prediction that change will come from two forces: governmental and generational. You can already see these impacts. Government policy changes trickle down into the commercial market; as Medicare Advantage becomes the dominant form of coverage for seniors, these types of benefit structures (individual choice, trading narrower networks for lower out-of-pocket costs and other benefits) will become more commonplace for younger individuals. And Millennial and Gen Z workers are looking for something different from their health benefits. They’ve never known anything other than high-deductible healthcare, and they may prioritize benefits like enhanced mental health, telemedicine or wellness, rather than paying top dollar for broad network PPO coverage. We’ll be watching to see how these trends play out, as employers navigate post-pandemic benefit choices.


THIS WEEK AT GIST—ON THE PODCAST

All the headlines in healthcare policy, business, and more, in ten minutes or less every weekday morning.

Last week we revisited some of our favorite Gist Healthcare Daily episodes, including our three-episode series exploring investor acquisitions of physician practices. Coming up next Monday, we’ll feature a conversation with Alex about how insurers are doubling down on virtual and home-based care as they expand vertical integration strategies.

The podcast will return with new episodes on Tuesday, November 16.

[Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.]


That’s all for this week—we’ll see you back here for a few more “slimmed down” editions for the rest of the year, and will keep you posted on our plans for the Weekly Gist in 2022 and beyond. Thanks again for your readership, and for sharing your suggestions and feedback with us—we love hearing from you! Don’t forget to share our work with your friends and colleagues, and encourage them to subscribe, and to listen to our daily podcast. Lots of great stuff to come—and no shortage of things to discuss in our crazy healthcare system!

In the meantime, please let us know how we can be of assistance in your work. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO
chas@gisthealthcare.com

Lisa Bielamowicz, MD
Co-Founder and President
lisa@gisthealthcare.com