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Looking Back to Move Forward: Healthcare Focus in 2018

January 16, 2018 BY Kate Shamsuddin, SVP of Strategy

Looking Back to Move Forward: Healthcare Focus in 2018

Like many other industries, the healthcare industry consistently finds itself under the microscope, especially as it attempts to sustain itself under several competing pressures and a relatively unpredictable environment. And while the environment has been ripe for change, experimentation, and most importantly disruption, there has been a struggle to bring clear answers to core questions. Through this post I reflect back on a presentation I gave on the top trends of 2017, outlining the subset of issues that remain front and center as key discussion topics as we look ahead. Ultimately, I believe these are four topics which industry players will continue to spend mindshare on, and as such, demand greater attention.

Hospitals by HCAHPS Summary Star Ratings

HCAHPS Rating % of Hospitals Receiving Each Score Avg Net Patient Revenue (M)
1 Star 1.6% $235.7
2 Stars 14.2% $237.6
3 Stars 40.7% $315.2
4 Stars 37.3% $200.6
5 Stars 6.0% $67.0

Fig 1 Data from Definitive Healthcare. Percentages based on the number of hospitals receiving each rating, not including hospitals that did not receive an HCAHPS rating.

Patient experience as the real consumer priority, rather than just a trend

Patient experience is not a new concept and is unquestionably a value driver that stakeholders across the healthcare market can easily find themselves indirectly supporting, if not directly driving toward. Stronger inroads were really established in the market upon the realization that just putting more information in front of consumers or making slight tweaks in the patient journey would not and did not surface the desired outcomes: better patient outcomes and increased patient satisfaction. Because of this, healthcare providers like short-term acute care hospitals have almost been forced into the continued experimentation of different strategies and tactics to make the patient experience better. Many of these strategies focus on tools that address patient experience through patient engagement. But hospitals are not the only ones thinking about the patient experience.

Other types of providers, like retail and urgent care clinics, are reshaping their day-to-day operations, and payors are considering where patient experience fits within their evaluation of care quality. The investment in improving patient experience also extends into peripheral markets, as demonstrated by technology companies and service providers who strive to help hospitals and clinics and physicians in their endeavors. This is demonstrated by a broad range of new tools that tailor the patient’s journey as they enter, navigate, and exit the healthcare market—whether that be through more personalized medicine or access to services that are relevant each specific patients’ needs. All in all, measuring the benefits that ensue from a positive patient experience is now considered a vital part of the overall value equation. What remains to be seen are trusted reviews and research that really define which of the strategies lead the market in the ultimate transformation of patients into loyal consumers.

Top 5 Patient Portal Vendors

Vendor Name Hospital Implementations Vendor Market Share
Epic 1,706 21.6%
Cerner 1,050 13.7%
Evident 410 5.6%
Medhost 401 5.4%
Allscripts 312 4.1%

Fig 2 Data from Definitive Healthcare

Despite duress, CMS remains at the front of the helm

For decades, the Centers for Medicare and Medicaid Services (CMS) has been considered a true thought leader in driving development, with a goal of increasing efficiency across the market. CMS has led in the transformation of healthcare payment systems and delivery models that have strongly influenced key players in the commercial sector, including how payors contract with providers or even how service providers engage hospitals in risk-based contracting. Notably, CMS has taken on a largely consultative role to the rest of the market through its experimental models – whether that is through its effort to redesign primary care, programs focused on quality reporting, or payment reform through its episode payment initiatives. And while the future of the Affordable Care Act is obfuscated, it is clear that the market will continue to swim in the tow of CMS and look to it for its persistent leadership, which includes the rigor it has placed on program evaluation. Not all programs released to the market are fully successful, and this notion was clearly demonstrated when CMS canceled the mandatory hip fracture and cardiac bundled payment models and reduced the number of markets required to participate in the Comprehensive Care for Joint Replacement Model this past November. CMS will continue to maintain its role in driving innovation and acting as a petri dish to push more progress. There certainly is no evidence suggesting its response to find and test solutions to solve market pressures will wane anytime soon or its commitment to engaging other public and private partners will decline in order to achieve success.

The emergence of AI continues, but its potential remains undetermined

It is no surprise that artificial intelligence (AI) has found a home for itself within healthcare, whether that be in support of providers, businesses, or patients. And while it is a new technology adopted within healthcare, some have ventured so far to claim AI is solving problems already. AI was once considered a strategy that would be most impactful to “back-office” tasks in making them more efficient for an enterprise, but it is quickly becoming apparent that its limits haven’t been discovered just yet. AI is surfaced through computers, apps, devices, robots, and much more, and now has an established presence in being able to support the daily workflows and activities of physicians. For example, tools exist to help triage information to inform clinical decisions in real time, capture unstructured intelligence through natural language processing, or even help to interpret the results of ancillary or lab tests. This sort of technology is no longer an emerging capability, but a sophisticated tool that stakeholders will need to harness in order to pick and choose where further investment should be made. Its ultimate success will require continued trust in its ability to get smarter over time with the intake of more data.

Top 5 Inpatient Electronic Health Record (EHR) Vendors

Vendor Name Hospital Implementations Est. Vendor Market Share
Epic 1,852 25.4%
Cerner 1,747 24.0%
Meditech 1,025 14.1%
Medhost 441 6.1%
Evident 426 5.8%

Fig 3 Data from Definitive Healthcare.

Intensified market disruption through acquisition

Consolidation among providers within the healthcare landscape has continued in full force, even when it feels we have reached a point of saturation around deals. The news headlines have continued to stream announcements and continued evaluations of merger and acquisition activity. Such potential mergers include Partners HealthCare and Care New England, Dignity Health and Catholic Health Initiatives, and Providence St Joseph Health and Ascension Health—creating one of the largest hospital operators in the U.S. Consolidation remains a key tactic among healthcare providers to maintain a strong foothold over market share, but it is becoming more obvious that consolidation is starting to move well beyond the commonplace transactions. Market disruption and uncertainty are massively intensified by even higher profile deals that either bring new entrants into the healthcare marketplace or move non-traditional players like CVS much closer to the center of the market. Three major deals were announced in 2017 which seemingly left the market confounded: CVS Health’s announcement to purchase Aetna, Optum’s announcement to purchase DaVita Medical Group, and Humana’s joint purchase of Kindred Healthcare. Each of these transactions is intrinsically valuable for the obvious reasons: diversification of services and product, financial gains, improved competitive positioning, and so on. But these deals are also extrinsically valuable. They are forcing real and serious conversations about the roles of traditional players within the marketplace, including how healthcare providers view their competition, how patients potentially access medical services, or even how suppliers can identify imposing threats. Even further, they introduce deal frameworks to the rest of the market on what sorts of transactions might be feasible. It feels like many will take a more passive approach here and wait to see what happens as these larger deals are realized and operationalized over the next twelve months.

Each of the trends explored in this blog provides an update on trends explored in 2017, and in essence, I don’t expose anything new. So, what is the takeaway here? The “trends” described here indicate where the market is spending its cycles and how it fills up a significant portion of the airtime. These topics have emerged not as trends, but as mainstays. And, in the end, I do think these are the right areas for which we should and can expend our energy. It’s important to see how we can continue to pivot our focus to thinking more about the patient, and to understand the channels that best drive toward that goal—whether that is advanced AI techniques, new programs, or by stamping out new models for consolidation. Perhaps we see an emerging trend to focus on in 2018, but that is not the wager I want to make. Instead, we should focus our attention on going deeper into these areas of study and advancement and evaluate their effectiveness. We must understand how continued pursuit of change across these topics, either independently or together, makes the overall system better…or worse.

Visit the Definitive Blog to read more about healthcare industry trends.

Definitive Healthcare is the leading provider of up-to-date, comprehensive, and integrated data on the healthcare industry. Our database tracks financial and clinical metrics, as well as CMS program participation, on over 8,800 hospitals, 1.5 million physicians, and dozens of other care providers.

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