The Healthcare market is dynamic, constantly expanding and evolving in ways that can be hard to predict. Last year, we made a few macro-level predictions. What can we expect in 2025?
Now more than ever, Healthcare enterprises are wrestling with evolving patient expectations, the high cost of care, technological advancements and manpower challenges. Leaders know they need to make transformational change to advance health outcomes and optimize costs.
The reality is that many hospitals, clinics, ambulatory surgery centers, medical groups and home healthcare providers are not making expected profitability and, in some cases, are even drowning in debt. The reimbursements from insurers and Medicare/ Medicaid have shrunk, while costs for physicians and clinicians, as well as administrative support staff, have risen drastically – and such talent is getting harder to source.
In this scenario, one would expect healthcare payers to be very profitable as reimbursements go down. But, no. Payers are also struggling to maintain profitability because of the quantity of claims, the number of claim dollars and the overhead costs.
This means both payers and providers are suffering from reduced profitability, which is inhibiting additional healthcare facilities and increased insurance choices for members and patients. The country sorely needs both.
Both payer and provider Healthcare organizations are sticking to their core competencies and sourcing activities that support those competencies. IT & Business Process service providers can be very specialized and have proven to lower costs for Healthcare organizations. But Healthcare organizations need to ensure alignment between their technology investments and business processes. This means, if we look closely, we will find market synergies between IT outsourcing and business process outsourcing.
While Healthcare providers source workloads outside their core competencies with the goal of lowering costs, they are also looking to improve efficiency by automating specific workflows and to save money by deploying GenAI in the right use cases.
Specifically, healthcare payers are sourcing many workflows of the claims processing systems, e.g., provider data management and payment remittance. A lot of integrations involving Electronic Data Interchange (EDI) and Fast Healthcare Interoperability Resources (FHIR) are sourced or are ripe for sourcing, especially by niche service providers. Smaller payers, such as Medicare Advantage companies, are sourcing the entire claims process, including call centers, due to squeezed costs of providing service.
How can sourcing help optimize costs? Here are six ways:
As healthcare providers continue to struggle with profitability, we will see an uptick in M&A activity. Divesting and sourcing non-core competencies will continue, as will automation projects that address standard workflows in the healthcare provider environment. GenAI initiatives in non-clinical areas will continue to proliferate, and there will be growing interest in providing physicians and clinicians with GenAI tools that allow better diagnoses and specifically tailored treatment plans.
Medicare Advantage (MA) enrollment has been plateauing, and these once significantly profitable organizations will become more conservative. Automation initiatives in the claims pre-processing and post-processing workflows will continue. The new administration has promised to lower the cost of Medicare, but it will also chip away at the subsidies of the popular ACA programs as it does so.
In 2025, healthcare providers will be expected to share the risk along with insurance firms; the capitation model will become more prevalent. To free up more acute care beds, which are always in a short supply, hospital-at-home models will also increase. And drug prices will continue to come down as the federal government takes an increased interest in negotiating with pharma companies.
GenAI in healthcare is increasingly prevalent in non-clinical workflows for both healthcare payer and provider organizations in the industry. As an example, healthcare revenue cycle management (RCM) will see a drastic increase in possible use cases and pilots to address them. Currently use cases are very prevalent within the contact center and in standard workflows such as prior authorizations and coding initiatives. Clinical areas like radiology are adopting some GenAI tools to augment the information available to a clinician that enables better diagnoses. GenAI pilots that help create tailored treatment plans in personalized medicine will also be on the rise.
A number of companies have been using workflows involving prior authorizations as a use case for GenAI trials. This involves both healthcare providers requesting prior authorizations for their patients as well as payer insurance organizations fielding calls through an AI engine to approve standard cases or refer them to a human in the loop.
GenAI is also being used to record patient-physician interactions and transcribe them into accurate EMR notes, which can then be used for recording and billing purposes or for additional information synthesis for specialty treatments.
There is no doubt that technology is changing healthcare. And yet many healthcare organizations don’t think of themselves as technology enterprises. ISG helps both healthcare payer, provider, PBMs and healthcare solution organizations assess where they stand in the current market, create a technology-forward strategy for the future and execute on plans that empower people and enhance patient satisfaction. Contact us to discuss how we can help you.