Last week, healthcare-focused market research firm Trilliant Health released a report detailing the most significant economic trends affecting stakeholders in the U.S. healthcare sector this year. Some of the main ideas covered in the report included Americans’ worsening physical and mental health, the industry’s shift away from traditional care pathways, and the way patients’ decision making is becoming increasingly driven by consumerism.
Here is a summary of the 10 trends Trilliant has deemed as most impactful in shaping the healthcare economy.
1: “The commercially insured market continues to erode”
The uninsured rate in the U.S. reached 7.7% early this year, thanks in part to the Affordable Care Act and pandemic-era flexibilities. However, the number of people in the commercially insured population dropped by 0.3% from 2021 to 2022 — which is important given most healthcare revenue comes from commercially insured individuals.
One factor that will greatly affect the commercial market is the fact that millions of Americans lost their health coverage this year due to changes in Medicaid coverage tied to employment status and procedural issues like address changes and missing forms. This has led CMS to pause Medicaid redeterminations in several states. How disenrolled patients handle their health coverage — whether they gain marketplace insurance, enroll in an employer-sponsored plan or become uninsured — will impact the payer mix of “almost every healthcare provider,” the report said.
Another significant factor impacting the commercial market is the country’s aging population — the number of births in the U.S. does not offset those who are aging into the Medicare market.
The commercial sector will also experience major changes based on the country’s migration patterns. As people leave large coastal cities and flock to the Sun Belt, the proportion of commercially insured patients within both growing and dwindling regions will inevitably change.
2: “The physical and mental health of Americans is unraveling”
The mortality rate for Americans under age 40 increased in 42 states from 2018 to 2022. In California, Washington and Tennessee, the rate more than doubled over these four years. These spikes are “largely attributable” to the rising numbers of overdose deaths across the country, the report said.
Additionally, the demand for primary and preventive care has gone down in recent years, due in part to the fact that more and more patients are forgoing care because of cost concerns. The rising costs of drugs is also causing many patients to skip their medication, the report pointed out.
The report also noted that Americans’ heart health is declining, with rising instances of myocarditis in young people, as well as an increasing share of pregnancies with preeclampsia.
On the behavioral and mental side of healthcare, visit volumes have been consistently trending upwards since 2019. This includes marked increases in demand for treatment for anxiety disorders, depressive disorders, eating disorders, bipolar disorders and alcohol and substance use disorders. The rising prevalence of mental health disorders is especially high amongst the country’s youth, the report added.
3: “Drug and diagnostic investments signal emerging patient needs”
Most of the drugs recently approved by the FDA are ones that treat genetic diseases and cancer, and much of the M&A activity in the life sciences world has centered on oncology and rare diseases in recent years. Additionally, the drug pipelines at many of the world’s biggest drugmakers are heavily focused on oncology, the report pointed out.
Drugmakers are investing in cell and gene therapies because they could greatly improve the way doctors treat cancer and rare diseases, but the complex and expensive patient journey that these drugs require is still hindering adoption.
The rise of GLP-1 weight loss drugs is another important aspect included in this trend. Prescription volumes of these drugs shot up by 300% between 2020 and 2022, with Novo Nordisk’s Ozempic accounting for 65% of all GLP-1 prescription volumes. Much of these drugs’ use remains off-label — just a little more than half of patients on a GLP-1 medication in 2022 had a history of type 2 diabetes, according to the report.
4: “The tepid demand trajectory for healthcare services persists”
The demand for emergency care and behavioral health services is high, but healthcare utilization has been declining in most other care settings since 2021.
The nation’s disease burden does not seem to be directly correlated with patient demand for care, the report pointed out. For example, the prevalence of chronic disease is continuing to rise, yet hospital admissions have declined more than 10% from 2008 to 2021. The report asserted that patient demand is highly dependent on local market characteristics — including disease burden, demographics, consumer preferences and access.
Trilliant’s report also predicted that the demand for healthcare services will likely remain cool over the next four years. Even among growing service lines, like oncology and digestive health, patient demand is not predicted to exceed a 1% compound annual growth rate by 2027, according to the report’s analysis of patient demand trends in Chicago and Houston.
5: “Consumer behaviors are starting to manifest in patient decision making”
Americans’ opinions of the country’s healthcare system are getting more negative. For the first time in two decades, the majority of the country believes its healthcare system is subpar. Patients are also trusting their healthcare providers less — nearly 40% of Americans said that health websites are their most trusted source of healthcare information.
Care is also moving away from the health system. In recent years, patients have gained access to new care pathways, including retail clinics and telehealth providers.
Many patients — especially younger ones — are opting for convenience and accessibility by receiving care at nontraditional care sites. Nearly 60% of Americans said they are likely to seek non-emergency care from a retail pharmacy chain, according to the report.
6: “The traditional care pathway is becoming disintermediated”
As patients embrace convenient, nontraditional care sites, their care journeys are becoming even more fragmented. For example, a patient who walks into a retail clinic to seek care does not have a relationship with the provider they’re about to see, which makes it more difficult for them to navigate the healthcare system to seek other medical services they may need, like screenings.
The care provided by retail clinics is typically transactional and low acuity — preventive or high acuity care is usually rendered by a provider with which the patient has an established relationship, the report pointed out. While the rise of alternative care sites has helped patients treat low acuity conditions with more ease and convenience, this trend has also made it more challenging for them to have cohesive healthcare journeys.
Telehealth is making patients’ healthcare experiences more disconnected as well. The report showed that a majority of large employers are concerned about siloed virtual care providers and the lack of integration between these platforms and the broader healthcare system — they are worried that this issue could be making care quality worse.
7: “New models of care are further constraining provider supply”
More physicians stopped practicing than started from 2018 to 2022, resulting in a -2.3% workforce reduction. Not only is there a shrinking number of physicians, but more companies are competing to hire them as new entrants like retail clinics and home health providers disrupt the field.
From 2022 to 2035, the national adequacy of most medical physicians is projected to fall below 100%. The predicted adequacy by 2035 is at its lowest for nephrologists, standing at 78.7%, while pulmonologists exhibit the highest projected adequacy at 174.4%, according to the report.
8: “The monopolistic effects of provider M&A are overstated”
The report declared that market concentration is not correlated with hospitals’ financial metrics. In 2021, more than 20% of hospitals had negative operating margins, regardless of market concentration, the report pointed out. It also noted that the negotiated rate for healthcare services is often lower in monopoly markets than it is for the three most competitive markets in the country.
Healthcare stakeholders from across the industry are increasing their spending on lobbying with a focus on influencing federal policy regarding M&A, the report noted. For example, physician groups and associations increased their spend by 3.4% from 2021 to 2022.
The report also highlighted the fact that the federal government’s measure of market concentration is limited to inpatient utilization — even though the share of care being delivered in inpatient settings is declining. If the government used a more accurate measure that took both inpatient and outpatient care into consideration, it would arrive at different conclusions about the same market, the report declared.
9: “Employers are paying more for less”
Employers’ insurance costs are continuing to rise. The share of employer-sponsored lives covered by a high-deductible health plan last year was more than six times higher than it was in 2006. Since 2010, family deductibles have increased by 31.4% and individual deductibles have risen by 33.4%, according to the report.
The report noted that growth in employers’ expenditures for health insurance premiums exceeded year-over-year growth in total U.S. health expenditures in 2021. That year, employer-sponsored health insurance expenditures totaled $1.07 trillion, making up 25% of all health expenditures across the nation.
Trilliant’s report also pointed out that price and care quality are not correlated in highly competitive markets. For example, the median negotiated rate for hip and knee replacements in New York City is $71,944 — the provider receiving the highest rate for this procedure at almost $140,000 has one of the highest ratios of excess readmission compared to all other hospitals that were paid less for the operation, the report said.
10: “The market rate has been revealed, and it is lower than you think”
Healthcare expenditures are anticipated to continue their upward trend until 2026, which will affect both public and private payers. Consequently, all stakeholders in the healthcare economy are likely to face increased pressure to align their rates with the prevailing market rates — which is now clear thanks to health plan price transparency data.
CMS’ price transparency rule for health plans gets rid of the historic opacity of negotiated rates — this could potentially catalyze employers to bend the healthcare cost curve, the report said.
The report also pointed out that unwarranted price variation among health plans contributes to waste — which can often total tens of millions of dollars for a single service in a single market.
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