Happy Thursday, Hospitalogists! A few things from me: As I was perusing various reports on healthcare outlooks for 2025, today's essay is a quick dive into what I found most relevant from them. Tuesday will be a recap of all the pressing healthcare news so far from the New Year. Enjoy! |
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Going deeper on an interesting topic, theme, or trend |
Key Expectations from 2025 Outlook Reports for Hospitals, Health Systems, and Payors |
An uptick in positivity / optimism among payor & provider executives is palpable as we kick off 2025. I think you can already see a number of deals have already been announced or closed (Transcarent-Accolade chief among them, something I will talk about more in depth on Tuesday), while fundraising seems to be picking up material steam (looking at you, Hippocratic AI). Let's dive into some key themes and areas of focus I'm looking at. What are you looking at? Let me know by replying - I (try to) read all of them! Here are Health systems' key areas of focus, per Deloitte's survey of key executives: Managing workforce challenges (physicians, contract labor) and investing in transformative technology - virtual care delivery, scheduling, navigation and triage tools Here are payor areas of focus: Hyper focus on regulatory compliance amid a rapidly shifting policy landscape and Trump Admin, and general operating improvement / tech investment (AI, contact centers, prior auth) Valuation disconnects persist between private and public healthcare companies (for instance, what do you think Transcarent, a $2B+ private company, would be valued at if it were public?) Stable to growing M&A environment (somewhat of a contrast to consensus expectations for M&A in 2025, which many are expecting to be robust. Perhaps we see this in digital health more acutely given the activity to start the year). Strategy: Hospitals & health systems expect increased utilization and stable to improved payor mix in 2025, but growth comps will be tough given the level of % growth during 2024. In general I'd expect to see a utilization environment tapering off and returning to historical trend, seen in the Advisory Board graphic below. |
Image source: VMG Health. Heavier investment is expected in more comprehensive digital platforms as these solutions consolidate and offer more holistic offerings (point solution fatigue). end-to-end revenue cycle management, AI scribing, coding, navigation, virtual care delivery, and other clinical and administrative workflows. Expectations for increased JV & health system transformation activity in outpatient surgery (ASCs) and behavioral health. |
Image source: Advisory Board. Declining trust in private equity from health systems across 'traditional offerings' Continued challenges for the broader physician landscape - declining reimbursement, hospital physician subsidy employment model sustainability, physician talent retention. Physician / clinician unions are increasing in prevalence, adding yet another middleman to the pile. Benefits administration transformation - between ICHRA (which candidly, is promising but the jury is still out on regarding its long-term sustainability, something I hope to explore more in a future post), Medicare Advantage supplemental benefits, and employers demanding more from their solutions (with existing incumbents failing to respond this need), we've seen a flurry of funding activity in a sorely needed arena. Enhanced focus on cybersecurity for obvious reasons. More scrutiny of large healthcare behemoths (especially those with vertically integrated assets). For instance, DOJ review of UnitedHealth's Amedisys deal drags on. It's a particularly interesting time for PBMs as those business models evolve or unbundle and reform calls grow (although much fanfare, little movement). And keep in mind the potential for site neutral payment reform, which would crush many a hospital but even the site of service playing field. |
Expect a rebound for Medicare Advantage and margin recovery for payors in 2025 given favorable advance rate notice for MA, boom in biosimilars, and leveling off utilization growth; there is risk in 2026 for players in the ACA exchange arena given subsidy expiration. Most pressing, I'm seeing uncertainty around Medicaid enrollment and funding as Republicans typically show less support for the program. On a related note, keep an eye on supplemental payments for hospitals, which currently holds little oversight and annual uncertainty. AI and big data / machine learning (ahh the buzz words are flowing now, I apologize) continuing to push inner connectedness (I told you I was sorry), a 'smart' system of intelligence layer, and more accurate analytics resulting in better whole-person health (yikes, this paragraph is bad). |
Image Source: Bank of America Oh, also - you can read my predictions article to get a good sense of where healthcare may be headed. |
Image source: Morgan Stanley. Finally, be prepared for a biosimilars boom in the coming years per the graphic above. |
The latest from inside my community of healthcare thinkers |
The Hospitalogy community is buzzing and it has been a great start to the new year. Here's what we've done, and what to expect in coming weeks/quarters: - Member happy hour in early January
- Uploads of all JPM healthcare conference health system presentations
- This outlook post was sent to them 10 days ago
- Upcoming fireside chats include an AMA with Sean Duffy from Omada, Commure on health system ambient AI outlook, MIND 24-7 on all things behavioral health, and more
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Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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