The world of healthcare is facing a slew of challenges.
The good news is that most of them are well-known. It’s well-known that Americans struggle to afford healthcare, with 40% saying they’ve forgone medical care because it’s too expensive. It’s well-known that, to improve both affordability and patient outcomes, the industry as a whole must shift to a value-based care (VBC) model, where providers are paid according to patient outcomes—not just volume of service.
The bad news is that the healthcare industry has numerous traits and idiosyncrasies that make these challenges difficult to face.
Just ask Amazon: Better, faster, cheaper might work in the world of retail. But in healthcare, where much more than an eight-pack of socks is at stake, an entirely different mode of innovation is called for.
Identifying solutions starts with understanding the challenges. Here, I outline the challenges facing healthcare today—and some early thinking on how the industry as a whole might begin to address them.
These are the healthcare industry’s 4 most pressing challenges
1. Cost. Reading through research findings from the Kaiser Foundation present one disheartening cost statistic after another: Half of U.S. adults struggle to afford healthcare. Many adults 65 and older have difficulty paying for health services. 41% of U.S. adults have outstanding medical debt.
It costs a lot to keep yourself healthy in this country.
Cost reductions should come from both the patient and provider side. Data from McKinsey suggests that providers could significantly reduce their cost to deliver care by automating administrative costs. Recent and future legislative action should also begin to ease the financial burden.
2. Population-based inequity. The Kaiser Foundation also reported that uninsured adults, Black and Hispanic adults, and people with lower incomes suffer disproportionately from high healthcare costs.
But it’s not just cost. These populations are also disadvantaged when it comes to care access, air and water quality, and proximity to nutritious food options.
It will take a mixture of state and federal programs and raw creativity to address these inequities of care. Technological innovations—the rise of telehealth, enhanced predictive data capabilities—should begin to improve access and reduce the financial burden on patients. But it will take a concerted reallocation of health resources to make a significant move toward equity.
3. The transition to VBC. The transition to VBC will of course be a welcome one for patients. When providers are compensated based on patient outcomes, they have extra incentive to give patients only the care they need, at the best possible quality, and with straightest path to an ideal outcome.
But it will take significant adjustment on the provider side. Billing systems designed for a fee-for-service (FFS) world won’t work as effectively in a VBC world. VBC-defined metrics must be established, integrated with billing systems, and displayed in dashboards intuitive to users.
4. Staffing shortages. Numerous factors have combined to produce more demand for healthcare than supply to meet it.
The American population is, on average, older, and therefore needs more care; many healthcare professionals left the industry during COVID-19 because of burnout; and more than 28% of Americans live in Health Professional Shortage Areas (HPSAs), which are areas where there is a shortage of primary care, dental care, or mental health providers.
In other words, it’s a seller’s labor market. Employers will have to get creative about a) finding new healthcare professionals and b) encouraging existing healthcare professionals to stay in the industry. More creative compensation packages, enhanced training offerings, and other accommodations for employee mental health are in order.
The ancient practice of caring for each other is having to reconcile itself with modern technology, population inequities, financial systems, and labor trends. There’s nothing simple about resolving any of these problems—but innovators have a well-defined roadmap for where to focus their energy.
