Non-Profit US Healthcare Futures, Part 1

Reporting on a Work Futures Project

Over the course of 2024 I worked on a Futures project for my employer, Providence Health. The effort was sponsored by Mark Premo, my boss and Providence’s Chief Data Officer, and he joined the team doing the actual work along with other wonderful colleagues: John Gallardo, Keith Leonin, Lindsay Mico, and Janet Vickers. Mark encouraged me to share the work outside of Providence, so I’m thrilled to be able to talk about it here; I also want to credit the communications folks at Providence, Alan Shoebridge and Bryan Kawasaki, for approving the sharing of this material. So many great foresight projects are invisible because they are locked behind corporate walls, so the generosity and transparency here is admirable.

We took as our approach the Framework Foresight method from the University of Houston, because I had never led a project before and didn’t think that coloring too far outside the lines was wise. I want to walk through all the artifacts we created and the lessons I learned through the process, using the APF’s professional framework as organization. Along the way I’ll share all the things I learned about the process and wish I had done differently; leading a project after only a little experience created lots of opportunities for instructive mistakes. Of course, nothing here should be construed as official Providence predictions or statements of what will or especially what should happen in the future, only as possibilities we identified that we may need to prepare for.

Step 1: Framing

Determining the scope of our analysis was a pretty easy group conversation. We decided to consider non-profit healthcare, specific to the Western US, over the next 10 years (that is, Horizon 1 covers roughly 2024-2029, Horizon 2 roughly 2029-2034, and Horizon 3 2034 and beyond). We considered the data team to be the client, so we would look We decided to focus on some specific strategic questions we already had on our radar, such as:

• What will the aging of boomers and other generations mean for the volume and type of care we need to provide?

• How will AI and other emerging technology transform our ability to improve health?

• How will our obligations around data management change?

• What changes will AI and other new technology bring to our workforce?

Below I’ve reproduced our domain map (apologies for all the ugly text wrapping). As you can see, healthcare today is wrestling with questions of what we do, where we do it, how we get paid for it, how we track/measure/optimize it, what else we have to do to meet our community obligations, and what else we have to do to keep from going broke providing so much care at a loss.

Step 2: Scanning

Before looking for signs of possible futures, we assessed the recent history and current state of the domain. Here was our assessment, which I think captures the vibe of the industry pretty well.

Current Conditions

• Negative/declining margins, Impact of inflation, EBITDA recovery – reimbursements remain low even as costs continue to rise

• Competition from other Healthcare Organizations, Specialty Hospitals – patients have several options for specific conditions in the continuum of care. There is a great need to stand out from other providers in services offered, technology and other areas.

• Competition from other sectors (Insurers, Tech, etc) - like the above bullet, but this time it’s competition from some very well-funded orgs.

• Virtual Healthcare – 2024 is being called the ‘Super Bowl’ for 2024 legislation as temporary Covid policies and regulations are set to expire. Depending on new legislation, reimbursement levels may be impacted

• Value Based Care Models, slow growth in reimbursement rates

• Workforce Shortage – labor costs could go even higher. Combined with inflation and higher costs plus continued low reimbursements, this would present a continuing challenge to non-profit providers. Is this the new normal?

• Regulatory Changes – see Virtual healthcare bullet. What other temporary Covid regulations will expire? It is also a national election year. What will change?

• Healthcare Disparities - The COVID-19 pandemic’s uneven impact for people of color drew increased attention to inequities in health and health care, but they have been documented for decades and reflect longstanding structural and systemic inequities rooted in racism and discrimination. While inequities in access to and use of health care contribute to disparities in health, inequities across broader social and economic factors that drive health, often referred to as social determinants of health, also play a major role. (https://www.kff.org/racial-equity-and-health-policy/report/key-data-on-health-and-health-care-by-race-and-ethnicity/)

• Cyber security threats - The healthcare sector is particularly vulnerable to cybersecurity risks and the stakes for patient care and safety are particularly high. Healthcare facilities are attractive targets for cyber criminals in light of their size, technological dependence, sensitive data, and unique vulnerability to disruptions. (https://pubmed.ncbi.nlm.nih.gov/27689562/)

• Medicare Advantage penetration - In 2023, more than half (51%) of eligible Medicare beneficiaries – 30.8 million people out of 60.0 million Medicare beneficiaries with both Medicare Parts A and B – are enrolled in Medicare Advantage plans. Medicare Advantage enrollment as a share of the eligible Medicare population has jumped from 19% in 2007 to 51% in 2023 (Figure 1). (https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2023-enrollment-update-and-key-trends/)

• Demographic change – Gen X consumers use a mix of in-person and digital channels to seek out health-related information, access care, and engage with providers. (At the end of 2022, 62% used a mobile based health app and 54% used social media to look up specific health information) (https://www.insiderintelligence.com/content/gen-x-healthcare-2023)

Stakeholders

• Patients – obvious but important. As their preferences for consuming healthcare services evolve, we need to keep up.

• Community members – they include our caregivers, patients’ family members, board members, and future caregivers. They influence how we are regulated, and they judge our reputation. They are the grantees of our nonprofit status.

• Caregiver unions – they influence our cost structure. They influence legislative and executive action.

• Federal/State Legislatures – they write the laws that define the healthcare “market” and the industry.

• Federal and state executive agencies (HHS, AGs, insurance commissioners) – they implement the laws written by the legislatures via regulatory action.

• Federal/State Judiciary - they adjudicate the laws which as written are rarely specific enough to provide explicit guidance. ie Judicial rulings often drive the specific requirements for statutory compliance.

• Pharmaceutical Industry – they innovate and manufacture the drugs which our patients need.

• In market competition (Providers) - they compete for patients we aim to serve

• Tech Industry – they innovate and support the technology that enables delivery of care

• Medical device manufacturers – they make the devices that support patient care

Recent History

• 2009: HITECH Act Passes, with the Meaningful Use standards injecting huge amounts of money for EHR adoption.

• 2010: Affordable Care Act passes, expanding Medicaid coverage to more adults (all Prov states except Texas)

• 2014: Illumina announced their high-throughput sequencing machine, promising a whole genome sequenced for under $1,000 and enabling mass-market personalized medicine.

• 2020: COVID Public Health Emergency starts, leading to huge increases in caregiver stress/burnout, huge drops in elective procedures (positive margins), and temporary influxes in government cash

• 2023: For the first time, a majority of Medicare beneficiaries are enrolled in Medicare Advantage plans, projected to hit over 60% by 2033, with wide variation by state.

Aside: I found that the biggest challenge throughout the process is to make sure the products of each step inform subsequent steps; it’s too easy to write something insightful and then leave it on the shelf¹. We did a good job integrating the domain map into the scanning process (it’s how we split up the scan), but the current assessment had less of an impact².

For the scanning process, we used Raindrop to collect hits. I know SharePoint is a tempting choice for companies, because it lives within the existing Microsoft footprint, but it’s so much less convenient without the automated import, highlight, etc features that something like Raindrop offers³. One of the tricky pieces of leading the scanning work was communicated exactly what we’re looking for with scan hits — signals of change, pieces of possible futures emerging in the present, etc, are more than just news items, especially ones that reflect the current system. For example, if a state changes its abortion laws, or two health systems merge, is this just an event that illustrates the way the world works now, or is it emblematic of some kind of potential bigger change? I struggled to convey this well, and would take more time to walk through some examples together in future engagements.

After collecting over 200 scan hits, we put together TIPPs to summarize the contours of the “official future”. In future exercises, I would make scanning tags for Trends, Issues, Plans, and Projections, and intentionally collect them as part of the scan; treating them separately felt like it created a moderate amount of double-work.

Here’s what we ended up with:

Trends

• Hospital operating margins are slowly improving after lows in 2022-2023 (link)

• Healthcare costs (including labor and supplies) are expected to continue to rise with a 7% increase in 2024 (link)

• The share of Americans 65 and older grew by one-third between 2010 and 2020, and the share of children declined (link)

• More states are passing and enforcing general data privacy laws, creating a regulatory patchwork (link)

• The cost to sequence a whole genome has fallen from $1M in 2007 to under $600 today (link)

• Over the last 10 years, the percentage of Americans who have been offered and accessed a patient health portal has more than doubled to 57% (link)

• Epic’s Acute Care US market share has grown from 26% in 2016 to 36% in 2022, with big systems like Intermountain preparing to transition; no other big vendor is growing in market share (link)

• The higher demand for primary care combined with the low supply of doctors are contributing to a years-long downward trend in the number of people reporting they have a usual source of care. (link)

• The sale of Scandia Village this year is part of a trend of for-profit companies, including private equity groups and real estate investment trusts, snapping up struggling not-for-profit nursing homes (link)

• Robotics will be integrated broadly into care delivery and will help alleviate a growing staffing shortage (link)

• Some non-traditional players are exiting healthcare delivery (link)

• Increased scrutiny of private equity in healthcare (link)

Issues

• Will GenAI copyright lawsuits break in the favor of the developers or content creators (is training fair use)?

• Will data architectures/cultures evolve to favor mesh (decentralized data management by business teams) or data fabric (unified approach to and use of data regardless of storage location)?

• Nation leading minimum wages will be an issue for smaller health systems, and may lead to potential cuts to hours and benefits. (link)

• Retirement crisis looms as Americans struggle to save. (link)

• The single biggest challenge right now is the lack of acknowledgement that health inequities and disparities exist. (link) (link)

• More than 100 million people in America — a startling 41% of adults — are saddled with medical bills they cannot pay. (link) (link)

• Some Medicaid Providers Borrow or Go Into Debt Amid ‘Unwinding’ Payment Disruptions (link)

• Even for-profit health systems with private equity links can struggle these days (link)

• The Medicare Trust Fund’s projected point of insolvency moved out five years, to 2036, thanks to strong employment. Yet there are fears that insolvency is right around the corner. (link) (link)

• Medicare Managed Care government spending will continue to grow ($7 trillion over next decade) and that is increasing need for better data transparency and competition in the MA insurance market. (link)

Plans

• Epic is heavily investing in new generative AI capabilities for its EHR (link)

• Walmart announced that it is closing its health centers and virtual care service (link)

• A number of hospitals and health systems are reducing their workforces or jobs due to financial and operational challenges. (link)

• Caregivers and unions: increasing activism and organizing (link) (link) (link) (link)

Projections

• Medical Imaging AI products approved by the FDA are projected to increase five-fold by 2035, based on current funding (link)

• Per capita health expenditures are projected to grow from $13,413 in 2022 to $20,425 in 2031, which is an average annual growth rate of 4.3%. (link)

• Most elective surgery and diagnostic services will be done in freestanding surgery, procedural and imaging centers. (link)

• the main points of change for the healthcare industry over the next 20 years will revolve around consumers; interoperability: a holistic, prevention-based focus on health and well-being; and the equipping of healthcare providers with the technology and knowledge to collect and utilize on-demand patient data (link)

• According to new projections published today by the AAMC (Association of American Medical Colleges), the United States will face a physician shortage of up to 86,000 physicians by 2036. (link)

• Allianz forecasts that between 2019 and 2040, personalized medicine, stem cells, nanomedicine, gene editing, and digital health will create a new paradigm for health and disease (link)

• KPMG forecasts that healthcare will be increasingly delivered in a more consumer-driven way, including both deeper local community integration and online/metaverse driven care (link)

• Takeaways from the Change Forecast (slow growth for patient volumes; rethinking of service-line prioritization; service distribution and investment in at-home care initiatives; further innovations in virtual and remote care; demand for behavioral health services will continue to outstrip the supply of providers; Outpatient volumes are expected — look for surgical volumes to continue shifting across ambulatory care sites; Emergency department visits are expected to drop 2% over the next decade (link)

• Cyber risk from medical devices is an increasing issue, and federal agencies need to improve collaboration on standards and oversight (link)

The Value of Evidence

This has gotten long enough so I’ll continue next week, but sharing the results of the assessment and scan is a great illustration of the value of the chain of evidence that reputable foresight work provides. Some people will be skeptical of the value of foresight, and of possibilities that diverge from the official future; being able to trace back ideas to real events happening now, or actual research papers, makes clear that this is more than the what-if-ing side of science fiction.

1. Of course, even if this does happen, remember the ancillary/secret deliverable: the strategic conversations leaders have throughout the process and the change in orientation away from the emergencies of the present. Team members mentioned multiple times throughout the year how nice it was to have an opportunity to think more strategically and long-term.

2. I think one of the places I’d like to involve it in the future is as an input to the implications work — explicitly thinking about the impact to different stakeholder groups.

3. I mentioned a little over a year ago that I was using Notion for scanning, but the amount of manual work involved, similar to SharePoint, led me to switch over to Raindrop for my daily scanning work. If I can’t even bring myself to stick with a more manual tool, there’s no hope to get a team to use it.