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It is accurate to say that healthcare has been one of the industries most impacted throughout the various phases of the COVID-19 pandemic, and the industry continues to struggle — and adapt — as new COVID variants emerge. Following the initial impact of treating extremely ill patients in overcrowded facilities, the loss of revenue from elective procedures, and the hourly talent crisis, healthcare continues to face a host of extreme challenges. On top of this, healthcare was already undergoing a transformation due to shifts in consumer preferences, a need for streamlined delivery and supply, and consolidation through mergers and acquisitions. In many cases, the COVID pandemic accelerated these industry shifts and introduced new drivers of change.
As we begin to understand the long-term impact of the pandemic and current labor market, what priorities should hospital and healthcare system boards focus on to succeed in 2022 and beyond?
Today’s eight healthcare trends
With Mercer’s thriving healthcare practice and industry-recognized surveys, such as the US IHN: Healthcare Compensation Survey Suite, we have a unique industry-wide view into the data and information that healthcare leaders need in order to address the challenges now and in the coming years.
Let’s look at eight emerging trends in healthcare commanding the attention of these industry leaders today.
The federal minimum wage has remained at $7.25 since 2009, while inflation has risen almost 25%. In reality, more than half the states have higher minimum wages that are dictated at either the state or municipal level. As a result, many organizations are paying well above the federal minimum wage. Regardless, the federal government is in the process of passing legislation (i.e., “Raise the Wage Act of 2021”) that would gradually increase the federal minimum wage to $15 an hour by 2025.i
The results of a flash survey Mercer conducted in August of 2021 indicated that for 48% of healthcare organizations, the minimum hourly rate is $15 or more, and 44% planning to raise theirs to $15 by the end of 2022. Additionally, Mercer’s Compensation Pulse Surveyii (conducted in July of 2021) revealed that healthcare organizations reported a range of minimum rates from $12.00 to $14.99 more frequently than did other industries.
Should healthcare organizations plan to increase starting wages; if yes, what are the downsides?
Opponents of raising the minimum wage cite issues such as the downstream impact on prices, risk of spurring inflation, and resulting attrition of workers attracted to higher paying job openings. Potential benefits to raising the minimum wage include increased standard of living, improved morale, decreased burden on assistance programs from the “working-poor,” and reduced employee turnover.
How will this play out in reality? Recent Mercer studies have shown that compensation, while always important, is just one of many factors that employees consider when remaining at a company or deciding to choose employment elsewhere. Components such as flexible work hours, remote work options, and affordable medical benefits have become a baseline expectation, as all levels of worker are requiring their employer to consider their total wellbeing.
Of clear concern for healthcare systems would be the impact of pay/wage compression: by raising the wages of hourly workers, an organization quickly bumps up against the first level of salaried employees (supervisors, typically). When this happens, what is the incentive for hourly employees to transition into those much needed supervisory roles if they can make more, sometimes exponentially more, when overtime is added in, in a lower level non-supervisory role?
Additionally, there is the complexity of reimbursement rates, an obstacle that many other industries do not have to consider. For example, a raise in wages would affect the cost of a procedure, which then is required to be reimbursed by such programs as Medicare and Medicaid. Without compelling the states to increase the reimbursement rates, who would be responsible for the additional cost? Would that cost be passed along to consumers, or simply be taken as a loss for a healthcare system?
Although we know that increasing minimum wages, whether dictated by the government or driven by the labor market, is inevitable, data collection and a thorough understanding of compensation and employment trends throughout the US will better prepare healthcare organizations to make the decisions necessary to compete for talent.
Even as the pandemic has evolved, the lasting effect on healthcare continues to reveal itself. While organizations resumed providing routine patient care and elective procedures, the strain on both staff and resources in caring for COVID patients has made an indelible impact. Exhaustion and stress plague healthcare workers, which has been further exacerbated by staffing shortages. Truth be told, there were shortages in some critical roles prior to the pandemic; what healthcare workers have been forced to accomplish over the last 18 months, and will be called upon to accomplish going forward, has caused many to rethink their career choices. This issue has particularly impacted the low-wage or hourly workforce that keep our hospitals, clinics, and provider offices running smoothly. More recently, with surges in COVID-positive cases, primarily due to new variants, healthcare facilities and providers are once again operating at crisis levels.
Vaccine hesitancy is evident across the United States, and is an issue for our healthcare system. Aversion to the COVID vaccination affects more than the individual exercising the right to not vaccinate, it affects the healthcare professional, those in need of urgent or routine care, and those who are vaccinated. It is well documented that healthcare systems, stand-alone hospitals and providers’ offices are requiring their workforces to be vaccinated, which may counteract an employee’s belief and/or choice. Despite this added layer of complexity for employers attempting to attract and retain a qualified workforce, healthcare organizations appear willing to add transparency around vaccination requirements to their job postings and job requirements.
Healthcare organizations ultimately want to provide equitable, efficient, and cost-effective care to their patients. The COVID pandemic has highlighted and even exacerbated disparities in access to care and health outcomes within many demographics. This, paired with the increased cost of care for COVID patients, has proved tremendously challenging when traditional hospital services, such as elective procedures, are causing a decrease in revenue.
With the stress leveled on healthcare workers both the current workforce and those applying or being recruited are pressuring to increase pay. Additionally, healthcare organizations struggle to avoid the financial instability caused by increased expenses and lower revenues as a result of the shift in care priorities during the pandemic.
When we evaluate the future of healthcare, we are looking at a transformation in how we engage with healthcare providers. Virtual healthcare will play a key role in this transformation, and it extends beyond remote appointments and dial-up consultations.iii The increased use of video calls with doctors is just one indicator that consumers and providers are embracing new channels for care delivery.
In 2019, virtual healthcare technology was available, but the use of this technology was not widely accepted. It was not until mid-2020 that virtual healthcare took hold, mainly due to the pandemic and the requirement for patients and providers to seek an alternate method to interact. The percentage of Americans likely to use virtual health care increased from 11% in 2019 to 76% in 2020, according to a report by McKinsey.iv Data shows that telehealth use greatly escalated during the pandemic; however, evidence of its staying power and impact remains to be seen.
For certain populations, such as those living in rural areas, telehealth and virtual care is a significant benefit. While access to doctors and particularly specialists might have been logistically challenging in the past, virtual access can now expedite at least initial consultations as well as annual checkups.
More broadly, telehealth services reduce readmissions by providing better preventive care and routine informational sessions on such questions as confusing discharge instructions or prescription refill requests without the patient having to visit the provider in person.
What’s more, the rise of telemedicine will allow nurses, who are in such high demand and short supply, to consult with more patients. That is good news, given that the US Bureau of Labor Statistics estimates that the demand for nurses will continue to increase annually, particularly as many current nurses leave the profession for opportunities outside the healthcare industry or leave the workforce all together.
As telehealth continues to evolve, we will be looking for the trends that will help shape the practice of healthcare in the future. Will consumer preferences change as in-person care resumes? Will telehealth be around in 2030? Will it be "virtual care," or it will just be "care”?
Home healthcare is the fastest growing healthcare industry in the US. Within 10 years, nearly 500,000 more professionals will be employed in this industry than were employed in 2019. Home healthcare services are in high demand across the country as life expectancies increase and chronic conditions become more prevalent and with many patients preferring to heal at home. Because more recuperation is taking place at home, there is an increase in the demand for home health specialists, which is higher than for home health generalists. As the baby-boom generation ages and the elderly population grows, the demand for the services of home health and personal care aides will also continue to rise.
Labor statistics predict that overall employment of home health and personal care aides is projected to grow 34 percent from 2019 to 2029, much faster than the average for all occupations.
This rise in demand for home health care enabled new start-up companies like Readyv, which has an on-demand network of responders (trained EMTs, paramedics, and nurses) who arrive at the patient’s house and connect with a multidisciplinary group of clinicians (doctors and nurse practitioners) through telehealth. The patient is assessed and their needs are addressed on the spot, leading to faster care and recovery.
The increase in virtual visits through telehealth created further opportunities for the home health workforce during the pandemic, as patients preferred to remain at home while still receiving care from their providers. As the COVID-19 virus continues to mutate, healthcare delivery as we know it will evolve and the preference for home-based care options will continue to escalate.
The billions in revenue lost by healthcare organizations due to COVID hit small hospitals the hardest. While larger hospitalsvi may have been better prepared to weather the storm, smaller facilities were faced with the choice to be acquired by a larger organization, merge with others of similar size, or close their doors. Hospitals continually aspire to gain economies of scale that will offset their losses and introduce more income channels through new delivery partners, which makes them open to mergers and acquisition activity.
There are advantages and disadvantages when a merger takes place. Advantages include cost savings through economies of scale, improved care coordination, and the availability of specialized patient care. Disadvantages include concerns around market power and monopolistic activity as well as uncertainty for current employees.
What is the impact of mergers for the human resources function? Experts agree that the most important thing HR can do to prepare for mergers and acquisitions is to establish itself as a strategic part of the organization. Human resources has a key role during the “due diligence and pre-acquisition” period when organizations must understand the impact of merging workforces. This stage can be the most difficult, as wide-ranging issues facing the two merging organizations include staff layoffs, decreased productivity, and increased stress due to multiple changes in the employees’ ecosystem. Job insecurity, employee competitiveness, and lower job satisfaction are prevalent during this time. Therefore, it is important for organizations to focus on its people, one of the facets of a merger that is often overlooked.
Cooperative competition, or “coopetition,” is a key trend in healthcare. Coopetition is a collaboration between business competitors with the hope of mutually beneficial results. Where some providers view big-box stores, nationwide pharmaceutical chains, and other new entrants as threats, other organizations see an opportunity. Their strategy is to leverage the capabilities of these power players to lower the cost of care, increase downstream market capture, and focus on core specialty services, all while remaining highly connected to the patient and offloading financially draining activities.
Organizations like CVS and Walmart now offer basic primary care, simple diagnostic services, and chronic disease management — services that health systems have struggled to provide profitably. Identifying opportunities to partner with retail organizations to fill this gap can help simplify organizational services, increase access, provide better patient care, and lower costs.
How organizations align strategies to survive in the marketplace requires rethinking and reshaping the where, when, and by whom services will be offered. More than seeking the best solution, organizations should want to start by asking the right questions. From the answers to those questions will rise an effective organizational strategy, whether it is to become part of a system, create different venture relationships, specialize in services, or make the decision to “cooperate” with outside partners, even if they’re traditionally seen as direct competitors.
Healthcare consumerism puts the purchasing power and decision-making in the hands of the patient by encouraging them to become wholly involved in their healthcare decisions. Patients are provided with detailed information so that they may make educated decisions about their care. Because of this, patients are insisting that clinicians take time to listen, show empathy, and communicate clearly.
In this “Amazon age,” where consumers may place an order for goods, track its status from the time it is ordered through its delivery, and receive it quickly, sometimes even the same day, they expect the same high level of efficiency and transparency from their healthcare provider. Unfortunately, the reality is that patients may wait weeks or months for an appointment, and continue to be in the dark as to when such things as exam results will be available. This lag in adapting to consumer expectations has led to patients becoming distrustful of providers because of the lack of information around services, procedures, and medications. Of particular concern is the lack of transparency in cost for these services, procedures, and medications.
For the healthcare consumer, a positive experience can dramatically impact care outcomes, the ongoing relationship with the healthcare provider, and the likelihood of adhering to treatment, as well as affecting the proactive pursuit of care in the future. Designing smarter care pathways makes it easier for consumers to engage with their provider for preventative treatment, rather than only when not feeling well.
Healthcare organizations are particularly vulnerable to cyber attacks, as they regularly house personal, financial, and medical data that may be stolen and sold for insurance fraud purposes. Ransomware’s ability to lock down patient care and back-office systems make lucrative ransom payments likely and internet-connected medical devices susceptible to tampering.
The damages from a cyber attack can be staggering. In addition to direct costs and lost revenue, healthcare organizations could face legal action from patients affected should there be a security breach.
In today’s electronic world, cybersecurity in healthcare to protect information is vital for the normal functioning of organizations. Many healthcare organizations have various types of specialized hospital information systems, such as electronic health record, e-prescription, practice management support, clinical decision support, radiology information, and computerized physician order entry systems.
Employers need to have the correct preventive systems in place. As the “eyes and ears” for the cybersecurity team, employees should understand the privacy and security policies of the healthcare organization and participate in regular security awareness training, so that they are aware of threats and what to do in case of actual security incidents. Engaging with employees will benefit the cybersecurity team in understanding what is working and what is not in the effort to secure the organization’s information technology infrastructure.
Professional opportunities with the cyber security sector continue to expand. The Bureau of Labor Statistics projects that the number of individuals employed within this profession will increase by 31% between 2019 and 2029. Unfortunately, cybersecurity positions in health systems on average take up to 70 percent longer to fill than information technology jobs.
The healthcare industry continues to face unparalleled uncertainty. Healthcare organizations are resilient in working toward long-term survival in an industry that is ever changing. Developing forecasting systems, reshaping business portfolios to further financial stability, creating a modern supply chain, and remaining nimble in a post-pandemic environment are a few of the initiatives tackled by healthcare executives.
Healthcare organizations and their workforces have absorbed the brunt of the pandemic, but continue to fight for survival. Organizations in the healthcare industry must have resilient infrastructures and supply chains to absorb future shocks; require detection systems to spot financial dangers and identify the correct approach; and use command data that can be analyzed and converted into insights.
Successful healthcare organizations will use the lessons learned from 2020 and 2021 to prepare themselves for the challenges that lie ahead by considering new business models based on the trends they encountered and transforming both the patient and employee experience to improve efficiency, loyalty, and financial strength.
Looking for data to support your healthcare organization? Email us or reach out by calling 855-286-5302.
Peter Bok Principal
Peter Bok is a Commercial Industry Strategist focused on the alignment of Mercer data, products, and services for organizations within the healthcare industry. His main focus is to fully understand our healthcare clients’ key requirements, and align the correct product and/or resource to best fulfill their demands. Peter has over 25 years of human resources experience as both a practitioner and consultant, and often looks beyond the traditional way of analyzing data to best uncover the added value in our survey results.
Donna Burke, Principal Donna Burke is the Healthcare Industry Product Manager and a Principal in Mercer Workforce Products. She brings a client-focused approach and a commitment to quality to all of Mercer’s healthcare compensation surveys. Her main focus is to help clients better understand the key information contained in the survey data and make certain they are able to accurately conduct the data analysis for their organization. Donna has over 21 years of healthcare compensation experience, having led national, regional, and industry-specific survey groups. She consults with a wide variety of healthcare organizations including some of the largest health insurers, hospital systems, teaching, and children’s hospitals.