Here are seven takeaways from the two-day summit.
1. Medical costs step up to another level in 2024.
Large employers are projecting medical cost increases of 6%-8% in 2024, up from 4%-6% increases in 2023. General and medical inflation along with higher utilization rates are driving the increase, while pharmacy costs may rise even more steeply than general medical.
Oncology was the number one cost for employers in 2022, and employers are bracing for a double-digit rise in 2024. The mix of cancer cases has shifted toward later stage cases, possibly resulting from fewer preventive screenings during the pandemic. New fee schedules for high-cost cancer drugs are another factor behind the increase. Expect payers and providers to move slowly toward value-based care to control costs.
2. Pendulum swings toward bundled solutions.
Employers are struggling to contract, integrate, and administer point solutions, particularly in digital health, effectively within their ecosystem. Health systems are experiencing the same issue as they face pressure from payers and manage labor shortages and stressed margins.
Both are looking at whether vendors are generating the ROI they promise and seeking ways to reduce the costs of managing vendor partnerships. The result will be fewer vendors and a movement from point solutions to more end-to-end bundled approaches.
By narrowing the number of vendors, they’re looking to initiate and manage vendor relationships more efficiently and reduce the technological and compliance resources required to support them. While the benefits of more cost-effective bundled solutions are attractive, purchasers are carefully weighing the effects on the patients ultimately receiving the care.
3. AI offers promise, but will it transform healthcare? Maybe.
The list of potential AI applications in healthcare is long:
- Clinical operations, including assisting physicians in notetaking, synthesizing information, optimizing workflow, and directing followup to allow for more physician engagement during each visit.
- Data processing and administrative areas like coding, contact centers, and A/R management to offset staff shortages and control rising labor costs through automation.
- Clinical trials analysis using AI to sift through data and parameters at an early stage to create better trial designs.
- Enabling payers to parse provider practice patterns from data sets to identify exceptions worthy of scrutiny and to use global patient data for predictive models of healthcare trends.
- Patient communication and follow up to integrate clinical findings and information about patient compliance to guide reminders, follow up calls, and next steps.
Most companies are proceeding with caution when it comes to using AI for diagnostics and doctor/patient interactions. While AI could be an effective coaching tool for clinicians, face-to-face interactions are almost indispensable to ensure the patient is heard—particularly in mental health—and for successful outcomes and patient retention.
4. Weight management moves to the forefront.
With the rise in GLP-1s, employers’ interest in weight management strategy has grown. Despite the broad attention they’ve garnered, GLP-1 drugs are not necessarily a need-to-have for the general employee population. Lacking accompanying lifestyle and dietary behavior change, GLP-1s can often serve only as a crutch without leading to long-term, sustained weight loss.
GLP-1s are expensive, so employers and benefits consultants are looking to target their use to where they’re most effective. Wellness companies may be the answer to developing programs that combine behavioral and dietary lifestyle changes with GLP-1s for comprehensive weight management strategy.
5. Employers upgrade health benefits to stay competitive for talent.
A tight labor market will continue supporting richer worker benefit packages in select areas, even as cost containment measures begin to creep in.
- Fertility care remains a small benefit—but an important one—to attract and retain employees in a tight labor market and demonstrate DEI commitment. Delayed family-building and the increase in the number of LGBTQ-identifying adults continue to underpin the growth of the fertility industry. Employers will look for solutions that drive outcomes while focusing on cost management.
- Employers are maintaining their mental health benefits but looking to manage rising costs as the COVID “tailwind” on mental health runs out. Mental health has become one of the first areas for cost cuts in the face of macro uncertainty, and employers now require proof of return for their mental health investment, including data points and intensive research to support ROI.
With budgets tightening, employers may be reluctant about introducing new benefits, but they don’t seem to be pulling back on existing benefits.
6. Outsourcing serves as the route for specialty care and complex functions.
For areas with clinical complexity and a continually high pace of innovation, health plans—particularly smaller, regional plans—are increasingly turning to specialty utilization managers to help them keep up. Outsourcers can slot into the intermediary role and with their expertise in the field, they can manage the payor-provider relationship and keep it focused on care outcomes.
Similarly, health systems, which have had their share of pressures over past couple of years, are staying focused on their core competency of patient care and outsourcing revenue center management (RCM). Health systems will depend on RCM outsourcers to use AI to help them become more efficient.
7. PE investors advise companies to optimize their time in the private market.
Under today’s market conditions, investors stressed making the most of your company’s time in the private market where management has more control to develop the company’s platform and build its value. The value of spending time building the company with the support of highly aligned shareholders and board members can’t be overstated. It’s also the time to ideate and pilot your company’s digital adoption, a key to expanding margins and increasing company valuation.
If you’re looking to go public, quality management, a differentiated approach, regulatory tailwinds, a defensible total addressable market, bulletproof unit economics, long-term visibility, and a strategic platform are all qualities the market seeks. Additionally, companies that have made the transition from the days of abundant funding to today’s market will have an advantage going forward.
