Keep up with the latest advancements in healthcare by aligning with these 2023 industry trends.
In just three years, the healthcare industry experienced a whirlwind of changes. Staff burnout increased, supply shortages emerged, patient demand soared, and administrative tasks became more unmanageable. As time passed and healthcare providers began to adapt to the new normal with Covid, some of these pain points eased while others continue to impact organizations.
Last year, SEI identified telehealth, digital care, automation, and data analytics as key factors transforming healthcare in 2022. With rising out-of-pocket spending, global inflation, and reduced Medicaid eligibility currently steering the market, 2023 is further molding the industry. Using data-driven analysis and insights from providers we’ve worked with, here are the healthcare trends worth keeping an eye on in 2023.
- AI Adoption is Accelerating
For example, the Mayo Clinic Platform has gained traction among many private firms and hospital systems by helping physicians and specialists make quicker and more accurate diagnoses. AI algorithms are integrated into the platform, providing doctors and patients with the insight and visibility they need to make sound decisions. With the AI healthcare market expected to undergo a 37.5% compound annual growth rate between 2023 and 2030, this advanced tool is on the path to becoming the new healthcare frontier.
- Healthcare is Harnessing Augmented and Virtual Reality
From helping physicians prep for an upcoming surgery to visually educating patients about a procedure, augmented reality (AR) and virtual reality (VR) have connected the dots between in-person and remote care. Set to reach a global worth of almost $10 billion by 2027, the healthcare AR/VR market is a growing investment area.
Successful applications of AR and VR in healthcare have included medical training and condition education, but the FDA expects this technology to supplement telehealth capabilities further by assisting with mental health therapy, hospice care, and symptom monitoring.
- At-Home Healthcare is on the Rise
Virtual appointments have become a successful care format as patients embrace the “new normal” of remote environments. According to MGMA, 72% of medical groups believe the demand for telehealth will either remain stagnant or increase this year. Additionally, the Consolidated Appropriations Act of 2023 extended telehealth coverage for Medicare recipients to the end of 2024. That will likely contribute to surging demand for at-home healthcare and position telehealth as a cornerstone patient resource.
Likewise, wearables and virtual/augmented reality devices have proven to be valuable home diagnostic tools for patients with chronic conditions and other illnesses that require constant monitoring. By reducing the risk of hospital-acquired infections and freeing up in-person appointment slots for complicated cases, the growing use of these tools indicates that at-home healthcare will continue to benefit patients and physicians for the foreseeable future.
- Wearables are Growing in Use and Capability
Smartwatches and fitness trackers have been keeping one in four Americans on pace with their health goals, but developers are innovating ways to apply these devices to new service areas. Wearable technology is useful for monitoring heart rate, blood pressure, physical activity, stress levels, and sleep patterns. It has been pivotal in early symptom detection, allowing physicians to diagnose conditions before they progress and become life-threatening. Researchers are currently looking into how biosensors can collect more vitals to help doctors diagnose a broader range of diseases.
The wearables market has been relatively healthy over the past few years, and we don’t see this changing in the next decade. Expected to hit a 25.5% year-on-year growth rate in 2023, the popularity of wearables will run parallel to rising patient demand for telehealth, VR/AR technology, and other personalized forms of care.
- Lingering Burnout is Spurring New Solutions to Staff Shortages
A recent MGMA poll found that almost 60% of healthcare practices surveyed were concerned about staffing shortages heading into 2023. Between medical supply deficits, staggering patient demand, low wages, emotional strain, and taxing work schedules, healthcare professionals find it hard to remain in the field. According to the U.S. Bureau of Labor Statistics, 575,000 healthcare workers quit their jobs in December 2022, intensifying existing shortages.
Better compensation provides a strong incentive for resilience and hard work, but it doesn’t address the mental and physical fatigue that workers wrestle with. As a result, organizations are implementing creative solutions to help staff members build resilience, reduce stress, prioritize wellness, and improve career satisfaction.
For example, some health systems have turned to shortened meetings compounded with rest periods. Others have implemented top-down well-being initiatives using toolkits like those from the American Medical Association and the American College of Physicians. Whatever the means, healthcare organizations are investing heavily in their employees.
- Retail Healthcare is Expanding
Pharmacies like CVS, Walgreens, and Walmart are making major moves to dominate the retail healthcare space. Just last year, CVS bought Signify Health to accompany at-home services, outbidding Amazon and UnitedHealth Group; Walgreens bought Summit Health to gain footing in the urgent care market; and Walmart partnered with UnitedHealth Group at limited store locations to provide preventative care.
Fortune Business Insights predicts a 10.8% CAGR for the retail clinic industry from 2022 to 2029. Health systems will need to find ways to compete with these one-stop health shops — namely by ramping up availability, convenience, and affordability.
- Digital Transformation is Becoming a Stronger Focus Point
Patient retention and engagement are crucial to protect revenue streams, especially during times of economic downturn. As healthcare organizations prepare for a forecasted recession, digital patient engagement tools (such as online appointment schedulers and live chats) are being viewed less as “nice to have” amenities and more like “must-have” resources.
In 2018, digitally transformed enterprises accounted for $13.5 trillion of the global nominal GDP. However, forecasts for 2023 predict that this will increase to $53.3 trillion, signaling that digital supremacy in the global economy is on the horizon.
The need for a digital transformation isn’t news to healthcare leaders, but many realize that the time to fully dive into a connected online experience is now.
- Private Equity in Healthcare is Undergoing a Revival
Positive numbers from the past few quarters have left industry analysts optimistic about healthcare funding in 2023, as deal volumes from health services continue to grow. CVS’ Signify Health buyout, UnitedHealth’s purchase of LHC Group, strong demand for at-home and hospice-based healthcare, and an interest in innovation encouraged by the 21st Century Cures Act have all contributed to this incline.
Health systems are also considering mergers and acquisitions to remain financially vigilant. In a 2023 KPMG survey involving healthcare and pharmaceutical investors, 60% of respondents stated they planned to intensify merger and acquisition activity this year. Although inflation and unfavorable economic factors have caused private equity dollars to dip momentarily, organizations will likely conduct more transactions this year to revive their budget and garner broad brand interest.
- Organizations are Trying to Improve Data Analytics and Interoperability
One problem health systems are still trying to solve is a lack of interoperability. Epic and Cerner — software solutions that collect and organize medical data — own over half of the total market share for electronic health records as of 2020. Yet data cannot be easily shared or transferred between the two giants.
To combat this issue and ensure that hospitals, urgent care clinics, private practices, and retail care centers can share information between providers when needed, some organizations are incorporating predictive analytics into their operations. This enables these organizations to organize large amounts of patient data, streamline redundant administrative tasks, and better evaluate medical information for more accurate and timely diagnoses.
- Financial Pressures are Inciting Cost-Cutting Measures
Although most of the above trends promise success for the healthcare industry, it’s important to note that they are avenues for transformation and growth in a currently unstable economic climate. Health systems have been coping with financial pressures exacerbated by the pandemic, supply shortages, and climbing costs for a while now. Still, a new set of factors are expected to bring in another round of obstacles.
Lagging reimbursement rates, inflation, and expired emergency funding have contracted already tight budgets, forcing healthcare organizations to sacrifice spending in certain areas. As the year unfolds, we expect health systems to shift dollars away from low-performing service lines, employ stricter hiring practices, and invest more in digital tools that fuel patient engagement. Similarly, there will be an emphasis on process improvement to boost operational efficiency at a lower cost, helping organizations yield better results with what they have.
Navigating Industry Changes with SEI
The future of healthcare is digital, interoperable, and inventive. Achieving your organizational goals while aligning with these market shifts takes data-driven analysis and a holistic approach. At SEI, our consultants are industry experts ready to work alongside your team to drive impactful and long-lasting results.
Looking to transform your healthcare organization into a resilient and forward-thinking powerhouse? Let’s chat and discover how SEI can help your enterprise solve its most demanding problems.