The healthcare market is a dynamic place, constantly expanding and transforming in ways that can be hard to predict. Last year, we made a few macro-level predictions in this piece and wanted to revisit and update them for 2024.
- Horizontal and vertical integration of key market players will continue. Investments in primary care also grew. Examples include the CVS acquisition of Oak Street Health and the Centene/Magellan and Kaiser/Geisinger acquisitions. In 2024 and beyond, we expect to see non-standard lines of business and channels for healthcare products and services expand. New market entrants and consortiums will form. The PCP market is shifting toward virtual health, as are the mental health and wellness markets.
- Non-traditional players have begun to transform primary care delivery. The most renowned is probably Amazon’s offering of One Medical subscription to Prime members. Quick Trip, Dollar General, Best Buy, Kroger and several other grocery retailers have also moved into the market with various care offerings and services. We expect that 2024 and beyond will bring a continued evolution of concierge and self-pay retail healthcare services.
- Technology advancements have been shaping care delivery for decades – and will continue to do so. Advancements accelerated due to the pandemic and regulatory mandates over the past few years, and we expect this trend to continue with the above-mentioned investments and non-traditional players ushering in greater competition to the market. Some examples include the growth in virtual health, wearables and remote monitoring solutions. Healthcare ecosystem players are using more and more real-time data to improve outcomes. Internet of medical things (IoMT) devices, enhanced by 5G, have opened new opportunities for holistic patient care. This is spurring a shift in focus from the "back office" to clinic process automation (e.g. radiology, surgery prep, patient intake). We will also see an increased focus on health equity and the use of social determinants in health analytics to better meet the healthcare needs of at-risk populations.
We can expect the following in 2024 and beyond:
- Health and wellness market will grow to $1 trillion over the next 5-7 years.
- Care delivery will increasingly occur in non-traditional settings (e.g., home, work, retail, virtual).
- Generative AI co-pilots will begin to assist care teams.
- Improved healthcare outcomes will be driven by generative AI and RPA technologies.
- Growth in precision medicine will help achieve better health outcomes.
- Social determinants of health (SDoH) tools, data and analytics will increasingly shape healthcare policy, programs and interventions.
- Changing payment models are impacting the dynamics of care delivery. In 2023, there were continued shifts from fee-for-service to value-based care, a shift to Medicare Advantage from traditional Medicare FFS and a trend toward concierge, self-pay healthcare services (e.g., CVS and Costco). Next year is likely to bring the following:
- A potential shift back to traditional Medicare FFS among some populations (e.g., those with chronic or complex medical conditions).
- Continued proliferation of new care models driven by non-traditional healthcare players.
- Increased pressure to comply with the No Surprises Act and other regulations.
- The pressure and demand for operational and clinical efficiency will increase. Last year, we saw a higher priority placed on "looking inward" and leveraging technology (e.g., automation) to improve the efficiency of existing processes over new technology investments. We believe many care organizations this past year shifted from a focus on efficiencies in the back office to clinic process automation (e.g. radiology, surgery prep, patient intake) in the back office. Organizations did (and will continue to) struggle with physician and nursing burnout. Twenty-plus healthcare labor strikes occurred in 2023, including at Kaiser and Providence. Other future trends in operational and clinical efficiency include:
- Pressure for policy to address the underlying causes of shortages in nursing and allied health professionals.
- Healthcare organizations augmenting clinical staff with offshore recertified staff or Philippines.
- The number of independent, privately owned physician practices will continue to decline as physicians seek alternatives (e.g., acquisition, partnerships, etc.)
- Data security will become a top priority across the healthcare ecosystem. For many, data security was not enough of a priority in 2023. Healthcare organizations are a primary target for cyber-attacks and are experiencing an increased number of data breaches. E-mail phishing attacks remain a primary initial attack vector. Security is (now) "top of mind" for the C-Suite and board. We should expect to see growth in IT security investments as a % of IT budgets. The coming year will bring continued growth and optimization of IT security investments and security product vendors will continue to embed AI into their solutions to improve IT efficiency in protection against threats. Public policy will also continue to raise the bar relative to privacy and security obligations for healthcare organizations.
ISG helps healthcare providers fully leverage the business value from these trends. Let us help you do the same.
About the authors
James (Jamie) Burke
Jamie helps clients define strategy, capitalize on cloud, analytics and digital technology trends and implement target operating models. Recently, he assisted several Fortune 100 and 1000 clients in sourcing their global transformations to the Microsoft cloud, next generation networks and data center co-location solutions. ITIL certified, Jamie has a BA in MIS from Notre Dame and an MBA with a concentration in Portfolio, Program and Project management from the University of Texas at Dallas. He served as an Airborne, Air Assault and Ranger qualified US Army Field Artillery officer. His military decorations include the 1998 Gen. MacArthur Leadership Award.
SG Anand
SG Anand is a Director with ISG Health Sciences.
Shayne Yeager
Shayne is a Director in ISG’s healthcare vertical and delivers IT advisory services and business development to ISG’s healthcare clients on a global basis.
