Five Healthcare Trends to Watch in 2022 that Can Rein In Skyrocketing Costs

Without question, the single greatest challenge facing the U.S. healthcare system is rising costs. The U.S. spent a staggering $3.8 trillion on healthcare in 2019, the latest year for which federal data is available. Despite a massive undertaking by the industry to drive efficiency, healthcare trends show that spending continues to soar. With an average annual growth rate of 5.4%, the Centers for Medicare and Medicaid Services predicts that by 2028 healthcare spending will reach $6.2 trillion, nearly 20% of our GDP. 

Fueled by the proliferation of chronic illness, our aging population, rising health wages, and the growing complexity of the healthcare system, U.S. spending outsizes and outpaces all other nations. Yet even with the greatest investment in healthcare, America lags behind other developed nations when it comes to health outcomes. We are facing a true cost crisis that impacts all players in the healthcare ecosystem. Consumers are paying more than they can afford, employers and the U.S. government are struggling to keep pace with rising costs, and both payors and providers are seeing profits squeezed. Our spending trajectory is no longer sustainable and must be better aligned to improve health outcomes. 

Short of overhauling the entire health system which is practically impossible, there is no easy solution or silver bullet to curtail rising costs. Instead, it will take a combination of forces chipping away at the margins to make healthcare more affordable. Here are five trends we’re watching in 2022 with the potential to lower costs, improve outcomes, and make our health system more sustainable over time. 

#1: The Consumerization of Healthcare Will Drive Down Costs

Until recently, healthcare has been immune to the forces of consumerism that have disrupted every other major industry. Catering primarily to payors and employers who have largely covered the cost of care, providers haven’t had to compete directly for consumers based on price and outcomes. But as consumers take on a far greater share of the cost burden, that is about to change. 

Out-of-pocket costs for healthcare have grown substantially, from higher premiums and deductibles to more expensive drugs. With increased skin in the game and digital expectations shaped by their experiences with other industries, a new generation of health consumers are bringing higher expectations for convenient, affordable, quality care on their terms. They want greater price transparency, better digital tools, and the ability to get care when and where they want it. In fact, the Accenture 2019 Digital Health Consumer Survey shows consumers will increasingly choose medical providers who offer digital capabilities. This healthcare trend has only been accelerated by the pandemic, which quickly acclimated patients to virtual care platforms, digital communications, and new convenient care settings. 

Not only are consumers demanding more from the healthcare system, but they are also taking a more active role in managing their own health. In fact, a recent study from Wolters Kluwer Health shows 86% of consumers believe proactivity on their part is critical in ensuring high-quality care and outcomes. These empowered, price-conscious, digitally savvy patients will transform the future of healthcare as the industry innovates and adapts to deliver more patient-centric experiences. We expect this disruption will drive spending downward as providers compete more aggressively for patient loyalty and lower-cost delivery models emerge. Moreover, as patients take a more active role in their health, cost savings can be achieved through a healthier population. 

While the greatest impact of consumerization will initially be felt in the self-pay market, payors and providers must act now to align their experience to the expectations and needs of the next generation of health consumers. Taking a more patient-centric approach now means being more competitive now and in the future. 

#2: New Transparency Measures Will Put Pressure on Pricing

Given the cost of care and Americans’ increasing financial worries over health-related bills, it’s not surprising most want to know what they will pay before receiving care (just as they do for every other service they purchase). A recent TransUnion study found 75% of patients now seek cost information before receiving care. Unfortunately, until now, that data has not been easy to find. Medical costs vary widely by location, provider, and coverage type, making it difficult for patients to understand their true costs and to comparison shop. 

Sweeping bi-partisan healthcare reforms aim to change that in 2022. In an effort to make healthcare more affordable, lawmakers are banking on a series of new transparency regulations to drive down costs by arming consumers with better pricing information. Reform measures including the Hospital Transparency Act, the No Surprises Act, and the Transparency in Coverage Rule make it easier for consumers to understand how much they will pay, compare costs, and make smarter provider selections. 

Despite significant industry hurdles to adopt these new transparency measures, widely available pricing information is expected to drive competition between providers and give patients the necessary resources to manage health costs proactively. 

Payors must act fast to ensure they are ready to comply with these new measures. It will also be essential to engage members in the adoption of pricing tools as they become available. While regulation will make more data available, it is unlikely to move the needle on the cost of care if consumers don’t use the information to make better spending decisions. 

#3: Cost Management and Payment Accuracy Innovations Will Cut Wasteful Spending

Waste is one of the most significant contributors to the high cost of healthcare, accounting for 20 to 30 percent of all spending. Fraud, abuse, and billing inaccuracies significantly drive up the cost of care, but new efforts and innovations in artificial intelligence and machine learning could turn the tide on this healthcare trend if they are widely adopted. Using advanced data and analytics to fuel negotiations, prevent and detect fraud, and manage claims, MultiPlan alone drove nearly $20 billion in savings for our customers last year. 

We expect to see the adoption of new cost management strategies accelerate in 2022, especially in using AI to curb administrative waste. While the benefits of AI are clear, the healthcare industry still lags behind the curve, with only 20% of health organizations reporting to be in the late stages of deployment. Bullish on its potential, leaders across healthcare are stepping up to accelerate their efforts, investing in new technology, partners, and staff that can leverage data and analytics to solve their most pressing cost challenges. In fact, 60% of health plans say they have accelerated their investment in AI in the last year. 

AI, machine learning, and advanced analytics also can fight one of the industry’s biggest cost management challenges – perception. For too long, cost management has been viewed as a negative practice, putting members, payors, and providers at odds with each other, when in fact, it is an essential solution to keep healthcare affordable. Through the use of predictive analytics, much of the abrasion that came along with traditional payment integrity solutions can be avoided. Advanced pricing data can be used to determine fair and reasonable rates that are a win for providers, payors and patients. 

As payors look to maintain profitability without raising premiums, proactive member engagement, member wellness initiatives, and effective utilization management should be a critical piece of any strategy to fight rising industry costs. Cost management is imperative to making our health system sustainable, and when done correctly, can actually lead to better health. It’s time for it to be seen as a positive force instead of a deterrent to quality care.

#4: Lower Cost Care Models Will Proliferate

Battered by high costs, it’s no surprise employers, the federal government, and consumers are looking for new healthcare options and are experimenting with a host of new payment models, care delivery channels, and innovations they hope will improve care and make it more affordable. With a focus on well-being, new care models are emerging and quickly transforming the future of healthcare as we know it. Where 80% of today’s health spending goes toward care and treatment, it’s estimated that by 2040, 60% of all spending could go toward improving health and well-being, and the market is quickly shifting in that direction. 

Just as they were a driver of our current health system, employers looking to maintain a healthy and productive workforce are key drivers of this change. Facing cost increases of 6.5% in 2022, employers are finding alternatives to traditional health plans, encouraging the adoption of wellness programs, steering employees to lower-cost options and centers of excellence, and in some cases, even entering into the healthcare business directly to provide employees convenient and affordable options. Onsite clinics, fitness programs, and a greater emphasis on mental well-being are all on the table. As it foots the bill for aging populations and increasing numbers of Americans not covered by employers, the federal government is also putting more emphasis than ever on keeping patients well, resulting in the widespread adoption of value-based care. 

With so much on the line, healthcare incumbents, as well as new market disruptors, are rushing to bring new solutions to the market. In addition to new payment models, we are seeing widespread shifts in how and where care is delivered. Telehealth, which catapulted into the spotlight as a result of the pandemic, is here to stay as an efficient and effective delivery channel. Retail clinics and quick care centers are replacing traditional medical offices and giving consumers the convenience they want at a lower price tag. And direct-to-consumer offerings are taking off, giving consumers affordable access to address common health needs from birth control to mental health. Even hospitals are taking a back seat, increasingly used only as a last resort for urgent health needs. Care will be decentralized, and patients, previously hospitalized, will increasingly be cared for from home. 

With demands for more affordable plans, payors will continue to adapt and embrace new models, innovating new reimbursement strategies that support a transition from a fee-for-service system to a model that rewards total wellness. Working closely with providers, payors will need to redefine the value of care and effective reimbursement strategies that reward and incent for healthy patients. Plans that continue to elevate the member experience, engage members in wellness programs, embrace new care delivery options, and offer more flexible, affordable networks, will be well-positioned to succeed in this rapidly changing environment. 

#5: Greater Collaboration Will Drive Efficiencies Throughout the System

Our healthcare system faces vast challenges in the years ahead. Delivering efficient, affordable solutions to meet increases in the demand for care, produce better patient outcomes, rise to new consumer expectations, and create fairness for all parties – patients, payors, and providers – is a tall order. However, a movement toward greater collaboration between all players could help pave the way, and we are starting to see signs that it is underway. Changes in care delivery models, greater interoperability, the digitization of healthcare, and more engaged consumers are fostering an era of collaboration not previously seen, in which patients, their providers, and their health plans all work together to improve outcomes and lower costs. 

A shift to value-based care models is accelerating this healthcare trend. As payment becomes intertwined with patient outcomes and satisfaction, we continue to move away from a transactional model toward a patient-centric system of care in which providers and payors share an interest in keeping patients healthy. The movement will drive better coordination between providers as they are incented to work together to proactively manage patients’ overall well-being, resulting in the more efficient and effective use of our healthcare dollars.

Once a roadblock to collaboration, technology platforms will also transform how the industry works together to deliver the future of care. 2022 will bring continued innovation and investment to build platforms and solutions that improve workflows, break-down silos, and drive efficiency through collaboration. Though much still needs to be done, improved interoperability allows care teams to see the complete picture and reduce duplicate or unnecessary procedures. In addition, increased digitization empowers patients to take a more active role in managing their care. With the proliferation of electronic medical records, patient portals, apps, and digital health tracking tools, it is easier than ever for patients to communicate with their providers and share information across their care teams. 

Collaboration is the only way forward if we are to bring necessary cost savings to our health system. Payors have a key role to play and will need to work closely with providers toward shared goals that benefit patient outcomes and increase efficiency. While several new regulations will force deeper collaboration between payors and providers, those that can proactively seek collaborative partnerships with their provider networks and members will be better positioned to reap the benefits, driving bottom line savings through reduced administrative costs and improved patient outcomes.

At MultiPlan, our mission is to make healthcare more efficient, affordable, and fair. While there are no easy answers to tackle the mounting cost challenges facing our industry, we are eager to see how each of these healthcare trends contributes to a more sustainable future in 2022 and beyond. We’ll continue to do our part, working with our partners across the industry to inspire change and innovate new cost-saving solutions. 

Contact us today to learn more about what these healthcare trends mean for your business and how MultiPlan can help you adopt cost-saving strategies in 2022.