Dark Days on the Horizon?
I know that it’s winter time, but it feels colder than usual. Definitely cooler than this time last year, or the year before. And no, I’m not talking about the weather.
🏠 The housing market is cooling (Forbes)
🛢️ The energy market has been volatile and looks to be cooling (which is good for the buyers, bad for sellers and confounds the whole inflation discussion below) (EIA)
🧑🏽💼. The job market is wild - quiet quitting, job vacancies without wage growth, layoffs, etm. - there’s just lots of uncertainty (Forbes)
💸 Inflation is up, but slowing, even though consumer prices continue to climb. (TradingEconomics)
📈 Interest rates are, well, UP and don’t look like they will come down significantly any time soon. (NYTimes)
🏥 The healthcare market is cooling in terms of investments and hospital spending due to cost cutting and price pressure (Investments & Spending)
Now, I won’t say the “R” word as I don’t want to incite panic or anything like that, but it definitely feels like everyone is prepping for darker days ahead.
So too is the landscape in healthcare: we haven’t seen patient volumes go back to where they were pre-Covid (Physician’s Weekly) and reimbursement is changing on telehealth (HHS) which means that the industry as a whole is being far more fiscally conservative or concerned than usual.
Healthcare systems typically run with slim positive margins (AHA), if they don’t already run in the red. Such market conditions have recently worsened, with a decline in net patient revenue and uncontrolled growth of operational expenses.
Thus, many systems are taking defensive actions in order to prepare for further fiscal turbulence and subsequent population pressures ahead. They are trying to cut costs, reduce vendor and supply spending, optimize operations, reduce workforce, and do anything they can to treat patients and retain revenue today and into the next economic phase.
The widespread precaution of health systems, the heart and soul of US healthcare, means that the whole industry is likely subject to darker days ahead. Health Tech companies and advisories/consultancies are going to feel this impact acutely, if they aren’t already.
Hospitals seem to have lost their appetite for tech that doesn’t directly impact top or bottom line revenue, patient safety, or regulatory compliance; which has always been the case, but had seen a shift over the past few years due to pandemic-induced needs and reimbursement.
So, what is there to do? As always, there are options.
Healthcare Providers can just hunker down and hope to ride out the storm or they can find ways to generate or recover additional revenue so that they can best serve their patients.
Healthtech Companies and service providers will need to shelter in place or become fantastic at generating revenue for themselves and for their clients (in cost avoidance or revenue recapture) and they will need to be really, really good at demonstrating, not just talking about, value or ROI to “de-risk” the solutions that they are bringing to their customers.
Overall, there’s going to be a drop in spending, a reduction in investing, and lots of organizations struggling in the coming months. However, there are ways to actively defend against the cooling of the healthcare market and put providers and health tech companies on the offensive in a time where most organizations will likely retreat and try to just weather the storm.
Watch for parts two and three in the coming days to learn about how providers, health tech companies, and consultancies can not only mitigate the impact of the impending dark days, but gain critical market share by anticipating questions about cost optimization, reimbursement, and patient care, and to really understand value and ROI.
If you enjoyed this blog, have questions/comments, or would like to learn more about Monocle Insights, please email rdeiotte@monocleinsights.com, or visit our contact page to schedule a demo!
