Significant changes in the past several years have impacted the healthcare industry, from the passage of the Affordable Care Act to the rise of big data and other disruptive technologies. In 2019, the industry will continue to experience change rapidly.

In addition, the healthcare industry is complicated, and it is one that is increasingly competitive. This year, a number of distinct trends will affect it. By learning about these trends and being proactive, you and your organization will be in a better position to ride these macro waves to continued financial success.

Healthcare Industry Trends

One of the most significant trends in the employer insurance market is a stable, yet high medical cost trend.

According to PricewaterhouseCoopers’ (“PWC”) report on medical cost trends in 2019, the medical cost trend continues to trend at 6 percent. This is similar to the past five years (which have ranged between five-and-a-half and seven percent).

There are many reasons why costs continue to rise. According to the pwc study, three important trends include omnipresent care, provider megamergers, and physician consolidation. While employers and health plans are leveraging telemedicine to give consumers a new (and more convenient) way to receive care, the existence of more access points is leading to increased utilization. That results in short-term cost increases. The merger of several large providers may lead to rising prices, due to their scale and negotiating power. Because more physicians are employees of hospitals, health systems, and medical groups, PWC argues that these organizations tend to charge higher prices than doctors who are practicing independently.

Ultimately, this puts pressure on employers everywhere, not just in the healthcare industry. In a survey conducted by the National Business Group on Health (NBGH), large employers project that their total cost of providing medical and pharmacy benefits will increase by five percent in 2019. If they didn’t make benefit changes, those costs would rise by six percent. The survey also states that health care costs are rising at two times the rate of wage increases and three times the inflation rate.

Along with rising costs and increasing employer expenditures, employers are less bullish on consumer-directed health plans (“CDHP”).

The NBGH survey shows that large employers are moving away from CDHPs as a full replacement for other health plan options. Next year, the number of employers offering CDHPs as a sole option will drop to 30 percent, a decrease of nine percent from the previous year. Because the so-called “Cadillac Tax” may continue to be delayed (or repealed altogether), employers are feeling more at ease about a pressing need to reduce the scope of their health plans. That said, the news isn’t entirely bad for CDHPs. There are several pieces of legislation before the U.S. Congress that would allow health savings accounts to pay for some non-preventive services on a pre-deductible basis.

As mentioned above, telemedicine is becoming an increasingly popular option in employer health plans.

Many large employers offer telehealth or telemedicine services to their employees. Telehealth not only includes physician consultations. It also encompasses things like lifestyle coaching, physical therapy monitoring, and even cognitive and behavioral therapy.

According to the NBGH survey, 20 percent of respondent employers said that telehealth services are used annually by eight percent or more of employees. Along with this, over 50 percent of respondents to the NBGH survey said that telemedicine is a top healthcare industry initiative next year. Their priority is to add more virtual care solutions that their employees can use. Specifically, in 2019, large employers are planning to add additional telehealth services. Those that focus on mental and behavioral health services, diabetes care management, health and lifestyle coaching, and weight management may be included.

Approaching 2019, employers are also concerned about drug manufacturer rebates.

Specifically, the NBGH survey shows that 75 percent of large employers believe that drug manufacturer rebates are not an effective tool to lower pharmaceutical costs. Along with this, more than half of the respondent employers also believe that these manufacturer rebates do not benefit consumers at the point of sale. Because of this, employers are trying to adopt a new capability by pharmacy benefit managers that allows consumers to obtain rebates at the point of sale. Currently, the pharmacy benefit managers themselves collect the rebates and then pass the savings along to health plans and employers. That said, some health care analysts argue that point of sale rebates are not going to be that effective in addressing increasing drug costs.

Along with drug manufacturer rebates, employers are concerned about the costs of specialty drugs.

Specialty drugs now account for 50 percent of employers’ prescription drug spending. But they are prescribed to only one-and-a-half to two percent of plan enrollees. The NBGH survey reveals that managers are looking at a variety of tactics to manage specialty pharmaceuticals. They include aggressive utilization management; requiring that consumers obtain specialty drugs through a specialty pharmacy or the specialty department of a health plan or pharmacy benefit manager; or using site-of-care management to ensure drugs are administered in appropriate and cost-effective settings. Ultimately, employers will be closely watching the costs of specialty drugs as they comprise a disproportionate amount of current prescription drug spending.

Finally, in 2019, more large, self-insured employers are projected to directly contract for services with doctors and health systems.

In 2018, three percent of NBGH survey respondents directly contracted with accountable care organizations (“ACOs”) and high-performance networks. That number is projected to increase to 11 percent in 2019. Direct contracting with centers of excellence (“COEs”) is also projected to increase year over year (6 percent from 2018 to 2019). Most direct contracting with COEs is with hospitals that specialize in orthopedics. Yet, the greatest growth in direct contracting with COEs focuses on cancer, cardiovascular health, and fertility.

Follow The Trends

Ultimately, it is important to watch and follow these healthcare trends in 2019. These trends will likely affect your business, regardless of its location in our state.

Understanding the current and future landscape of the healthcare industry in Georgia will place your business or organization in a better position in the new year. The bottom line? Follow the trends, be nimble, and adjust course as necessary.

Interested in the top trends driving Manufacturing, Marketing or Technology in 2019? We have those too. Just follow the links to get fresh insights into these impactful industries.

February 20, 2019 Communications Coordinator