The past few years have seen the further growth of longstanding macroeconomic challenges to which no hospital system is immune. From inflation, both generally and in wage growth, to labor shortages, particularly in nursing, to the continued impacts of the global pandemic, providers everywhere are familiar with the headwinds facing the industry. In a September 2022 report, McKinsey & Company referred to the circumstances healthcare systems face as a “gathering storm,” and no wonder: McKinsey suggests that inflation alone could add an additional $370 billion in healthcare spending above the expected baseline by 2027, with endemic COVID-19 adding another $222 billion to that increase.1 On top of these major forces growing costs, accelerated salary growth, turnover, and shortages in labor make the environment even more difficult.
Passing on costs and hiring are unlikely to fix the problem
With headwinds like these facing the industry, to whom can the burden of increased healthcare costs be passed? Employers, facing their own financial pressures, are unlikely to foot the bill, with 95% of employers stating they “would pass along any cost increase greater than 4 percent per annum to employees.”2 Patients themselves face challenges, with “more than 20 percent of consumers report[ing] having more than $1,000 in medical debt…will have difficulty absorbing these higher costs for much longer.”3 According to a WebMD survey, almost 7 in 10 Americans have deferred care due to a lack of affordability.”4
The government doesn’t look to be in the best shape to step in, either. As McKinsey points out, “a range of factors indicate that it may be difficult for the government to absorb the additional medical-cost burden.”5 The United States is experiencing inflation rates that haven’t been seen since the 1970s, healthcare spending represents a record 20% of GDP6, and federal responses to the COVID pandemic drove the largest federal budget deficits ever in 2020 and 2021. Add on top of this a narrowly split Congress, and substantive progress on tackling increased healthcare expenditures is an uphill battle.
Providers across the industry “cited revenue cycle management as a top priority for the next year, pointing to a broad set of specific priorities, including revenue integrity, charge capture, and complex claims, and underscoring a robust set of RCM needs across the provider ecosystem.”7
For systems who have managed to maintain strong enough finances to hire heavily, critical staff just aren’t there for the taking. An analysis on labor market data revealed a potential shortage of 3.2 million healthcare workers by 2026. This healthcare labor crisis cuts across a number of job categories, but is especially serious in nursing, with the United States facing a potential shortage of 200,000 to 450,000 registered nurses by 2025. By this time, the shortage of physicians could reach 50,000 to 80,000 physicians. This has major implications not only for care, but for areas directly impacting revenues, like clinical documentation integrity (CDI) and utilization management (UM).
In short, generating additional revenue by increasing costs and counting on someone else to pick up the tab is far from a secure bet, and hiring to solve the problem will remain an immense challenge. How, then, can healthcare leaders respond?
Systems can use technology to capture more revenue for the work they’re already doing
Clinician shortages and economic pressure are driving demand for solutions that enable existing teams to be more productive, efficient, and drive ROI. In an October 2022 report jointly developed by Bain & Company and KLAS Research, the authors found that over the past year, 45% of providers accelerated software investment, with only 10% slowing down and “forward-thinking providers doubling down on technology roadmaps.” Providers across the industry “cited revenue cycle management as a top priority for the next year, pointing to a broad set of specific priorities, including revenue integrity, charge capture, and complex claims, and underscoring a robust set of RCM needs across the provider ecosystem.”7
Not all solutions, however, are equal to the task at hand, and among the challenges providers face in responding to financial headwinds are vendor proliferation and an increase in tech stack complexity. Numerous solutions claim to solve for the pains ailing hospital systems, but in the current climate, an acute focus on ROI and long-term financial peace of mind is key. Systems can’t invest indiscriminately in technology for technology’s sake. Rather, a challenging financial landscape makes judicious, careful decisions on technology all the more important. Deciding on a nascent solution without proven ROI or a second-tier solution to save a few dollars up front can have real consequences.
Iodine is focused on driving real ROI to help systems find long-term financial resiliency
Throughout our history, Iodine has developed solutions with real-world, high-level value in mind. Our tools help systems go beyond merely weathering McKinsey’s “gathering storm” to something better: future readiness. We don’t merely contribute to financial stability, but serve as a full partner in revenue enhancement to help you capture the revenue you’ve already earned and achieve lasting, big-picture financial peace of mind. We do this by using our clinical machine learning AI suite of solutions to help staff spend their time on the work that most benefits from their skill and attention.
This isn’t just a long-term play, either: Iodine solutions deliver value at speed. For example, a five-hospital system in the mid-Atlantic with 94k+ admissions saw a first-month financial impact of $2.2 million, with $27.1 million in annualized impact. This big-picture value is made possible by improvements to key metrics in the functions we support. Programs powered by Iodine solutions drive increased output per FTE, with higher query volume. Iodine-supported CDI programs saw a median productivity lift of 134% in our 2021 Productivity Cohort Analysis, with improvement seen in 92% of facilities. One four-hospital system in the Southeast saw major improvements to their CMI, with 9.8% growth in surgery and 14.6% overall within the first six months after implementation. In short, we have a proven track record of delivering in concrete ways on the promise of our solutions: driving real, financially meaningful ROI.
While the challenges that face healthcare systems aren’t going away, neither are we. We’re excited to build on the work we’ve done with our current clients to help as many providers as we can flourish, no matter the financial climate.
1 “The gathering storm in US healthcare: How leaders can respond and thrive,” McKinsey & Company, September 2022.
2 “Employers look to expand health benefits while managing medical costs.” McKinsey executive survey from July 2022
3 McKinsey Consumer Healthcare Insights, February 2022
4 “Cost of Medical Care Leads to Delays for Many Americans: Survey”, WebMD, May 2022
5 “The gathering storm in US healthcare: How leaders can respond and thrive,” McKinsey & Company, September 2022
6 National Health Expenditure Data: Projected, Centers for Medicare & Medicaid Services, April 27, 2022
7 “2022 Healthcare Provider IT Report: Post-Pandemic Investment Priorities,” Bain & Company, Inc. and KLAS Research, October 2022
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