2022 Healthcare Predictions

Brice Voithofer

To make 2022 Healthcare Predictions, we start with the lessons and trends from 2021, most notably the Covid-driven disruptions. Of course, the questions practice and department leaders want to answer include

  • Will 2021’s big fluctuations in patient volume continue into 2022? 
  • How long will the Omicron spike last?
  • How bad will cost increases be?
  • Can I find enough workers?
  • What else do I need to worry about/plan for?

2021 Healthcare Trends

2021 Healthcare Utilization Trends

Most practices survived the massive COVID downturn in 2020 only with government subsidies; even then, some went out of business. Those that planned on a return to “normal” in 2021 got a rude shock. 

For example, the Bureau of Economic Analysis found that spending on health services (hospital and ambulatory care) was 7.1% below what would have been expected in June 2021. 

Early 2021 Data Show No Rebound in Health Care Utilization

While volumes picked up somewhat after June, most data show patient volumes remaining below pre-pandemic levels, especially for non-Covid hospital admissions and surgeries. Outpatient and ambulatory volumes have fared only slightly better. Of course, there were wide variations across specialties and geographies, with some practices reporting volumes at or above 2019 levels. 

2021 Healthcare Cost Trends

On the cost side, the news hasn’t been much better. The Provider Relief Fund (PRF) kept many practices afloat in 2020 and in early 2021. But PRF money is all but gone at this point. At the same time, costs have been increasing, especially for technology and labor (average compensation increased by over 4% from 3Q 20 to 3Q 21). And costs are the tip of the iceberg: with almost 20 percent of healthcare workers quitting their jobs since the pandemic started, many practices have lost critical skills, support and even leadership. Total healthcare employment is down by over 450,000 workers since the beginning of the pandemic! (See 2022 Healthcare Workforce Predictions for more details).

Inflation has become a real factor in the second half of 2021 affecting supplies, equipment and salaries. Overall, the annual inflation rate in the US accelerated to 6.8% in November of 2021, the highest since June of 1982.

2021 Healthcare Regulatory Trends

The first part of 2021 saw many regulatory changes still on hold due to emergency Covid exceptions. As the year evolved, some rules that were relaxed earlier, for example around telehealth, were put back into effect. In areas like MIPS / QPP, changes continued to be small.

The debate over 2022 Medicare rates was resolved only after Congress got involved with yet another “quick fix.” See Final Medicare Physician Billing Rates for 2022 for the details.

The regulations that got the most attention in 2021 were those implementing the No Surprises Act, intended to prevent so-called “surprise billing.” See 5 Things to Know About the No Surprises Act for more background.

2022 Healthcare Predictions: the Perfect Storm

As everyone knows, healthcare in 2022 will be heavily influenced by COVID trends, especially with the Omicron variant spreading rapidly at the beginning of the year and COVID hospitalizations spiking in over 30 states. 

  • If Omicron really is less severe than Delta, consumers may continue their “return to normal” behavior. In that scenario, many will need to catch up on deferred care and may drive volumes above pre-pandemic levels as the year unfolds. 2022 Healthcare Predictions
  • At this point in time, that looks like an optimistic scenario. It appears more likely that we will see “rolling waves” of (mainly Omicron) COVID during the first quarter to half of 2022.

    • In this scenario, most hospitals will be overloaded by COVID for at least a few months. That is already the case in parts of the country.
    • As a result, many elective procedures and many screening appointments will be postponed or simply not done.
    • If Omicron peaks quickly during each “wave”, as now seems likely, then the second half of 2022 should see a return to “normal.” Probably sooner in areas hit by Omicron first.

At the same time, practice costs are expected to increase even faster than in 2021 with labor shortages and supply chain disruptions two of the biggest drivers. 

Of course, other factors are also contributing to the 2022 “storm.”

  • PRF and other subsidies will not be available as a cushion in 2022.
  • Medicare reimbursement is set to drop by an average of 2 percent, more for some specialties. See “Final Medicare Physician Billing Rates for 2022” for the details.
  • The macro-economic environment is volatile, with inflation a major risk factor.
  • With the advent of the No Surprises Act, commercial payers are becoming more aggressive in contract negotiations. (See 2022 Surprise Billing Predictions: Lower In Network Fees & More Paperwork for the specifics). 
  • Many patients are not seeking care due to concerns about cost. A December survey indicates that nearly a third of Americans skipped care in the past three months over cost concerns! 
    • A recent Kaiser Family Foundation poll found that, even for insured Americans, nearly half (46%) report difficulty affording their out-of-pocket costs, and one in four (27%) report difficulty affording their deductible.
  • Cybersecurity threats, including ransomware, will continue to increase (See 2022 Healthcare Cybersecurity Predictions and 3 Steps to Take Now for more specifics).

How to Plan for a Stormy 2022?

Facing highly uncertain demand, rapidly increasing costs and other risks, practices need to find ways to navigate the “perfect storm” that COVID has created. There are a number of steps needed to prepare for 2022.

  • Retaining clinical staff will be critical and will require a combination of increased compensation, flexibility, training and recognition. 
    • This is doubly important where staff have been taxed by COVID overload and/or backlash. 
    • The ability to flex clinical staff will become more important. Options include more flexible work hours and arrangements (valued by younger workers and parents, especially women, with children at home), overtime and part-time staff. These options will also help recruit new clinical staff.
    • See 2022 Healthcare Workforce Predictions for more suggestions.
  • Managing costs will be essential since they are likely to increase faster than rates. Overhead costs are an obvious target since salaries and benefits will need to remain competitive. Finding more efficient workflows that improve productivity should be another focus.
  • Where remote care is possible, practices should develop or expand their offers to patients. Remote Patient Monitoring and even Critical Care Monitoring are expected to expand rapidly. Many of these options can be added quickly by partnering with the right service provider.
  • Your privacy and cybersecurity plan needs to be enhanced and updated, unless the plan is fresh. See 2022 Healthcare Cybersecurity Predictions and 3 Steps to Take Now for specific suggestions.
  • Make sure you have the proper notices and patient cost estimate procedures in place to meet the No Surprises obligations. See No Surprises Impacts All Physicians in 2022 for the specifics.
  • If you have favorable in-network rates, start now to prepare for tougher contract negotiations. See 2022 Surprise Billing Predictions: Lower In Network Fees & More Paperwork for why this has become much more important.
  • Being able to analyze and react to volume and reimbursement data and trends will become even more essential. This requires robust analytics technology and people skills. Finding and retaining these skills will be more difficult. Fortunately, professional billing partners can perform most of this essential work for you.
  • Contracting administrative functions, on a variable cost basis, will be even more valuable than in the past. Committing to the fixed and increasing costs of in-house administrative staff will be extremely risky in 2022.  

AdvantEdge offers practices and departments a way to reduce cost risk while assuring that proper reimbursement is obtained for each clinical encounter. With AdvantEdge, billing, coding and related costs are directly proportional to your practice’s patient volume. AdvantEdge also provides insights through practice analytics and skilled Client Managers that help identify and respond to trends. In addition, you gain a partner to help with compliance and security. Contact us today at 877-501-1611 or [email protected]

 

References

https://www.ama-assn.org/system/files/2020-prp-covid-impact-medicare-physician-spending.pdf 

https://ehrn.org/articles/early-2021-data-show-no-rebound-in-health-care-utilization 

https://www.lblgroup.com/healthcare-utilization-low-expectations-covid/ 

https://revcycleintelligence.com/news/healthcare-spending-utilization-remain-low-in-2021 

https://www.theatlantic.com/health/archive/2021/11/the-mass-exodus-of-americas-health-care-workers/620713/ 

https://www.beckershospitalreview.com/workforce/18-of-healthcare-workers-have-quit-jobs-during-pandemic-morning-consult.html 

https://www.fiercehealthcare.com/practices/ama-medicare-physician-fee-schedule-spending-dropped-nearly-14b-last-year-due-to-covid-19 

https://www.cbsnews.com/news/health-care-costs-rising-americans/ 

https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs

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