The Future of Healthcare: 6 Ways the Industry Will Adapt and Innovate

Healthcare industry experts see talent recruitment and retention, supply costs, and increased competition as key issues for the industry in the next few years. Here’s how hospital and health system leaders can meet those challenges while continuing to innovate.

An illustration of two people at a doctor's office.

From a transition to value-based care to the rapid speed of technology and innovation, the healthcare industry continues to absorb shocks, shifts, and challenges that are transforming how care is delivered.

Healthcare providers are under pressure to reduce expenses to counter elevated labor, medication, and supply costs. At the same time, they’re increasingly expected to deliver more accessible, affordable, and higher quality care while managing health disparities and an aging U.S. population. In this environment, it’s not just nurses and doctors who are feeling burned out—77% of healthcare executives feel the same, a WittKieffer survey found. 

To navigate these changing needs, healthcare organizations will need to bolster their agility and resilience by building flexible systems that leverage data to operate more effectively. Here are six ways forward-thinking healthcare leaders are responding to change while remaining focused on serving their communities. 

1. Making Frontline Workers’ Experiences a Business Imperative

As more healthcare workers experience burnout and leave the bedside, the industry’s employee turnover struggles are heightened. A report by staffing firm NSI Nursing Solutions found that the average hospital has turned over 105% of its workforce in the past five years. 

Healthcare organizations that find themselves caught up in this expensive cycle of continuous hiring must adopt tools to understand and enhance the employee experience. In one major example, workers were given more flexibility and control over their schedules and their benefits.

St. Luke’s University Health Network extended its core human capital management (HCM) system with an application that enables nurses to opt in to bonus plans, boosting employee engagement and retention. Its human resources (HR) team notes that giving employees more information and self-service processes makes it easier for them to navigate the constant changes in healthcare. 

In addition to giving workers more control over their schedules, healthcare organizations need to invest in compensation and benefits that address employees’ physical, emotional, and financial wellbeing, says Vince Vickers, principal and national healthcare consulting leader at KPMG.

To do this, health systems like Banner Health have invested in technology that simplifies employees’ lives. For example, providing systems that allow nurses to easily keep their certifications and licensures up to date. As Janice Gil, human resources technology product owner at Banner Health, explains, “These are innovations that help our users on a day-to-day basis.”

By reducing friction across the employee experience and delivering self-service capabilities to simplify scheduling and time tracking, health systems can improve their workers’ daily experience, boosting retention and better continuity of care.

“We’ve gotten tremendous value in greater engagement with our stakeholders—including suppliers—plus cleaner data and easier, real-time reporting from a single source.”

Ryan Koos Chief Supply Chain Officer Sharp HealthCare

2. Leveraging AI and ML to Optimize the Talent They Have  

The pandemic accelerated a shake-up among clinical staff, prompting a slew of retirements and resignations. Nurse employment fell by 100,000 workers between 2020 and 2021—the largest drop in 40 years, according to a study in the journal Health Affairs.

This shortage has forced many hospitals and health systems to rely on expensive contract staffing firms to fill shifts and meet patient demand. The clinical labor shortage is expected to continue. By 2025, McKinsey research projects a gap of 450,000 registered nurses and 80,000 doctors. No wonder, then, that 85% of health system leaders who participated in a Deloitte Center for Health Solutions survey said that staffing challenges would have a major impact on their future strategy.

In need of more staff and facing cost-cutting pressures, 66% of executives are turning to technology to solve their labor challenges, a McKinsey survey found. Artificial intelligence (AI) and machine learning (ML) will play a role in the automation of many clerical tasks, allowing clinicians to practice at the top of their licenses. AI and ML, for example, can help radiologists expedite image reading to support a timely, precise diagnosis or help nursing staff monitor a patient’s breathing around the clock. 

“We expect that by the end of 2027, one out of five large hospitals will have established AI-driven command centers to improve everything from care coordination to cost reduction to improved operations,” says Mutaz Shegewi, research director at IDC Health Insights.

Organizations that can easily access up-to-date clinical and operational data will have an advantage on optimizing inventory, staffing, and patient flow, allowing them to make the most of their resources. Moreover, organizations can further optimize by using AI and ML to create forecasts of demand and uncover recommendations on optimal distribution of labor. 

“The North Star that healthcare often struggles with is getting visible and central access to resource constraints,” explains Eric Washer, vice president of product strategy at Workday. “Fusing enterprise resource data with industry-specific operational data such as clinical scheduling, space allocation, patient health records, and point of use can transform healthcare demand planning.”

Being more proactive about preventing staff exits will also be top of mind for healthcare leaders— especially as burnout is causing many employees to leave the industry. 

Leaders at Embark Behavioral Health know that to achieve their business goals, they must also look after their own employees’ wellbeing, including quickly and proactively addressing the warning signs of potential attrition. They turned to intelligent listening technology to surface these insights to better support employees before it’s too late.

We use Peakon and other data points to identify factors of burnout, compassion fatigue, and even flight risk, so we can be proactive,” says Landon Kirk, chief people officer at Embark Behavioral Health.

3. Focusing on Business Agility and the Power to Adapt 

The future of healthcare is, in part, home care. In recent years, telehealth has expanded, and many patients have now come to see the home as a more comfortable and convenient place to receive post-acute and long-term care. At the same time, healthcare payers are embracing home-based models that can improve care quality and reduce hospital readmissions while increasing affordability. 

“Everyone is focused on shifting care toward the home or toward a convenient location,” says healthcare technology executive David Chou. “That’s going to shift how we practice medicine and shape the technology solutions that every organization is going to offer.”

In addition to delivering remote patient monitoring and telemedicine technology, bringing care into the home will also require additional operational and logistical agility. “How do you get medical supplies to the patient’s home quickly?” Chou asks. “That is going to be a challenge.” However, the same unified data core that allows hospitals to manage a high volume of supplies across multiple locations can also be leveraged to deliver supplies to patients at home at scale, thereby improving care quality while reducing operational inefficiencies.

Providers such as Vanderbilt University Medical Center (VUMC) are investing in innovative equipment delivery and patient education models to ensure continuity of care from hospital to home and anywhere in between. “If this doesn’t make health care personal, I don’t know what does,” shares Teresa Dail, chief supply chain officer at VUMC.

Beyond demonstrating agility throughout the move to home care, health systems will also have to adapt to new market entrants, including retail giants that are ramping up the competition for patients and healthcare dollars. To compete in this new environment, healthcare organizations need faster access to meaningful insights that clarify when and how to pivot to remain relevant. For many organizations, that will include giving patients convenient “digital front doors” that provide the same easy consumer tech experiences offered in industries such as retail, finance, and hospitality.

“We expect that by the end of 2027, one out of five large hospitals will have established AI-driven command centers to improve everything from care coordination to cost reduction to improved operations.”

A quote by Mutaz Shegewi Mutaz Shegewi Research Director IDC Health Insights

4. Tapping Finance to Create Value and Drive Business Transformation

Facing a rapidly evolving and increasingly competitive environment, healthcare CFOs are being asked to go beyond the numbers and play a major role in shaping business direction and strategy.

Whether raising capital or helping to plan an expansion, 77% of healthcare financial leaders surveyed by Deloitte say they will focus more intensively on boosting business growth as a strategic partner.

“We look for transformation that will reduce cost, increase efficiency. With that level of efficiency, we become more advisory—helping the clinical and operations teams understand the expenses they’re managing,” says Tim Fitzgerald, vice president, treasury & financial systems at Geisinger. “That’s where the partnership between IT and finance becomes powerful.”

And given the industry’s staffing challenges, healthcare finance leaders are turning as much attention to talent strategy and investment as they would to major capital expenditures, Deloitte finds. Specifically, CFOs are focused on transforming the workforce through automation to improve workflow and allow employees to focus on fewer administrative tasks.

To create this efficiency within their own teams, CFOs will move to advanced planning methods such as rolling forecasts that increase their efficiency and agility. Driver-based models let leaders see the impact of pulling various operational levers and use scenario planning to anticipate the impact of shifting reimbursement models, competition, care delivery approaches, and regulatory requirements. 

Scenario planning will become especially important as the healthcare industry continues to see high levels of M&A activity. Digital transformation will play a large role in any successful merger. Such was the case for Corewell Health, a nonprofit managed care organization based in Grand Rapids, Michigan. Formed by the merger of Beaumont Health and Spectrum Health, Corewell united the new $14 billion organization’s finance, HCM, and supply chain management under a single platform to unlock efficiency and better position the organization for the future.

As Jason Joseph, chief digital and information officer at Corewell Health, explains, “Our motivation around M&A was to create a more integrated health system that matched up our care delivery and our health plan coverage across the state. Integrating the digital services—EMR [electronic medical record], ERP [enterprise resource planning], etc.—was a foundational element of being able to offer that value proposition."

5. Using Real-Time Data Continuous Planning to Accelerate Decisions

Decreasing reimbursements and rising costs will continue to impact hospitals’ margins for the foreseeable future. As a result, clinicians and leaders will continue to be asked to do more with less while striving for ever-greater efficiency. To make that happen, they’ll need real-time data and accessible analytics to monitor performance, drive improved decisions, and quickly surface potential problems.

“No longer can healthcare organizations review the past 30 days of claims or historical behavioral trends to determine next steps,” notes a PwC Health Research Institute survey. “They need real-time insights to alert leaders to the shifting fronts that may have a major impact on their business.”

However, more than two-thirds of healthcare organizations—which also are often saddled with legacy systems and siloed data—say they lack the analytics tools required to make real-time financial and operational insights, according to a survey by Kaufman Hall. That’s not a good problem to have in an industry that is churning out astounding amounts of data. Healthcare produces almost one-third of the world’s data, according to RBC Capital Markets. And by 2025, the compound annual growth rate of healthcare data will reach 36%—much faster than data-driven industries such as financial services or manufacturing. 

To unlock insights from this data deluge and make confident decisions faster, health systems are increasingly adopting cloud-based solutions. By blending operational and historical data, machine-processed data, and real-time analytics, these systems can augment human decision-making and will allow healthcare leaders to make the best decisions as quickly as possible.

6. Improving Supply Chain Management to Support Financial Sustainability, Business Continuity, and Innovation

It’s not just the cost of their people that healthcare organizations need to worry about. Inflation and supply chain snarls have also driven up the price of key medical supplies and equipment. Per-patient supply expenses soared by 18.5% from 2019 to 2022, according to the American Hospital Association.

To keep costs under control and gain more insights into their spending, healthcare organizations must transform their supply chain management. By layering sophisticated analytics through cloud-based systems, they can address pricing, vendor issues, and other bottlenecks in real time, while also proactively automating tasks such as requisitions, tracking, and replenishing.

Take, for example, Sharp HealthCare in Southern California. Like many health systems, Sharp relied on various supply chain management systems to track about $1 billion in spend across multiple departments. “We had too many systems and manual touch points,” says Ryan Koos, Sharp’s chief supply chain officer. “Sourcing efficiency and visibility were suffering, as was our employees’ work experience.” 

By centralizing its sourcing processes in a single system, Sharp improved its oversight of suppliers, contracts, and bids. As a result, the organization saved $4.2 million in six months while also shaving four weeks off its request-for-proposal cycle. “We’ve gotten tremendous value in greater engagement with our stakeholders—including suppliers—plus cleaner data and easier, real-time reporting from a single source,” says Koos.

To unlock insights from this data deluge and make confident decisions faster, health systems are increasingly adopting cloud-based solutions.

As healthcare leaders look ahead, they must be willing to rethink their supply chain strategies. That includes leveraging AI and ML to uncover additional optimization and cost reduction opportunities, as well as smart sensors on inventory to create a holistic, real-time understanding of the supply chain. These insights can help healthcare leaders shore up their supply chains and deliver high-quality patient care amid industry disruption. 

Workday is here to help healthcare companies digitally transform to meet the challenges of tomorrow. Learn more.

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