Healthcare professionals face similar challenges to other fee-for-service industries: increasing fragmentation and specialisation, new corporatised competitor models, and major shifts in payment models.
New payment pressures
Although it varies by medical practice area, most healthcare professionals depend on a combination of revenue streams – some of which are highly regulated and subject to political uncertainty.
Medicare and private health insurers dictate the earnings of healthcare professionals and their businesses, while patients also have the choice to pay out of pocket directly. With the Productivity Commission singling out specific procedures as potential for cuts (such as hysterectomies and knee arthroscopies), this adds to the pressure for specialists.
It’s something dentists have already had to adapt to. With no Medicare contributions and increasing numbers of graduate practitioners competing for business, they can no longer depend on ‘patients for life’, and they’ve had to invest in marketing and customer experience. Corporatised dental centres are increasingly the norm.
The same pressures are now playing out in general practices, day surgeries, aged care and the National Disability Insurance Scheme (NDIS). We are seeing competition between independent practitioners and corporates, with the latter generally aligned with private health insurers.
Patients are in control
With the rise in chronic disease, an ageing population and awareness of healthy lifestyle choices, healthcare itself has also shifted from reactive treatment to proactive preventative care.
Patients have a lot more choice about who they see for specific concerns, rather than following a single referral letter from their GP. They can make more informed decisions based on location, waiting lists and how much it's going to cost them out of pocket, and they can get answers, opinions and reviews online.
Patient data will be crucial in this new medical world. If you have a clear picture of who your clients are, how much you may earn from each of them and what that data suggests they might also need help with, you could see new ways to diversify your income streams.
The healthtech tipping point
Health records are only now becoming digitised, and faxed referrals are still a typical protocol in Australia. But we are now on the brink of a healthtech evolution with implications across patient data, diagnosis and operational efficiency.
The new MyHealth Record will put patients in control of their own digital health records, and major banks and private equity firms are investing in businesses like HealthEngine, Whitecoat, MediRecords, Lantern Pay and Surgical Partners.
Macquarie has invested in MediRecords, a cloud-based practice management software that works across all types of healthcare practices, as well as Lantern Pay, which allows NDIS providers to set up and manage care plans and automate payments.
Meanwhile, the exponential growth in healthtech investment is largely driven by the US market due to higher insurance and care costs.
While Artificial Intelligence (AI) is already augmenting specialist diagnosis, a human element will still be needed in patient care. Indemnity is one factor – who is at fault if the machine gets it wrong? But also there’s a very emotional side to managing critical health.
Operational efficiency under the microscope
Doctors are paid for the time it takes them to execute treatments and treatment plans – so the more efficient you are, the more you can earn. This means maintaining profitability demands a renewed focus on patient management efficiency.
One example is inpatient aftercare, currently under government and private health insurer review, with research showing home recovery can provide a similar outcome. This flows on to rigorously managing the number of staff or beds needed, or how many more procedures can be carried out to optimise waiting lists.
Another is dental practices. Successful practices acknowledge the dental hygienist is probably the most profitable revenue earner, but also the one spending the most time with patients on uncomfortable procedures. So that’s where they focus investment in client experience, ensuring people feel more relaxed in that environment.
Make digitisation a priority
Once you’ve gone through the pain of going paperless, all that data becomes a rich source of patient insights, with opportunities to run a better business. Digitised health records will soon be expected as standard, so make sure you choose technology platforms that integrate well with each other and with the way that they want to do business.
Embed design thinking into your practice
In the not too distant future, medical businesses will feel much less clinical. They’ll provide ancillary services and exceptional patient experiences, and they'll be the ones that truly succeed and stand out from the rest. It’s important to employ a really good practice manager who could effectively run any type of business – who understands technology and puts the customer experience first.
For example, a new Queensland obstetrics and gynaecology practice demonstrates the impact design thinking can have on patient experience. Designed to feel more like a day spa, it also provides specialist prenatal allied health services, including physiotherapists, massage therapists and acupuncturists, within the practice.
Interact with clients 24/7
Using ‘internet of things’ connected devices, wearables or apps, you can help patients manage their health on the go, when and where it suits them. This allows you to provide valued, trusted insights even when they’re not in front of you. With the shift in health care towards chronic disease management and supporting lifestyle changes, this helps you continue to improve patient outcomes.
A strategy for growth
Businesses are operating in a completely new landscape, dealing with uncertainty, volatility and an accelerated momentum of technological change. And that may mean re-thinking the way you define your strategy.
In 2000, McKinsey defined three horizons of growth based on the maturity and relative risk of different types of projects.^ We believe this is a useful way to describe the three growth initiatives that will need to happen concurrently in order to sustain business growth in this changing business landscape.
Re-frame your perspective
This is a time of opportunity, not threat. We believe business owners are in a strong position to thrive.
To grow sustainably and profitably, it’s important to acknowledge that traditional rules no longer apply. Business models have been democratised and boundaries have dissolved. Customer expectations are driving the pace of change.
Consider your innovation model and mindset, the broader business ecosystem you can tap into, and the capabilities you need to put in place.
We trust you found this report informative and insightful, and we’d be happy to continue the conversation with you.