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If COVID-19 has taught us anything about how hospitals are investing for the future, it’s that digital health is here to stay, according to Mallory Caldwell, Ernst & Young U.S. health leader.
“I think the big thing is that we have accelerated and focused attention on things there before COVID, (that) became more timely because of COVID,” Caldwell said. “Digital health is the example of that.”
There’s telehealth, of course, but what’s next?
Caldwell and EY work with healthcare leaders to help them prioritize where to allocate capital. C-Suite executives feel that they don’t have good data for decision-making and that their decision-making is rushed, Caldwell said.
These findings came from EY’s 2021 Capital Allocation Strategy Survey. The survey found that less than half, about 48% of provider CEOs, have a formal system to capital allocation. Almost three-quarters, 74%, named digital tech as a top priority.
“Healthcare clients are asking us frequently to help them get a handle on the landscape of potential places to invest, to move them along that digital journey,” Caldwell said. “We do that work frequently.”
WHY THIS MATTERS
Capital allocation priorities in digital health may include telehealth platforms, interoperability digital platforms, wearables data and digital platforms to enable care in the home and hospital at home.
Executives need to articulate what kind of digital experience they want to give to the patient, the caregiver in the home, physicians, and others, Caldwell said. This will help determine the technology needed to sequence their investments.
They want to know how to run AI to get better throughput for facilities and to have a more holistic picture of the social determinants of health.
Once priorities are established, healthcare executives need to reallocate capital in a market that has been anything but predictable.
“There’s not a lot of extra cash going around,” Caldwell said. “That’s one of the topics we’re helping clients with. Do they have facilities that are underutilized? We’re talking about efficiency in their working capital. Do we need as much in patient capacity? Should we curtail that in favor of something else?”
There is still a push to find efficiency through integration, either by merger or a partnership that will result in aligned strategies.
This is visible in the “payvider” trend as payers build bigger provider platforms surrounded by digital enablement. One example is Humana investing in Kindred at Home and UnitedHealth Group building out OptumCare.
“They’re coming together to say, let’s form an alliance,” Caldwell said. “It is the thing that aligns the economic incentives. Everyone is trying to do the right thing.”
THE LARGER TREND
As a result of ongoing upheavals caused by the pandemic, amplified market pressures are compelling healthcare executives to reconfigure operations and investments. In fact, more than three-quarters of provider and payer CFOs acknowledge their capital allocation process needs to be improved, according the EY survey.
CFOs face trade-offs between multiple investment needs.
A September Kaufman Hall report shows they don’t always know where to put their money. Many organizations developed new buildings or sites of care without researching consumers’ needs first. Hospitals and health systems that launched or accelerated digital health capabilities during the outset of the COVID-19 pandemic have failed to commit fully to digital and consumer-centered transformation, according to the 2021 Healthcare Consumerism Survey.
The transition is happening, according to Caldwell.
“All of that power of big data, people are making happen,” he said. “People are investing in the technology infrastructure for a digital consumer interface.”
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