The ripple effects of 2018 will extend well into the new year as the healthcare industry navigates significant policy and business shifts.
In 2019, the industry will continue to grapple with major changes initiated last year, including high-profile mergers such as CVS-Aetna and Cigna-Express Scripts, as well as a court ruling declaring the Affordable Care Act unconstitutional.
On the policy front, newly elected Democrats in Congress and 2020 presidential candidates will advocate for broader healthcare coverage, while Republicans explore stricter Medicaid restrictions at both state and federal levels.
Meanwhile, existing trends are set to persist. Investments in digital health and telehealth services show no signs of slowing, and merger and acquisition (M&A) activity remains robust.
Here are key trends for healthcare providers and payers to monitor in 2019:
I. Providers: Advancements in Behavioral Care, Digital Health, and Price Transparency
Ia. Bridging Gaps in Behavioral and Population Health
Historically, behavioral healthcare has been fragmented, but increased spending in digital health and a push to lower out-of-pocket costs are fostering better integration. Sandra Kuhn, behavioral health consulting lead at Mercer, anticipates more partnerships between traditional medical and behavioral health providers, leading to targeted solutions.
This aligns with the broader movement to address social determinants of health (SDOH). For example, the Utah Alliance for the Determinants of Health—a coalition of providers, community organizations, and government agencies—aims to mitigate socioeconomic stressors like housing instability and food insecurity before they lead to emergency room visits. Intermountain Healthcare has invested $12 million in this initiative.
Efforts also include experimental electronic health record (EHR) technologies, expanded value-based payment models, and partnerships with community organizations. Many state Medicaid programs are already adopting value-based payments for behavioral health services.
Telemedicine continues to complement these initiatives. At Riverside Health System in Virginia, a telebehavioral health program has enhanced coordination between psychiatrists and social workers, addressing service gaps created by psychiatrist shortages. Companies like Quartet, Lyra, and Teladoc are capitalizing on the growing market for behavioral health solutions.
Ib. Expanding Digital Health and Telemedicine
Larger health systems have led the adoption of digital healthcare technologies, but physicians are increasingly integrating these tools into their practices.
Telehealth use among commercially insured patients has surged, growing 52% annually from 2005 to 2014 and spiking 261% between 2015 and 2017, according to JAMA. Revenue cycle management firm SYNERGEN Health predicts a 30% growth in remote digital health technologies this year, empowering patients to manage their own care while enabling clinicians to serve more patients efficiently.
As insurers expand telehealth coverage, hospitals will see further cost reductions. A 2017 Rural Broadband Association report found telehealth services yielded average annual savings of $20,841 per U.S. hospital. However, the trend toward remote care could challenge the viability of large hospital facilities, increasing financial pressure on traditional healthcare institutions.
Ic. The Uncertain Future of Price Transparency
Healthcare consumers and legislators continue to demand price transparency to curb rising costs, but progress remains slow.
In 2018, CMS finalized a rule requiring hospitals to publish chargemaster rates online in a machine-readable format. However, compliance is difficult to enforce, and chargemaster rates are often irrelevant to insured patients due to negotiated pricing and financial assistance programs.
CMS Administrator Seema Verma has stated that market forces, rather than regulation, should drive transparency. Yet, studies show that consumers rarely shop for healthcare services based on price. Without enforcement mechanisms, hospitals have little incentive to improve transparency, though the discussion is expected to persist throughout 2019.
II. Payers: Contract Disputes, Value-Based Care, and Medicare Advantage Growth
IIa. Intensified Contract Negotiations
Following major mergers in 2018, relationships between payers and providers have become more contentious. Fitch Ratings predicts heightened tensions during contract negotiations, even within value-based payment models.
Recent disputes include UnitedHealthcare’s contract standoff with Envision Healthcare and the prolonged negotiations between Tenet and Cigna, which ultimately resulted in a multi-year agreement.
Hospitals, especially in competitive markets, must demonstrate their indispensability to insurers to secure favorable network inclusion. Expanding Medicaid in additional states may offer financial relief to hospitals that have struggled to receive payment for treating uninsured patients.
IIb. Continued Momentum in Value-Based Care
Hospitals and insurers are increasingly adopting value-based contracts, but few providers are assuming full financial risk, according to Moody’s. While many contracts include incentives for meeting quality benchmarks, most hospitals remain hesitant to embrace downside risk.
CMMI (Center for Medicare and Medicaid Innovation) continues to experiment with alternative payment models, including addressing social needs like housing for Medicare and Medicaid beneficiaries. While CMMI’s director, Adam Boehler, has emphasized voluntary participation, the Trump administration has hinted at possible mandatory models that could expose providers to financial losses.
IIc. The Ongoing Success of Medicare Advantage
Medicare Advantage (MA) remains a lucrative segment for insurers, with average profit margins of 5%, according to the Medicare Payment Advisory Commission (MedPAC).
As the senior population grows, MA enrollment has expanded rapidly, increasing by 8% from 2016 to 2017. Today, about 34% of Medicare beneficiaries choose MA plans, a sharp rise from just 10% a decade ago.
Starting in 2019, MA plans have greater flexibility to offer non-traditional benefits such as adult daycare, meal services, and in-home care, aimed at improving patient health outcomes.