2023 Healthcare Trends: What Leaders Need to Know about the Latest Emerging Market and Policy Issues

© Health Catalyst. Confidential and Proprietary.
2023 Healthcare Trends: What Leaders
Need to Know about the Latest
Emerging Market and Policy Issues
Tim Zenger, VP of Market Insights and Dan Orenstein, General Counsel

Agenda
1. Workforce Management
2. Privacy Trends – Dobbs and 42 CFR Part 2
3. Macro Economic Trends
4. The Administration’s Healthcare Agenda
5. Patient Disengagement
6. 118th Congress and the Republican
Healthcare Agenda
7. Transition To VBC
8. Price Transparency Enforcement
9. Analytics Maturity
10. Sunset of the COVID-19 Public Health Emergency

Workforce Management: A Tough Environment to Be Operating in
3.4
0
5
10
15
20
US
Unemployment
%
US Bureau Of Labor Statistics
January
1969
Tech companies only make up 6-
8% of total US employment
5,825
23,057
29,359
21,731 21,425
10,841
24,164
50,593
40,486
108,080
48,000
Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23
# of Tech Employees Let Go
As of March 2023 Trueup
Did not
return to
workforce,
17%
Moved to
different
industry,
48%
Took a new
job in same
industry,
35%
Status of employees who quit their job
April 2020-2022 n= 1831 McKinsey

Macro Economic Stressors: There Is a Lot Going On
53%
23%
Burned Out Depressed
Are you burned out and/or depressed
Medscape 2023 n=9,100 MD’s
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Under
25
25-34 35-44 45-54 55+ Prefer
Not To
Answer
How would you rate your current emotional health?
American Nurses Foundation n=11,964 RN
Very emotionally healthy
Emotionally healthy
Neutral
Not emotionally healthy
Not at all emotional
healthy
19.6%
18.3%
16.8%
14.2%
13.1%
13.7%
14.3%
15.3%
15.5%
16.2%
16.7%
16.6%
18.0%
18.8%
19.6%
23.0%
Overall turnover, including PRN, per diem, casual - MEDIAN
Advisory Board n=224
RN Vacancy Rate
NSI n=272
2018 2019 2020 2021 2022
< 5% 15.8% 21.9% 19.3% 23.9% 6.5%
5-7.49% 30.5% 22.8% 18.2% 13.8% 3.6%
7.5-9.9% 28.4% 31.6% 30.7% 26.6% 8.6%
10-12.49% 12.6% 12.3% 15.9% 22.9% 12.2%
12.5-14.9% 7.4% 5.3% 4.5% 3.7% 7.9%
>15% 5.3% 6.1% 11.4% 9.2% 61.2%
Average 8.2% 8.0% 9.0% 9.9% 17.0%

Privacy Developments—The Dobbs Decision and Part 2 Alignment
• Supreme Court decision: Dobbs v. Jackson Women’s Health Organization.
• Use of social media to gather information on violation of state bans.
• HIPAA compliance in information requests.
• CA response to out-of-state warrants seeking information on abortions.
• President’s executive order to support access to reproductive healthcare.
 FTC proposed rulemaking on commercial surveillance and data security practices.
 OCR issued a bulletin to outline the HIPAA requirements when using online
tracking technologies.
 Additional federal guidance on protecting reproductive health care information is likely.
• 42 CFR Part 2 – Proposed rule to synchronize HIPAA with Part 2 rules on the
confidentiality of substance use disorder information.
• Provides for a consent to enable HIPAA permitted uses and disclosures.
• Other provisions to synchronize with HIPAA.

Part 2 Alignment—Other Provisions to Synchronize with HIPAA
• Permit redisclosure of Part 2 records as permitted by HIPAA by Part 2 programs, covered
entities, and business associates, with certain exceptions.
• Create patient right to an accounting of disclosures, right to request restrictions on
disclosures for treatment, payment, healthcare operations.
• Align Part 2 Patient Notice with HIPAA notice of privacy practices.
• Apply the same breach standards to Part 2 as under HIPAA.
• Establish a complaint process.

Is The Current Financial Environment “The New Normal”?
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Kaufman Hall Operating Margin Index YTD by Month
2023 could represent
a new normal for
hospitals.
-Kaufman Hall
($4.5B) ($2.3B) ($1.2B) ($916M) ($837M) ($715M)
($428M)
($515M)
($378M) ($370M) ($275M) ($232M) ($178M) ($111M)
Notable Health Systems Full Year 2022 Net Income Performances

Costs from Inflation Are Projected to Increase, Not Decrease
-1.0
-0.5
0.0
0.5
1.0
1.5
1-Month
%
Change
CPI for All Urban Consumers (Inflation)
US Bureau Of Labor Statistics
Buying gets more expensive
Buying gets less expensive
Buying gets WAY more
expensive
Buying stays
expensive, but
doesn’t increase
as fast
29 29
22 22 21
15.5 15 14.5
12
9
5.7
0.51
France UK Netherlands Japan Canada Italy Belgium Sweden USA Germany Switzerland 21-22 Fed
Reserve
Predictions
Number of years for inflation to return to 2% after a breach of 5%
Bloomberg, BofA Securities. 1960-2022
G-10 Average
Healthcare could add an
extra 143% in additional
costs associated to
inflation over the next 5
years.
McKinsey
Hospital services costs
have increased 242%
over the last two
decades.
US Bureau of Labor Statistics

Poll Question

How Long Can Hospitals and Health Systems Continue to Operate
with Their Current Business Model?
40%
46%
41%
43%
42%
How long if your business continued on its current
paths, would it remain economically viable?
% of those who answered 10 Years Or Less
Korn Ferry n=4,400 CEO's

Biden Administration Healthcare Priorities - 2023
• Cancer “Moon Shot”—To address screening gap, environmental exposure, prevention,
research funding, patient and caregiver support.
• Clinical research: (1) clinical trial networks, (2) new data systems that integrate data.
• Further steps to reduce smoking.
• ARPA-H – Advanced Research Projects Agency for Health—To focus on breakthrough
research on a number of diseases.
• Lowering prescription drug costs – Addressed in the Inflation Reduction Act.
• Reducing veteran suicide.
• Housing, mental health support, and employment support for veterans.
• Tackling the mental health crisis.
• Beating the opioid and overdose epidemic & cracking down on fentanyl trafficking.

Patient Disengagement
% of participates who avoided telling a
clinicians each type of information
MTurk
n=2011
SSI
n=2499
Disagreed with clinician's
recommendations
45.7% 31.4%
Did not understand clinician's
instructions
31.8% 24.3%
Had unhealthy diet 24.5% 20.3%
Did not take prescription mediation as
instructed
22.5% 17.6%
Did not exercise 22.2% 21.6%
Deliberately did not mention a certain
medication
15.5% 10.4%
Took someone's else's prescription
medication
13.9% 8.8%

Who Will Be Able to Consistently Meet Patients’ Expectations and Needs?
Bain capital predicts by 2030
30% of primary care will be
delivered by nontraditional
providers
64%
25%
69%
79%
65%
52%
70% 70%
41%
Us adults who
have never
sought out
pricing for
healthcare
services
YouGov
n=2000
US adults
who have
switched
providers in
last 12m
because of
poor
experience
Accenture
n=11,000
US adults that
experienced
frustrations
during
medical
appointments
BDO n=3,000
US adults that
encountered
frustrations in
seeking
medical care
BDO n=3,000
US adults that
ranked their
trust in
payers
negatively
Zelis n=800
US adults
who view US
healthcare
quality as
fair/poor
Gallup
n=1020
US adults
tried online
scheduling in
the past year
but were
redirected to
a phone call
OnePoll
n=1,005
US adults say
the US
handels
mental
healthcare
not at all well
AP-NORC
n=1,505
US adults
who have
some form of
healthcare
debt
KFF n=2,375
Recent Research Findings

118th Congress – Healthcare-Related Committee Leadership

Healthy Future Task Force and the Republican Agenda in the House
in 2023
• Empower employees to have more choices, with an emphasis on more flexible plan
options, enhancements to HSAs. Empower small businesses to join together in
Association Health Plans to increase their market power.
• Continue to enforce price transparency rules and move forward with more price
transparency initiatives such as the “Advanced EOB.”
• Leveling the playing field: Payment parity for clinics and hospitals, allowing physician-
owned hospitals.

Bipartisanship – Is it Possible to Get Anything Done?
• Where do the agendas potentially overlap?
• Are there other areas of potential collaboration?
• Potentially less controversial items, such as:
 Reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA) – Set to expire
on September 30, 2023.
 Reauthorization of FDA User Fee Programs.
 Medicaid access.

Move to VBC Has Historically Shown Over the Last Decade to Move Slower
than Anyone Predicted
53.7%
52.3%
39.4%
14.9%
11.8%
7.6%
3.8%
44.9%
31.9%
32.3%
31.5%
34.3%
2.6%
7.8%
25.3%
5.9%
Commercial
Medicaid
Medicare Advantage
Traditional Medicare
2021
Category 1 Category 2 Category 3 Category 4
1.5%-3.5% for 5
years
3B: 8-10%
*HCPLAN 2022 Measurement Effort
** EmlemHealth

Organizations Are Slow to Adopt Mechanisms to Support Physician
Accountability for Cost and Quality and Full Capitation Risk
*Numerof Population Health Survey Report - November 2022
57%
65%
49%
46%
65%
35%
37%
55%
70%
56%
48%
62%
39%
37%
58%
64%
53%
47%
59%
37%
34%
55%
67%
59%
50%
65%
39%
35%
55%
67%
60%
48%
66%
40%
32%
We have
established
standardized care
paths for one or
more high-cost
procedures
We have physician
order entry systems
(e.g. CPOE systems)
designed to make
variation from the
care path of one or
more procedures an
exception
We provide
information to
physicians
regarding patients
at risk for high cost/
high utilization
We are using a
formal process to
work
with physicians who
are outliers on cost
and/or quality for
one or more
procedures
We provide at least
some physicians
with comparative
cost and/or quality
data
We are using a
formal process to
identify variation in
cost and/or quality
at
the physician level
for one or more
procedures
We pay at least
some physicians
based
on their ability to
manage variation in
cost and/or quality
(includes cases in
which only a portion
of pay is
determined by
cost/quality)
Data indicates percentage of respondents
reporting these mechanisms being used routinely at their organization
2017 2018 2019 2020 2021
2016 2017 2018 2019 2020 2021
Median % of
revenue at risk
10% 10% 10% 10% 15% 10%
Median % of
capitated revenue
5% 0% 5% 5% 5% 0%

Price Transparency Rule Enforcement
• Since Jan. 1, 2021, hospitals have had to make public their standard charges for items
and services they provide. The standard charges include gross charges, discounted cash
prices, payer-specific negotiated charges, and de-identified minimum and maximum
negotiated charges.
• Congress and the Administration to prioritize enforcement of the Hospital Price
Transparency Rule.
• Letter from Energy and Commerce Committee leaders asking the Government
Accountability Office to investigate hospital non-compliance.
• CMS has said it will take “aggressive additional steps” to identify hospitals lacking
required pricing information on their websites.
• To date, there have been:
• Two enforcement actions against hospitals.
• Over 500 non-compliance warning letters.

Does Your Data Have the Right Environment to Reach its Full Potential?
1%
5%
30%
62%
2%
All employees
are highly data
literate
Most employees
are highly data
literate
Most employees
are data literate
Most employees
are not data
literate
Almost no
employes are
data literate
What would you say is the average level of data
literacy within your organization?*
*Carruthers and Jackson Data Maturity Index October 2022
Fully embedded
with high levels
of data maturity
within the
organization, 1%
Well embedded
with adequate
levels of data
maturity within
the organization,
24%
Our data
strategy sits on
the side of our
operating
model, 46%
We have no data
strategy, 29%
How embedded is your data strategy within your business
processes?*

Elements of Enterprise Data Intelligence
20% 40% 30% 10%
*IDC 2021, n=1,170
Enterprise data intelligence
aligns Data Governance, Data
Quality, Data Literacy and
Business Value

The COVID-19 Public Health Emergency (PHE) Is Ending—How Will
that Impact Healthcare Delivery?
• The Biden Administration intends to end the PHE on May 11, 2023.
• Wind-down of federal supports for Medicaid programs.
• Continuation of some telehealth waivers are in question.
• Waivers that are continuing:
 HHS extended a number of telehealth flexibilities in the 2023 Medicare Physician Fee
Schedule Final Rule for 151 days following the end of the PHE.
 Flexibilities include waiving originating site restrictions, allowing audio-only coverage,
expanding the list of telehealth practitioners).
 FDAs emergency use authorizations for tests, vaccines, treatments for COVID-19.
 Acute hospital care at home waiver extended through December 31, 2024.
• Waivers that may be sunsetting:
 Certain Medicare and Medicaid telehealth flexibilities, such as waiver of copayments and
deductibles, virtual direct supervision, HIPAA enforcement flexibility.

Questions for Consideration
1. What are our goals for leveraging data and analytics in healthcare, and how do we measure our progress toward these goals?
2. What are the key capabilities and skills required to become a data-driven organization, and how can we assess our current level of
maturity in these areas?
3. How can we ensure the quality and accuracy of our data, and mitigate the risk of errors or biases in our analysis?
4. How can we promote a culture of data literacy and fluency throughout our organization, and ensure that everyone is equipped to
make accurate data-driven decisions?
5. How can we promote better communication and understanding between patients and physicians, and create a culture of mutual
respect and trust?
6. How can we empower patients to take a more active role in their care and make informed decisions about their health?
7. How can we better align incentives and priorities between patients, physicians, and the healthcare system as a whole?
8. How do we de-risk the move from FFS to VBC?
9. How can we balance the short-term and long-term financial implications of the transition to value-based care, and ensure the
sustainability of our healthcare system?
10. What types of contracts does it make sense to engage in more upside and downside risk and in what contracts doesn’t it make sense?
11. How can we use data and analytics to inform and augment our decision-making and identify opportunities for cost savings?
12. How can we balance our focus on cost containment with our mission to provide quality care to patients?
13. What strategies beyond money can we implement to improve staff retention rates and reduce turnover?
14. How can we leverage technology and automation to streamline workforce management processes and reduce administrative burden?
15. Will policy changes at the federal level have a significant impact on my organization?
16. Should my organization prepare for policy changes?
17. Should my organization take steps to prepare for the sunset of the PHE?
18. Will my organization’s use of telehealth be impacted by the end of the PHE?
19. With the hospital at home extension should our organization consider starting or expanding a program?

Questions?
Tim Zenger, Vice President of Market Insights, Health Catalyst
tim.zenger@healthcatalyst.com
Dan Orenstein, General Counsel, Health Catalyst
dan.orenstein@healthcatalyst.com

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