The scenario for 2024 at this early stage is one of opposing forces for the healthcare industry that will require a careful balancing act to get through successfully.
The developing mix of good and bad news will keep decision-makers on their toes to protect profitability while rebuilding vitality and resiliency. An environment marked by risks – some more manageable than others – will keep the pressure on.
Here are some of the influences at work as the year progresses that the industry must be ready to deal with.
1. Dueling forces keep margins under pressure. On the positive side, that much discussed recession predicted for 2023 never materialized. In fact, we exited the year buoyed by good news.
After a third quarter of blockbuster growth at 4.9%, the economy expanded at a 3.3% annualized rate in the fourth quarter, even as the inflation rate ended the year at 3.4%. Morningstar, for one, predicts an average inflation rate of 1.8% through 2027. It’s coming together to relieve the industry’s cost pressures on supplies, equipment and routine maintenance.
But worrisome conditions remain. The chronic shortage of healthcare professionals is a long-term drain. The cost of money remains high, affecting capital projects and purchases of advanced medical tech, not to mention the impact of long-term debt coming due and the expense of revolving credit lines.
Amid this is the struggle to respond to intensifying competition. The number of walk-in clinics has exploded to 14,500 since 2019 as the convenience factor has caused patient volume to surge by 60%. Another factor diverting revenues from traditional providers is the continuing popularity of telehealth.
While positive operating margins through 2023 pointed to success at recovering from over a year of negative results, escalating expenses (like drug costs) remain a concern in 2024.
2. Top challenge: shortage of professionals The shortage of healthcare professionals is sapping the industry’s vitality. By 2030, 200,000 nurses will be needed; by 2034, the shortfall of primary care physicians will reach 48,000.
The industry must get to the root of the problem. Feeling undervalued leads over 30% of healthcare workers to depart the field. Another issue? Safety. The risk of injury from workplace violence is five times greater than in any other industry.
There’s no easy cure. Many hold out hope that technology – particularly with advances in artificial intelligence – will fill the gap. But a more immediate fix might be a shift to more humanistic cultures, benefits and work policies. One survey found that 80% of employees want to be seen as individuals – not just workers – and receive support that addresses their work and personal lives. Delivering personalized benefits to create a quality employee experience can be a major factor in boosting recruiting and retention efforts in 2024.
