Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
April 19, 2022

Four Recent Healthcare Trends Reshaping Regional Health Plan Leadership

By Spencer Stuart’s North American Healthcare Practice

The healthcare industry is at an inflection point. As we talk with boards and leaders of health plans, numerous forces from the rising consumerization of healthcare to government regulations are reshaping the industry and affecting the leadership capabilities necessary for regional health plans to succeed. Here are four trends we see impacting healthcare and what they mean for leadership across the C-suite.

1. Telehealth and digital innovation

The pandemic turbocharged digital transformation across healthcare. What was once conceptual became essential overnight as demand for telehealth skyrocketed. Even as people are returning to in-person services, virtual care is firmly in the mainstream, and we anticipate this will be a significant growth area going forward. By some estimates, more than 56 percent of providers plan to increase telemedicine investments over the next two years. Getting these investments right will be critical, especially as patients continue to view healthcare through a consumer lens, with the same expectations for seamless, convenient digital experiences they enjoy from sectors like retail and financial services.

A key question for regional plans will be: build or buy? Humana, for example, took the “build” route, creating its own virtual platform versus contracting with a telehealth company. But there has been an influx of private equity investment and emerging disruptors in this space that could provide the necessary capabilities for a plan looking to buy. The right answer will depend on a number of factors, but at a minimum will require prioritization of both the end user experience and systems integration – an area that’s currently lacking.

How this impacts leadership requirements: Organizations will need executives who are proven digital leaders with experience driving innovation. Some health plans are establishing roles borrowed from other industries to lead the innovation charge, such as chief experience officers and heads of product innovation. This may mean hiring a leader who comes from outside the healthcare world, which requires careful vetting of how that person will adapt to the nuances of healthcare, as well as consideration of the cultural challenges they may face coming from a different industry background.

2. Provider partnerships

The trend towards accountable care and value-based reimbursement has placed greater emphasis on how payers and providers work together, pressured by expansion in both directions — new or expanded provider-sponsored health plans, and payers (including national ones) acquiring primary care and multispecialty practices. A decade ago, payers and providers were adversaries. Now, we expect to see more creative partnerships emerge in response to the current environment. In addition, new individual, Medicaid and Medicare markets require addressing social determinants of health in addition to traditional healthcare services.

How this impacts leadership requirements: Leaders with a track record of developing innovative provider relationships, joint venture and corporate development expertise will be needed. They must also be able to collaborate with multiple stakeholders, including the CEO and the board, and understand the impact of these partnerships on the organization’s culture.

3. National competition

Once secure regional markets or lines of business face competition from national health plans and new PE-backed entrants. Consolidation among payers and pharmacy benefit managers (PBMs) has led to competitors with resources competing on price and technology. And, as corporate clients become more global, these clients become harder to service locally.

How this impacts leadership requirements: To compete, regional health plans will need leaders with experience from multiple geographies, particularly in highly competitive markets. Experience outside of core business and building new lines of business are also critical.

4. Shifting regulatory environment and costs

Unplanned costs due to the pandemic, such as coverage for COVID-19 testing and vaccinations are impacting regional health plans. Orphan drugs continue to drive pharmacy costs. Some struggle with the technology costs of transitioning from post-payment to pre-payment methodologies to accelerate claims processing. Health plans must also keep pace with regulations such as the No Surprises Act protecting patients from surprise out-of-network hospital bills. The government is becoming a larger payer and will have a greater say in how healthcare is paid for, especially as more aging Baby Boomers enroll in Medicare.

How this impacts leadership requirements: Key skills include financial savvy, agility, flexibility and adaptability. A learning mindset, curiosity and ability to take smart risks are also going to be more essential.

To succeed in this changing landscape, regional health plans will need leaders across the C-suite with a strategic mindset and skills in digital innovation and building partnerships. Some may need to establish new roles in response to the needs of members and providers. Plans that build these capabilities will be better positioned to compete and succeed. Reach out to our Healthcare Practice for more on what these trends mean for your organization.