On the Road to Recovery
Based on survey, the healthcare industry is recovering from pandemic.
The COVID-19 pandemic had a profound impact on the healthcare industry, resulting in ongoing disruptions and challenges. However, there is optimism that the industry is recovering and returning to pre-pandemic levels. Based on Alexander Group’s recent Healthcare Providers Survey among hospital executives, physicians and surgeons, it is anticipated that procedure volumes in the U.S. will return to pre-pandemic levels during 2023. Although volumes did not reach the levels initially estimated for 2022, providers reported achieving up to 98% of pre-pandemic levels in Q4 2022. For Q1 and Q2 of 2023, providers are projecting to surpass pre-pandemic levels, reaching 100% or higher. This article will examine the projected path for the healthcare industry’s recovery and the obstacles that healthcare companies may encounter on the journey.
Healthcare Industry Outlook
Alexander Group reports that 80% of healthcare companies are growing, with 45% having revenue growth goals that exceed their 2022 growth rates. Most healthcare executives are confident that they can achieve their 2022 revenue growth goals, which is the most optimistic outlook since the start of the pandemic. The good news―during Q1, there were no major surges in respiratory illnesses. However, there is still uncertainty stemming from bank closures and the pending recession, which could have a potential pullback effect on the pent-up demand. The cost side of healthcare is an important factor, with clinical and administrative staff costs being a major issue. Hospitals are recovering to pre-COVID procedural volume levels, and while ASC and Outpatient Care Settings growth accelerated during the pandemic, current growth is consistent with the long-term trends of moving less complex procedures outside of the hospital. In addition, there is an increasing growth expectation for healthcare delivery options due to certification of new devices, drugs and digital health solutions.
Payment Concerns and Rising Costs
A concern among healthcare providers is the decline in elective procedures due to payment apprehension among patients. Another is the rising costs of premiums and benefits for employers and payers.
According to a Gallup poll, 38% of Americans postponed medical treatment in 2022 due to cost. This has a significant impact on hospitals’ revenue and profitability, especially for those that rely heavily on elective procedures. Hospital executives reported that 43% of this came from patients experiencing moderate to severe payment concerns. This correlates with the Gallup poll and suggests that many patients are struggling to afford their co-pays or take time off work for medical care.
This is not a new phenomenon. The ability for patients to pay their bills had an impact on the healthcare system during the 2008 recession as well. However, the current situation may be more severe and prolonged due to the ongoing effects of the pandemic and the uncertainty about the economic recovery.
Another challenge facing the healthcare industry is how to cope with rising costs and declining benefits. The average premium for employer-sponsored health insurance reached $22,000 per person in 2022, but many employers are not willing or able to offer solutions to reduce costs for their employees. This puts pressure on payers, who have to balance affordability and quality of care.
On the other hand, some employers are turning to digital health companies as a way to attract and retain talent by offering additional health benefits. These companies provide services such as telehealth, wellness programs, chronic disease management, mental health support, etc. However, not all digital health companies are profitable or sustainable in the long run. As funding becomes tighter in this sector, only those that can demonstrate value and outcomes will survive.
In-Person vs. Virtual Selling
The pandemic has changed the way salespeople interact with their clients and customers. Healthcare sales leaders are encouraging reps to return to their clients and interact with customers in person, but customers are demanding the appropriate mix of virtual and in-person interactions. The type of product or service being sold matters as well. If selling into a clinically intensive environment, such as a hospital operating room, it’s easier to access and deliver products. Often the reps selling healthcare products and services help by providing services that ease the burden on clinical staff. However, selling healthcare products and services to healthcare administrators or employers may be more challenging with limited need for in-person interaction.
One of the key questions to address is at which points in the sales process should a salesperson to be physically present, and where virtual interactions can be used instead. Other industries, particularly high tech, can offer some best practices on how to transition from in-person to virtual sales. For example, sales reps can use video calls for initial meetings, demos and follow-ups, while saving in-person visits for highly technical clinical support or building relationships. Healthcare companies also need to deploy lead development programs with virtual sales components, such as email and social media.
Where to Place Marketing Dollars
Marketing investments in healthcare are expected to increase in the near future. However, the priorities for investment differ based on the sector. Digital health companies prioritize lead generation, while pharma and biotech companies prioritize community engagement. One concern is the return on investment of trade shows and whether they are worth the cost, which can reach hundreds of thousands of dollars. Trade shows are not very effective in generating leads or closing deals, as they often attract lower-level prospects or competitors. Some trade shows are shrinking in size or have mixed results depending on the type of show or product. However, trade shows offer an opportunity for people to shake hands and connect in person, which can be valuable in building trust and rapport.
Marketing investments must adapt to changing customer expectations and behaviors. Healthcare leaders recognize the importance of tracking ad spend and marketing qualified leads (MQLs) to ensure that money is being spent wisely while also using data analytics, customer feedback and market research to optimize marketing strategies.
Looking Towards the Future
The healthcare industry is expected to continue experiencing disruption and transformation, with continued reliance on physical channels while aggressively investing in and supporting digital channels. There is an increased focus on cybersecurity and ongoing pressure on pricing and margins, requiring healthcare companies to identify ways to increase efficiency and cut costs without compromising quality or value for their customers.
Healthcare organizations of all types can benefit from the Alexander Group’s expertise and innovative solutions, allowing them to efficiently achieve their revenue growth goals and position themselves for future success. For more information on how to optimize your go-to-market strategy, please contact an Alexander Group healthcare practice lead.