2024 Health Care Industry Trends

The health care industry has been navigating a landscape fraught with volatility. Shifting market demands, supply chain struggles and medical inflation issues have driven many key challenges in recent years.

In 2024, several additional trends could impact the health care sector. These include labor shortages propelled by demographic shifts and changing skills requirements; technological advancements that will continue to progress, bringing both advantages and risks; and the risk of workplace violence, which is a significant challenge for health care organizations and requires robust risk mitigation strategies. Additionally, nontraditional mergers and acquisitions (M&A) in the sector are becoming more common, adding another layer of complexity and requiring careful scrutiny and adaptation of risk management frameworks.

Considering these evolving dynamics, organizations should closely monitor these developments in order to adjust their operations and risk management practices as needed. This article provides more information on health care industry trends to watch and offers suggestions on how to navigate them.

Labor Shortages

The health care industry faces a labor shortage driven by factors such as an aging population and health care workforce, a skills shortage and employee attrition due to burnout. In fact, professional services provider Deloitte reports that 57% of health system executives expect labor shortages and workforce challenges to impact their organization’s 2024 strategy.

Labor shortages can have far-reaching impacts on the health care industry. They can heighten organizations’ employee injury rates and associated workers’ compensation exposures, as having fewer workers may lead to these organizations lengthening their existing employees’ shifts and job responsibilities, putting them at greater risk of experiencing overexertion or repetitive motion injuries. Additionally, labor shortages can elevate health care organizations’ professional liability exposures. For example, overworked and mentally fatigued employees can be less alert and focused on their job tasks, making them more error-prone. In the medical field, such errors could lead to incorrect diagnoses or ineffective treatment methods and care, therefore threatening patient safety. In turn, these patients or the family members of those who receive improper care due to treatment errors or omissions could take legal action against the health care organization, holding it responsible for the resulting damages.

With these risks, health care organizations should invest in measures to address these workforce challenges. Strategies to consider may include offering more competitive wages and benefits packages (e.g., tuition reimbursement options, flexible work arrangements and additional paid time off); implementing employee assistance programs and other staff well-being and mental health initiatives; offering additional training and opportunities for upskilling; and promoting a positive, safe working culture that empowers employees to voice their concerns regarding job hazards and other work-related incidents.

In addition to prioritizing employee attraction and retention strategies, health care organizations may also wish to utilize technology to increase operational efficiencies and improve safety, which can help mitigate labor concerns.

Technological Advancements

Technological advancements in digital health continue to transform the health care industry. Mobile health, health information technology, wearable devices, telemedicine, personalized medicine and artificial intelligence (AI) have all impacted the sector.

An aspect of digital health that has grown significantly in recent years is telemedicine. Telemedicine, or telehealth, refers to the facilitation of medical treatment and services via digital communication methods, such as text messages and video calls. Telemedicine can offer benefits to both patients and health care organizations. For example, patients can utilize telemedicine to receive timely and simplified access to treatment for a variety of injuries and illnesses, as well as avoid potential problems that could arise when obtaining in-person services (e.g., exposure to ill patients, troubles navigating clinic hours, difficulties finding specialized treatment and challenges traveling to medical facilities). In addition, health care organizations can implement telemedicine to help reach a larger number of patients, boost operational efficiencies, combat rising medical expenses, expand diagnoses and screening options, and enhance chronic disease management capabilities.

AI has also become more heavily utilized throughout the health care industry through tools like customer service chatbots, virtual care assistants, early diagnosis and imaging technologies, and data storage and processing devices. Market research and consulting company Grand View Research has reported that the global AI in health care market size was estimated to be about $22.5 billion in 2023. Such technology has emerged as a way to help health care organizations customize patients’ treatment plans and automate certain tasks by analyzing medical records, detecting potential patterns and highlighting opportunities for enhanced health outcomes at rapid rates.

Some health care organizations have also started leveraging wearable safety technology. These electronic devices can be used to assess patients’ vital signs (e.g., heart rate, body temperature and blood pressure), track their activity levels and manage any chronic diseases they may have. By utilizing wearable safety technology, medical professionals can monitor patients in various settings and empower them to be more accountable for their own health while minimizing employees’ workloads and lowering operational costs.

Despite these benefits, technological advancements can still present significant risks for health care organizations. They can raise cybersecurity concerns, especially since patient data is an attractive target among cybercriminals. Complicating matters, regulations are constantly changing, leaving health care organizations with substantial compliance considerations. Additionally, technology cannot replace in-person care and can contribute to errors or mistakes. Consider the following risks presented by technology:

• Virtual visits don’t permit medical professionals to conduct physical examinations, so they could miss crucial patient information, resulting in misdiagnoses, delayed treatment and related lawsuits.
• AI technology operates based on human-generated algorithms and inputs, which means it may contain mistakes and biases. These issues could elevate the risk of treatment errors, misdiagnoses and discrimination incidents, thus opening the door for liability concerns and associated litigation amid poor patient outcomes.
• Wearable technology is at risk of malfunctioning or delivering inaccurate data, leaving patients susceptible to injuries, illnesses or fatalities if they aren’t treated in time. In some cases, health care organizations could be held liable for these errors and the related damages.

To reduce these risks, health care organizations should consider various strategies, such as implementing solid cybersecurity measures (e.g., multifactor authentication, network segmentation and antivirus tools) across virtual care platforms, consulting legal counsel to maintain compliance with applicable laws, requiring employees to document important details diligently when using technology, setting appropriate standards of care when digital care is rendered, regularly testing and reviewing the tools to ensure they’re functioning correctly, and educating and training employees on proper technology use.

Workplace Violence

Workplace violence threatens the health and safety of health care workers, patients and other third parties. It can arise in several circumstances and involve outsiders, patients and even employees. Workplace violence incidents can have significant impacts on the physical and mental health of involved individuals, and they can result in increased insurance costs, employee dissatisfaction, financial liabilities and reputational damage for employers.

OSHA defines workplace violence as any act or threat of physical violence, harassment, intimidation or other threatening disruptive behavior that occurs at a worksite. According to the National Safety Council, certain industries, including the health care industry, are more prone to violence. The most recent data from the U.S. Bureau of Labor Statistics indicates health care workers are five times more likely to experience workplace violence than those in other professions.

In a 2023 survey conducted by health care improvement company Premier, 40% of responding health care workers indicated they experienced a workplace violence incident in the previous two years, and more than half of all reported incidents stemmed from combative patients. The survey also indicated that 60% of those who experienced violence identified as a bedside nurse, and women who responded to the survey indicated that incidents of workplace violence were evenly split between emotional or verbal assaults and physical or sexual abuse.

Employers have a legal and ethical obligation to prevent workplace violence and build a culture of safety. As such, health care organizations should implement a comprehensive violence prevention program. Management commitment and employee participation are essential for its success. Technology can also play a role; numerous tools can be utilized for this purpose.

Nontraditional M&A

The health care industry is becoming increasingly competitive, with organizations needing to adapt to new business models, emerging technologies and consumer-driven care to stay competitive. Nontraditional industries such as private equity firms, retailers and technology companies have emerged as major health care investors as they look to expand into new markets and find new streams of revenue. These new investors may also appear as attractive partners to health care organizations as they look to expand services, improve staff-to-patient ratios and meet the demands of their clients. These factors have spurred several M&A in recent years, and Deloitte reported that 86% of health systems executives said M&A would have at least a moderate impact on their 2024 strategy.

Strategic M&A can provide benefits to the health care industry. According to the American Hospital Association, M&A can help reduce health care costs, drive quality and improve access to care. The emergence of nontraditional health care partners can also introduce desired innovations in technology and security and allow for novel business models.

However, M&A can also present risks to organizations. With investors looking to profit from their acquisitions, negative effects can emerge, such as reduced staffing, increased medical expenses and less equitable availability of care that can dramatically impact vulnerable populations. It also has the potential to prioritize profit-seeking behavior over individuals’ medical best interests. Additionally, M&A can affect business operations by creating business interruptions, information technology (IT) integration difficulties and increased attrition.

Health care organizations can take steps to mitigate these risks. Strategies to consider include performing due diligence before entering into an M&A, clearly communicating with staff impacted by the transaction, preparing IT systems and offering education on new technology, properly training new staff to ensure the quality of care does not suffer, and enacting policies and procedures to ensure medical decisions are not influenced by profit motives. Health care organizations must also ensure the M&A adheres to all applicable regulations to address compliance risks.

Conclusion

There are several trends currently impacting the health care sector. By staying on top of these developments and mitigating their exposures, health care organizations can position themselves to maintain operational success in 2024.

For additional risk management guidance, contact us today.

Provided by The Horton Group, Inc.