Navigating the Terrain: A Look at the Turbulent Challenges, and Opportunities faced by the Healthcare Industry - Peter Waziri

Talking Trends
7 min readMay 13, 2024
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Navigating healthcare challenges whilst under financial strain will be the biggest challenge posed to healthcare executives in 2024. I urge healthcare boards to be mindful of the same, as these challenges will amount to a new irreversible age that is here to stay. One may ask why these challenges amount to a new age, and why this is significant. The significance is derived from the combined effect of these challenges. Together, they all interrelate, intersect, reinforce, amplify, heighten, and reinforce one another. This is an irreversible inflection moment that will only intensify in frequency and impact, given the increasing pace of change in our society (and globally) underlined by rapid innovation in communication, technological evolution, and generational adaptation.

These challenges can be grouped into five main categories. They are existential, regulatory, business model, talent, and technology. Existential include cyber risk, geopolitics, new entrants, economic trends, culture, etc. Regulatory include operational, data, privacy, confidentiality, etc. Business models include M&A, innovation, margin pressures, and core trends such as fragmentation vs convergence, treatment vs care, volume vs quality, etc. Talent covers retention, supply, training practices, demographic and generational attributes, etc. Technology includes selection, return on investment (ROI), technical debt, artificial intelligence (AI), etc. When combined, they all impact the long-term strategic direction of health systems, managed care entities, healthcare research, and pharmaceutical trends.

Cyber-risk has a damaging impact on operations, patient care, data confidentiality, margins, and reputation, and influences future regulation. State-sponsored cyber-attacks can be especially pernicious in this age of heightened geopolitics. As for new entrants, they see a staid business model ripe for disruption and are busy penetrating the boundaries of care by deploying powerful technologies to redesign the retail, supply chain, and consumer aspects. Being less encumbered by outdated business models allows them to be better focused on meeting consumer needs. Geopolitics and the sharp edges of the evolving multipolar world continue to have consequences for outsourcing, trade flows (i.e., sanctions), technology movements, and legislative activities. For example, the passing of the Inflation Reduction Act (IRA) in the US has led to similar responses globally to subsidize local strategic industries. This is further intensifying the shifts in supply chain patterns that will take years to settle.

The pressure to be more consumer-friendly will continue to intensify. Consumers are increasingly making purchase decisions based on price and convenience. They are also placing higher value on providers who relate to them and understand their needs. The pressure to offer more affordable treatment options (e.g., virtual health, digital tools) and to ensure loyalty requires adequate talent and training. This also applies to health plans that have to implement technological solutions to enable consumers to exercise this choice. Finding the right solution is fraught with difficulties. Health plan entities must ensure the right talent to plan, execute, and help consumers manage such journeys. Such strategies must also consider data and confidentiality challenges.

The long cycle of low interest rates and inflation has given way to persistently higher inflation, and tight labor markets, all partly reinforced by high government deficits. This makes for more macro uncertainty. Coupled with rising operational and technology costs, these factors further complicate the already low margin and high fixed costs nature of the health systems. Witness the decline of providers in rural settings without the demographic base to sustain such care models. This further intensifies the pressure on health systems to redesign, invest in technology solutions, and remodel operations into a more financially sustainable footing. This must be done while under pressure to converge (as a solution to fragmentation), evolve into care a model (versus treatment), and migrate towards quality care (away from volume). The historical evidence is not too encouraging. Take the US for example, where decades of costly effort by provider entities failed to transform the system, or the UK where huge investments into the NHS in the 1990s failed to yield expected improvements. But redesign is inevitable to achieve the productivity boost needed to adapt in a world of increasing costs, older populations, and savvier, demanding consumers.

Next comes talent management challenges — retaining employees with skills to manage the ever-changing healthcare landscape while attracting new talent to support digital transformation efforts. Today’s health systems are heavily constrained by the scarcity of workers and knowledge — the talent shortages that exacerbated losses in health systems in 2023 are a cautionary tale. This demands a re-think of the long–term talent acquisition strategies required to retain existing workers and attract younger workers who are more tech-savvy. Further, re-imaging a health system’s branding to attract talent is becoming more difficult due to changing workers’ viewpoints. This process is made harder due to social media outlets that have morphed into private newsrooms — out of the public gaze. Therefore, the publication of such views shaped therein often takes one by surprise.

The last group is technology. The industry needs to constantly invest in digital technologies such as cloud storage, data analytics, virtual health, AI, etc. However, optimizing the efficacy of such investments requires the integration of disparate IT systems into a single digital system while sunsetting others. This is a mostly disruptive, expensive, and time-consuming effort and a huge reason such investments have failed to match expected ROIs. Regardless, technological adaptation still holds the key to the success of multitudes of healthcare innovations — especially with the use of AI.

With the ability to quickly make sense of big data from disparate sources faster than humans, AI adoption can revolutionize almost every part of health care and speed up accomplishments. This can impact the speed of research and development of new drugs for example. Several pharma entities have recently invested heavily in the development of foundation models alongside the increase in AI-focused startups.

Another area AI can speed up is diagnosing ailments. AI has been utilized in this field for almost a decade. The advent of foundation models (e.g., ChatGPT) will speed up potential benefits. For example, deploying high-field magnets and proprietary AI has made the use of full-body MRI scans as a cancer-screening tool much quicker. AI can also detect what trained medical human eyes can miss. Take the case of a routine mammogram review where AI tools detected early indications of stage 2 cancer that were missed by two specialists.

AI tools also have enormous potential for a consumers’ journey to seek better quality of care from health systems. New price transparency regulations that require hospitals and insurance entities to publicize prices for different services and procedures are enabling consumers to make more informed decisions. This will lead to further demand for even more transparency. The more consumers access health information and motivate themselves to follow treatment regimes, the more AI chatbots can help maximize the use of consumer devices such as wearable health monitors. Further, emerging pharmacy entities are working to utilize AI tools to empower consumers with information about lowest-cost drug alternatives and price comparisons. More generally, the more consumers ask questions about their health on the internet, the greater the incentive for bespoke chatbots designed to teach consumers about public health issues and provide guidance on symptoms and potential implications.

Last but not least is cost savings and efficiency — such as using AI medical scribes to relieve clinicians from the administrative work that takes time away from care. But this is the tip of the iceberg. The US alone spent approximately $4.5 trillion on health care in 2022, and administrative costs account for about 30% of this. AI tools can also help to optimize hospitals’ adoption of home care practices aided by remote patient monitoring (RPMs) systems by utilizing AI foundation models to coalesce data from wearable devices, patient records, and call transcripts into a co-pilot to keep doctors abreast of patients’ vitals. There are further efficiency gains with hospital capacity command centers (CCCs) — air-traffic control type systems used by over 200 hospitals globally. CCCs utilize real-time data and analytics to better manage patient throughput. AI tools can improve the performance of such systems.

This article is meant to provide a brief snapshot of the current challenges faced by the healthcare industry, and how these challenges often work together to compound their effect, intensity, and impact on the healthcare ecosystem. In fact, Deloitte’s 2024 Life Sciences and Healthcare Industry Report highlighted similar findings and predictions for the coming challenges and how we can overcome them. Companies whose boards and management devise long-term strategies, innovate business models, and deploy technology to anticipate trends, will fare best.

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