Healthcare Transformation Is Driven by Local Factors

In a country with 50 different states and almost 10 times as many healthcare markets, every market is shaped uniquely according to the characteristics and conditions in the local area. Healthcare is undergoing a change in markets all over the country, but at varying rates.

Healthcare systems in the country are actively seeking to identify key factors that govern the change in market in order to assess where those markets are headed and how fast should the healthcare systems incorporate organizational changes to cope up with the change.

The factors involved are numerous, depending on the location of the market. Some examples of those factors include the level of organization among the providers, and product sophistication. There are also external factors at work, which include demand in the market, supply, pricing and the regulations imposed. Local demographics and economy are also among these factors.

Large cities like Atlanta and Denver are undergoing a rapid transformation. A common factor in these markets is a prevalence of vertical collaborations of physicians and hospitals, hospitals and payers and payers and physicians.

The Atlanta market has become more competitive and dynamic at a very quick pace. The main reason behind this is that there are several health systems that are working closely with payers to move toward value-based contracts.

Even in Chicago, vertical collaborations have been the key element behind the healthcare transformation. However, the change is not as fast as Atlanta’s. Healthcare providers in Chicago have been actively partnering with payers and other providers to change from a large free-for-service based structure to one based on shared savings and risk arrangements. These arrangements have shown a positive result on use-rates in the market.

In California, the scenario is somewhat different. The key driver of transformation in the state is nothing but the state’s own sophisticated insurance market. Insurers in the state have been able to offer products and reference pricing that appeal to employers. Insurers are also collaborating with hospitals and health systems which enable them to compete on a price with major integrated delivery networks.

The different factors that drive the change reflect the various approaches to healthcare reform around the country. Although some factors will always remain common everywhere, the best way to develop the most appropriate strategies would be to focus on identifying and understanding the unique local forces at work in their communities.

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