How will healthcare change in a post-COVID-19 world? In this video, L.E.K. Managing Director Andrew Kadar discusses shifts in three enduring trends, including care in the home, migration from fee-for-service to value-based care and the increased focus on behavioral health.
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Read a transcript of the video below:
COVID-19 was really a massive step change in healthcare that drove a number of sub-sectors of healthcare forward, 10 plus years.
Three major trends we're even seeing, outsized activity, is number one, the shift toward care in the home and all the care modalities that go along with that, number two, the shift from fee-for-service to value-based care, and number three, the ongoing professionalization and investment in behavioral healthcare.
One of the interesting things about this new post-COVID world is a lot has shifted toward the home with new technologies. And the real question, one of the major questions will be: what exactly sticks? We do not think that these trends are a flash in the pan. We think they're are durable, lasting impacts of COVID and they will continue.
When you think about the first one, the shift toward in the home care, this has been a decades long macro trend moving care away from the acute care hospitals into less expensive, more patient friendly environments. And with COVID, the technology advancements have really enabled this to take all new levels of care into the home--whether it's home health, traditional home health, whether it's synchronous telehealth that everyone hears about and the headlines or asynchronous telehealth, so kind of chatting or the provider responds afterwards. That's actually a lot more efficient for the providers. Even hospitals are providing hospital at home services in the home. And what's happened here is that providers have experimented with care and they realize that it's working.
The shift from fee-for-service to value-based care is another trend that's been going on for decades. And one of the aspects of COVID is that doctors who were receiving value-based care payments did pretty well because they got the payment. Even in an environment where patients were not receiving a large amount of care, especially elective procedures, and so providers who were ahead of the spectrum and receivers of receiving value-based care during this time did very well. Providers that were stuck in fee-for-service did not do so well. And so now the fee-for-service providers are really coming around to recognize the need for value-based care, the need to join scaled organizations so they have the capabilities and the size to take on risk and that is leading to a lot of investment in the space and rapid expansion that won't go away.
The last trend, the focus on behavioral health, is an acute crisis in America where demand far outpaces supply in almost every sub sector within behavioral health and that's not going away. And so as a result, the sector justifies a lot of investment in professionalizing the providers, leveraging mid-levels, and leveraging technology in the right places to provide additional and improved patient care along the spectrum of needs.
Private equity firms who invest in health care services or who are thinking about investing in healthcare services, the ground has shifted in healthcare services. And that has implications for their portfolio companies go forward strategy or for new investments as private equity firms assess in careful detail what trends will be lasting, what will be short-lived, and that often varies by geography, it varies by type of company, and it varies by the company themselves. They can identify undervalued and potentially overvalued sectors for investment.