2. Pharmacy steals the population health spotlight

For commercial populations, many insurers and employers now spend more on pharmacy than on hospitals. Pharmacy costs are growing at over six percent annually – faster than US healthcare costs overall. The “population pyramid” for pharmacy costs is also very different, with one percent of the population accounting for more than one-third of pharmacy costs. The industry needs a different approach to population health management than traditional care models focused on keeping people out of hospitals. Big players acknowledge this – it’s why, in recent years, we saw Cigna buy Express Scripts (now part of Evernorth), CVS bring together Aetna and Caremark, and many health plans invest significantly in pharmacy cost management capabilities. In 2021, we’re going to see continued steps towards greater medical-pharmacy integration and new approaches to managing pharmacy costs.

3. Virtual care winners and losers start to shake out

In the thick of the pandemic, we saw record growth in telehealth utilization. At their peak, telehealth visits for Medicare beneficiaries were up from 13,000 per week to 1.7 million per week, due to both increased consumer demand and sudden changes in reimbursement. Although numbers are now coming down, most systems expect 20 to 50 percent of visits to be delivered virtually long-term.

Due to this normalization of virtual care, pure-play telehealth companies saw sky-high valuations in 2020. But just offering a “video visit” won’t be enough to remain differentiated. To maintain their valuations and differentiate, virtual health companies are going to need to build superior consumer experiences, better data-based insights, more specialized care, and continuous engagement and condition management. This is why we saw deals like Teladoc-Livongo and Amwell getting a strategic investment from Google. We should expect to see more such activity in 2021, with virtual care winners and losers starting to shake out as a result.

4. Hospitals feel the squeeze

Hospitals were hit hard by the loss of elective procedures during the pandemic. But volume seems to have recovered in most places. The new challenges in 2021 will be a shift to government-paid and uncompensated care associated with unemployment (and as people come off COBRA), new pressures from price transparency, and increased government scrutiny of mergers and acquisitions. To survive, health systems must address the underlying cost (not price!) issue and embrace partnerships, less labor-intensive models of delivering care, and right-sizing supply. Primary care can no longer be a loss leader, either – systems need new models to make it sustainable.

5. Big tech makes missteps – but then recovers

Amazon, Google, Apple, Microsoft, and Facebook have all been making major inroads into healthcare. That said, we’ve already seen some missteps. And we’re sure to see more, especially given big tech’s reputation regarding privacy (already, a reported one in three Americans refuse tracking on most apps). Inevitably, at least one major tech company will do something with health data that causes controversy – and maybe even regulatory intervention. It will be tempting to dismiss big tech’s healthcare efforts as a result – but do so at your peril. They will keep trying until they get it right, and they’re already in consumers’ pockets, purses, and homes.