Healthcare executives are bullish on the financial performance of their own organizations looking into 2019, but they are less enthusiastic about the sector as a whole, according to a recent survey from J.P. Morgan.
On the national economy, 71 percent of respondents were optimistic, but just 41 percent said the same about the healthcare industry’s performance. Another 28 percent were pessimistic about the industry’s performance, but 62 percent were optimistic about their organization’s performance.
The biggest concerns among executives were revenue growth, rising expenses and labor costs, the survey found. Other concerns included regulatory requirements and changes, talent shortage, the competitive environment, managing data and technology requirements and development.
The concerns are reflective of the current environment, according to Will Williams, managing director and industry executive for the Healthcare Middle Market Banking group within Commercial Banking at J.P. Morgan.
“Healthcare is going through the most transition of any industry in the country right now,” Williams said in the report.
The shift from fee-for-service to value-based care has hit the industry hard, and executives are quickly adapting for success. Those feelings of optimism are likely due to the sense that individual organizations can adapt to industry changes.
“Healthcare industry leaders are operating in a challenging environment, but they’re taking the necessary steps to plan for success,” Williams said in a statement. “The industry is seeing a shift to value-based care and navigating a changing regulatory environment. Despite uncertainty, executives are planning to make strategic investments to capitalize on potential growth opportunities.”
With these challenges, executives are focused on growth strategies, with attracting new patients being a top priority for 61 percent of respondents. The focus on patients may reflect changing consumer preferences.
“You can shop for healthcare like you would a new pair of jeans,” Jenny Edwards, commercial banker in the healthcare practice at J.P. Morgan, said in a statement.
More than half also cited expanding target markets as a top strategy, while 44 percent pointed to expanding or diversifying products and service offerings. Another 42 percent cited joint ventures or strategic partnerships and 26 percent said mergers and acquisitions were top growth strategies for 2019.
However, growth could be difficult amid a talent shortage, and 92 percent of executives stated they were at least somewhat concerned with finding the right candidates for roles. For more than one-third of respondents, talent shortage was one of their top three challenges.
The most challenging positions to fill included:
- Physicians (52 percent)
- Nurses (46 percent)
- Other healthcare professionals (38 percent)
- Mid-level management (29 percent)
- Administrative positions (21 percent)
- Senior management (18 percent)
The problem is also compounded by issues of burnout among healthcare professionals.
Fortunately, many executives are willing to make the necessary investments for growth strategies, including 44 percent who plan to invest in physician recruitment. Just over half plan to invest in IT over the next 12 months, while 36 percent will invest in new or replacement facilities.