The healthcare industry is never static. From new innovations to ever-changing regulations, the landscape of this space is always different year to year. In 2022, we saw a reset following two years of significant hardships for hospitals and health systems brought on by the pandemic. And while we're likely to never return to life as it was prior to 2020, in many ways, COVID-19 improved the way providers deliver care both for patients and their health systems.
While there's no way to predict exactly what will happen across the healthcare space in the year ahead, our attorneys and government relations professionals are connected and tuned in to upcoming trends around the nation. We see a number of key issues to keep a close eye on in 2023. Here's what we'll be watching:
Mergers & Acquisitions
Over the past few years, the volume of health system transactions has shrunk as a natural function of consolidation and the market environment in general. However, the size of deals in the healthcare space has meaningfully increased. We expect to continue seeing for-profit and commercial entities trying to make their way into the industry and disrupt the space.
For hospitals and health systems, it's no longer about size and scale like it was a decade ago. Now, the focus is on innovation and accessing new capabilities, services and intellectual property. As those in the industry know, some of the most profitable services have also been pulled away from the health systems and into outpatient settings. We expect that trend to continue.
Interestingly, all of this is being done with structures that are not the standard change-of-control member substitutions. Rather, we are seeing more specialized joint ventures, minority-interest transactions, ACOs, CINs, and other value-based arrangements. Systems have been seeking partnerships across a broad range of patient care and support services that add new core capabilities, enhance intellectual talent, and increase consumer choice. In 2023, that will be no different.
With costs continuing to rise, the pressure to find a larger partner will continue to be felt by independent hospitals, smaller health systems, and independent physician groups. However, the Federal Trade Commission (FTC) will maintain its laser-focus on and aggressive stance against providers seeking to merge, including against large physician groups being acquired by a health system, particularly when the physician group is the largest or only group in a geographic area. The FTC, the agency primarily responsible for investigating healthcare transactions from an antitrust perspective, will also continue its advocacy work at the state level. In 2022, the FTC issued a general policy paper warning about the anticompetitive effects of Certificate of Public Advantage (COPA) agreements. It followed up with a comment submitted to the New York State Department of Health opposing a request by a health system for a COPA. Given the FTC's focus on using antitrust laws to protect employees, the Administration is likely to more closely analyze effects on hospital workers – physicians, nurses, and staff – as a result of any transaction in the year ahead.
Real estate investment trusts (REITs) and private equity are anticipated to have a larger involvement in long-term care, skilled nursing and senior living in 2023, particularly as staffing challenges are becoming less significant than they were during the height of the pandemic. The federal government's efforts to enact minimum staffing levels will likely put even more labor pressure on providers.
Immigration and Healthcare
As previously predicted in our recent immigration blog article, some employment-based permanent residence categories became oversubscribed in January 2023, leading to a backlog for certain foreign national physicians and other allied medical professionals. This emphasizes the need for healthcare providers to explore viable temporary visa options, such as the H-1B professional visa, for workers who are subject to the permanent residence backlogs. Healthcare providers that are not exempt from the annual limit on H-1B visas should consider participating in the H-1B registration process, which will begin in March 2023.
U.S. Citizenship and Immigration Services (USCIS) has also just proposed a rule that, if implemented, would increase certain government processing fees for applications and petitions, including commonly utilized employment-based processes for healthcare professionals. The public may submit comments to the rule during the 60-day period which began on January 4, 2023.
On the positive side, USCIS is expected to continue expanding Premium Processing – its expedited processing service – to additional application types in 2023. This projected expansion should improve the processing times for certain immigration processes and applications relevant to healthcare professionals and staff.
Coming out of the pandemic, the acceptance of telehealth has driven a massive increase in adoption and led to tremendous innovation across the entire healthcare industry. With telehealth replacing certain in-person visits, patients are becoming more empowered by increased choices, and burdens on hospitals and health systems have been reduced. In 2023, we will likely see usage of telehealth services continue to increase, with a particular focus on behavioral health. Additionally, we expect healthcare providers to explore newer ways to creatively deliver care in a way that avoids provider burnout and hospital closures and protects the patient care experience. With the increase in data-driven healthcare, we further anticipate that tech companies will continue to invest in telehealth – both on the technology and provider side – though market forces may impact the timing and scope of these investments.
Artificial Intelligence (AI) is a powerful tool that has the potential to help solve some of the biggest challenges facing the healthcare industry while also ensuring quality patient care, decreasing costs and reducing potential liability for practitioners. In 2023, we will likely see an increased focus on the development of more ethical and understandable AI – both for patients and providers. Since AI is already the main driver of emerging technologies like big data and robotics, it is important that physicians understand how AI works, so that they can disclose to patients the ever-evolving nature of the technology being used, explain how the AI system works to their benefit and share the level at which the technology was relied upon when determining courses of treatment. In the year ahead, we will also likely see a trend in developers gathering appropriate data from the population at large rather than using historical data or common benchmarking, which has been shown to deliver biased data that leads to biased outcomes.
After several extensions of the COVID-19 Public Health Emergency (PHE) declaration – most recently in October 2022 – it is very likely that in mid-January the federal government will finally declare the end of the PHE. In 2023, stakeholders in the healthcare industry should be particularly mindful of those Stark-related PHE waivers that were declared at the beginning of the PHE, including waivers involving compensation, recruitment and sanctions. We expect 2023 to be the year where the Centers for Medicare & Medicaid Services (CMS) further develops its value-based and center-based arrangements, and hopefully provides more guidance on the existing Accountable Care Organization (ACO) Realizing Equity, Access, and Community Health (REACH) Model.
If early trends are any indication, 2023 is looking like another critical year for the U.S. healthcare industry. At Buchanan, we have a multi-disciplinary team of attorneys and government relations professionals who are focused on the healthcare industry. They bring decades of experience helping clients and currently represent a significant number of the top not-for-profit and for-profit hospitals and health systems across the country, as well as post-acute, long-term care, assisted living, senior living, home health and hospice care facilities; ambulatory surgical centers; physician practices and faculty practice plans; ACOs and clinically integrated networks; health technology companies, and behavioral health providers and addiction treatment centers. We maintain regular communication with regulators, lawmakers at the state and federal level, and leaders from across the industry to ensure our clients are in the loop on the latest trends and headwinds that will affect providers and payors alike.
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