When the first Baby Boomers turned 65 in 2011, there was a lot of concern about how the aging of this large generation would impact the health care industry. There were bold predictions that the payer mix shift would bankrupt provider organizations and plans would be unable to survive after seeing so many enrollees shift to Medicare.
Ebook: Caring for America’s aging population: Opportunities and future challenges for industry stakeholders
We're now a decade into the Baby Boomer generation turning 65, so it's a good time to evaluate how the industry has adjusted. We looked at some of the main stakeholders to see what the impact this aging population has had on their business:
Stakeholders who saw a positive impact took a proactive approach
Pharmaceutical, medical device, and health plans have all benefited from the influx of older adults because they proactively adjusted their business models to the anticipated use of medication, insurance, and other technological tools. Longer lifespans have contributed to the prevalence of degenerative diseases, so there has also been more research and investment going into this space.
Health plans saw Medicare Advantage as an opportunity to keep older adults as members after they were no longer on traditional commercial insurance plans. This proactive approach solidified incumbent players' market shares and made it easier for them to contend with new entrants.
However, just because these stakeholders have experienced positive outcomes now, doesn't mean that they will remain top performers. There has been scrutiny surrounding innovations and financial gains. There's concern over the price of drugs, especially for the novel treatments that have limited evidence of efficacy. Also, there's concern that insurers are gaming risk adjustment practices to inflate profits.
For several industry stakeholders, the aging population hasn't yet caught their bottom line
The influx of seniors had neither a positive nor negative impact on hospitals, physicians, and digital health companies. Why? For the provider organizations, the payer mix shift simply wasn't as impactful as originally imagined. Hospitals have performed more procedural care and physician groups have explored risk-based arrangements, offsetting payment cuts from treating more Medicare patients.
Over time, these stakeholders have become aware of the increased complexity of the older population. Providers are finding that they need more time with an older patient to adequately assess their care needs. They will have to rethink and scale methods that deal with higher risk patients.
Also, more patients want to age-in-place. There are opportunities for health systems, physician groups, and digital health companies to rethink their models or tools to allow seniors to live independently at home, for as long as possible.
Negative impacts were likely due to outdated and reactive models
Post-acute care providers and Medicare are in a precarious situation. Given existing structures, financing mechanisms, and staffing pressures, these stakeholders have been forced into a reactive approach to the growth of the older population. They are operating in a complex and outdated regulatory landscape, which has created affordability and solvency challenges.
Also, more than any other stakeholder group, post-acute care has faced stigmas due to their lack of investment, resources, and support.
What about older adults themselves?
Most industry leaders would argue that the way we care for older adults is falling short. And the data backs that up. Size of the population is only one part of the equation—by 2025, there will be more than 65 million Americans aged 65 and older, which will surpass the number of children age 13 and younger for the first time.
Most of the issue revolves around the fact that senior's needs and health profiles have changed over time and we are using outdated models to pay for their care. Nearly 45% of Baby Boomers have no retirement savings at all, and even though most are enrolled in Medicare, they are challenged with high out-of-pocket costs associated with premiums, deductibles, and co-insurance.
However, most challenging of all are the societal stigmas against how we view older adults and the aging process. But there is hope that we are making progress, and that if we work together as an industry, we can address some of our shortcomings.
To hear more from industry stakeholders, check out Are we failing America’s seniors? Here’s what industry executives have to say.