Managed Care Executives Should Look Outside to Address Macro Healthcare Challenges

Gary Mangiofio, Ph.D., of Pepperdine Graziadio Business School, makes a case for outsourcing.

Managed care organizations are rightfully focused on making incremental changes to lower costs and improve care. Stakeholders such as Medicare, patients and regulators expect managed care to maintain focus on near-term, step-by-step improvements. By vigilantly analyzing trends and cost structures, managed care makes an impact on access, care and costs.

However, big-picture macro issues are driving significant change in the healthcare landscape and creating risk for managed care. These macro issues are already exerting pressure on overall management and day-to-day operations, such as contract administration and pharmacy benefits. Managed care must seek solutions to the bigger issues facing the healthcare industry.

While outsourcing is not the end-all solution, it is a critical ingredient for navigating transorganizational opportunities to improve the healthcare ecosystem. Outsourcing brings in capabilities, scalable personnel, technology, experience and technology.

Here are five macro issues facing managed care and thoughts on how outsourcing can help address them:

Overdose prevention

The U.S. Commission on Combating Synthetic Opioid Trafficking recently estimated that overdoses now cost the U.S. approximately $1 trillion annually. The same report also revealed synthetic opioids — primarily fentanyl — were responsible for almost 2 in 3 reported drug overdose deaths in the U.S. The costs of drug overdose, especially from fentanyl, are exacerbated because there are too few drug overdose prevention counselors. According to the U.S. Bureau of Labor Statistics, the need for drug and alcohol counselors is expected to rise by 23% by 2031. Already, private call centers are picking up the slack with crisis counselors. Managed care should invest in outsourced call center staff to help people in crisis.

Mental health

According to the Association of American Medical Colleges, at the height of the pandemic, 40% of adults reported symptoms of anxiety or depression — compared with 11% pre-COVID.

Within a few years, the country will be short between 14,280 and 31,109 psychiatrists, on top of a pervasive scarcity of psychologists and social workers. To address this shortage, mental health services provided via telehealth have emerged as a lifeline for thousands of patients who would have otherwise not received treatment. According to the Kaiser Family Foundation, at its pandemic peak, roughly 40% of mental health outpatient visits between March and August of 2020 were via telehealth (up from a pre-pandemic 1%). Mental telehealth services from outsourced providers must be integrated into a systematic managed care if the U.S. is to make any progress in addressing the mental health crisis.

Data privacy and modernization

According to the market research firm Fortune Business Insights, the global data privacy software market is projected to grow from $2.36 billion in 2022 to $25.85 billion by 2029, a staggering 995% increase. One of the top concerns for managed care is how to handle personal data in compliance with data protection laws, regulations and general privacy best practices.

Even with news of layoffs in the tech industry, many enterprises have unfilled privacy positions. About one-third (34%) of data professionals said this was the case according to a recent survey from the Information Systems Audit and Control Association). Not addressing data privacy and modernization will result in extraordinarily high costs in cases of lost or stolen data. Data privacy specialists are the only realistic way for managed care to build the dynamic capabilities to address this need.

Health equity

In the U.S. many marginalized minority groups and lower-income patients do not have access to nor receive the same level of care as their white, more affluent counterparts. According to consulting firm Deloitte, health inequities in the US health system cost approximately $320 billion today and could eclipse $1 trillion in annual spending by 2040 if left unaddressed. Consulting firms are investing in collaborations with medical schools and nonprofits as well as data analytics to address disparities in health. Management consulting firms in particular are well positioned to pool the talent and resources to examine conscious and unconscious racism and bias in the health system. Managed care systems should also consider how changes in population health management strategies could improve these disparities.

Environmental health

Each year, millions of people in the U.S. and around the world are at risk from environmental stressors such as pollution, climate change, under-resourced infrastructure, microbe-born infectious diseases, and poor water quality. Organizations such as the Centers for Disease Control and Prevention (CDC) promote a healthy environment and prevent premature death, avoidable illness, and disability caused by non-infectious, non-occupational environmental and related factors. However, to address widespread occurrences of hazards and disease, countless highly skilled and experienced professionals will need to be deployed. The recent COVID-19 pandemic accelerated the need for quickly scalable teams of professionals including consultants to work in laboratories as well as spend time in the field gathering data and monitoring environmental conditions firsthand. Managed care organizations are not organized to address these hazards but outsourced environmental risk management services are well suited for these tasks. Are there potential partnership possibilities in this ecosystem that could improve these situations?

To be certain, establishing an outsourcing relationship with service providers in managed care is not new. Recruitment, bookkeeping, marketing and billing are already entrenched in healthcare delivery outsourcing.

As Medicaid continues to transition away from a fee-for-service payment and delivery system to one that relies on risk-based managed care, macro issues will have an outsized impact on healthcare overall and managed care specifically.

It is almost guaranteed that outsourcing providers within the healthcare ecosystem will be needed to help bridge the challenges from incremental to large-scale change. The time to engage is now.

Gary Mangiofico, Ph.D., is an executive professor of organizational theory and management at Pepperdine Graziadio Business School in Malibu, California.