Editor’s note: This article is part of a larger report, Healthcare’s $1 Trillion Challenge, which provides a roadmap for creating a more affordable and sustainable healthcare system. In this article, we look forward to see what’s possible by 2035 if the industry works collaboratively to cut $1 trillion in spending. Discover more chapters on lowering clinical labor costs and curbing the impact of growing drug costs.

Viewed in totality, this report lays out a path for a more sustainable healthcare system that delivers on outcomes, access, and affordability for everyone. Each of the dimensions we analyzed will require years-long process changes across many organizations. Some will require structural or regulatory moves to unlock the full opportunity. But many of these processes are already underway in pockets, illustrating the potential for change and the savings opportunities at the industry’s disposal.

Rethinking strategies for scalable savings in US healthcare

Achieving savings at scale requires industry stakeholders to rethink operational and strategic decision-making processes. It can be immediate things like replacing a retiring primary care physician with an advanced practice provider (APP). Or bigger investment decisions like shifting away from another inpatient bed tower in favor of lower-cost settings or advancing technology solutions to improve productivity that overhaul legacy systems. Changes to research and development (R&D) are also necessary — not just getting a new drug to market but delivering material clinical and cost value.

This endeavor won’t be easy or comfortable. But taking these actions today will be rewarded in the future. As cost pressures become more acute, organizations with a lower cost structure will be able to compete more effectively, attracting new volume and maintaining profitability.

Transforming healthcare in America for a better future

As the healthcare industry begins to lean into each of these disruptions and transformations, foundations and momentum for a better future can be established:

Enhance care continuity through efficient delivery models

As care migrates to lower-cost, more efficient modes and locations, the convenience, access, and acceptance by clinicians and patients will grow. If that migration can be accompanied with connectivity and integration, we can increase care continuity. Payers and regulators will need to keep pace in enabling and incenting these shifts so that the investment in lower-cost delivery is at least as economically sustainable as the health system is today.

Redesign clinical roles for a sustainable healthcare future

The industry will not be able to meet the dual pressures of cost and labor shortage by gradually standardizing or automating current processes. Roles need to be redesigned to collapse and reconfigure steps from diagnosis to treatment. This offers the dual benefits of a more efficient patient experience and a more rewarding and sustainable practice for clinicians. Here, too, the professional and regulatory frameworks for training, licensing, and practice scope will need to adapt, respond, and ultimately enable these changes to have meaningful impact.

Streamline administrative processes for improved efficiency

The administrative processes required to operate the healthcare industry have developed into a web of complexity, unnecessary variation, and fragmentation. So far, technology and improvement efforts have focused on individual pieces of this web. The next 10 years need to emphasize standardization, integration, and connection across the entire system. Reducing unwarranted variation, creating direct system-to-system automation, and narrowing the use of expensive (human) resources to the most value-adding roles each can reduce friction, increase efficiency, and remove frustrations for users of all types.

Transform pharmacy into an integral component of healthcare spending

Instead of being viewed as an ancillary service, pharmacy needs to be viewed as an integrated component of medical spending. The industry needs to demand material clinical benefit and long-term cost outcomes from new drugs. As drug spending increases, medical spending for related conditions should begin to decrease. Organizations need to rely less on undifferentiated profits pools like 340B, or hidden pharmacy benefit manager fees, and explore new payment and delivery models, including consumer-directed and outcomes-based efforts. With pharmaceutical companies playing a larger role throughout the care journey, payers and providers need to test new partnership opportunities.

The path to affordability in healthcare is within reach. Large incumbents will need to commit to transformative ambitions, and innovators need to push the envelope on what’s possible in targeted market segments. This is not just crucial to address the pressing need for affordability, it will also be a key indicator of organizations’ future success in the market.