January 2023 – In this issue of Gibson Talks, Patrick Convery, Media Director for MRi, sat and talked with Jim Gibson, Founder and President of Gibson Consultants, about the current talent shortage in terms of locating, securing and retaining top talent specifically in the business of healthcare industry.
Jim: I would say we probably have the most acute talent shortage ever. There are a number of reasons for that, but to understand it, you have to look at healthcare from the big picture standpoint. For the past 10 years or 12 years, actually, healthcare has been going through a state of radical transformation. Whether you’re talking about the hospitals, the physicians, health plans, the suppliers, the whole ecosystem is being radically transformed and it’s going to keep going on like that, in my opinion, for several years.
There are new business models that are being adopted. The new business models demand new people. It’s like the mindset, the people that got us here are not the people that we need going forward. So that has created demand. one of the things for us as a firm, is that because one of our two domains is technology, healthcare technology companies, all the new business models are incorporating technology as a foundation. So there’s even increased demand for that. If you recall earlier I said our two domains are digital health or technology companies in healthcare and health plans. And I said that the lines between those two are blurring, and that’s a good example. New business models are using technology as a foundation, but everything about healthcare is being radically transformed. The way that providers, doctors, and hospitals work is completely different from what it used to be. It used to be that you as a patient would go see a doctor to get treatment for accident or illness, and then the doctor would submit an invoice to the payer, whether it be Medicare, Medicaid, or a health plan after the fact.
The new business models now are paying the providers in advance without knowing yet what kind of care has to be given. They’re paying them in advance and not to address accident and illness, but to move the patient population, all the patients in that provider’s population into a better state of health, and that’s widely referred to as population health. So a provider gets paid to to move the patient population to a better state of health. That changes the whole game. That changes everything. Everything about the way medicine is practiced. It changes the way the health plans interact with the providers. For many years now, most people have gotten their healthcare through panels or networks of providers. Those networks are groups of hospitals and physicians and other providers that are contracted with a payer with a health plan. That relationship has always been adversarial. The providers want to get paid as much as they can, and the health plans want to pay as little as they can. So it’s been a butting of heads. But under the new model, it’s collaborative. They work collegially to come up with an arrangement where both parties win. That’s so different from what’s always gone on. These payer provider partnerships. It’s new stuff.
Then there are other impacts of the changing business models, payers are buying provider practices. There’s a lot of consolidation on the provider side. Now, some of that was driven by the hit they took fiscally from covid. But some of it, a lot of it is also because of the new approach, the new arrangements that we have/ these collegial arrangements between provider and payer.
Another thing that has really had an impact on the demand for labor is that so many startups have been funded for the past few years. So if you think about it, interest rates were pretty much at zero for a long period of time. And the companies that invest in healthcare startups, the private equity firms, the venture capital firms, they had money that cost them. So they had a lot of money to invest, and so it became a supply and demand mismatch, and they were all chasing better and better returns. What happened was that it drove up valuations of companies. Many companies got funded. Whether it was, their seed funding or the series A or even the follow up rounds. A lot of people believe some of those companies shouldn’t really have gotten funded in the first place. But there was so much money chasing investment, so so many companies got funded. It was a land grip. When you have all these companies that are now getting an infusion of cash to invest in their company. One of the places they’re investing a natural place to look is in people. And so you have demand created by that supply demand mismatch where so many companies have gotten funded. They all need to go recruit people. And then you have the fundamental business models being torn inside out, creating a need for new people with new skills. So there’s been a demand for people that’s been a talent shortage across most industries across the economy. But I would submit that it’s probably been more acute in healthcare and it still is.