- From "Advisory Board," we are bringing you a "Radio Advisory," your weekly download on how to untangle healthcare's most pressing challenges. I'm Rae Woods.

- And I'm Abby Burns.

- 2024 was a big year for us, and frankly, for the healthcare industry. "Radio Advisory" had its biggest year yet. We released our 200th episode, surpassed 1 million downloads, even appointed a full-time co-host. We went on the road, we had amazing guests, and we pulled at so many strings to help you untangle your most pressing challenges.

- And there were definitely challenges. The majority of payers and providers this year were exposed to an unprecedented cyber attack. Hospital volumes and finances did start to bounce back, but that doesn't mean that margin pressures went away, and novel therapies and GLP-1s continued to take the market by storm.

- Not to mention the onslaught of healthcare announcements in the past few weeks, as the incoming Trump administration names its nominees and appointees for key healthcare leadership roles.

- There's no sign that things will slow down in 2025. So we wanna give you a sneak peek of what Advisory Board and "Radio Advisory" will be covering. To do that, we're gonna hand the mic over to five Advisory Board researchers to share what their teams will be diving into in the year ahead, and why. To start, I'll hand the mic off to health system service line expert, Kaci Platternburg.

- Hi, I am Kaci Platternburg and I study service line strategy and growth for "Advisory Board." Recently, my team and I have been having a lot of discussions with health systems about their service line management, and that's gonna continue into 2025. We know that service lines can be an essential and core function of any hospital or health system. They're really the foundation around which a lot of care delivery services are organized and delivered, and so rock solid management of them is absolutely crucial. This year, we've drawn out some common threads around how systems are running at shared priorities. These are things like increasing patient access and optimizing operational efficiency. We're also, of course, hearing about a lot of shared challenges. This could mean anything from desiloing care to striking the balance between standardizing processes across the system, versus customizing them based on the facility and market. So heading into 2025, my team will be focused on helping health system leaders solve some of their biggest service line management challenges. We're gonna explore the root causes that get in the way of successful and efficient service line management, and study the ways organizations are organizing and leveraging service lines to drive both profitability and growth. This might not always look like what you'd expect, and so we are particularly excited to dig into innovative growth ideas, especially ones that aren't the most typical or obvious approaches. Maybe they don't rest on the laurels of the highest revenue surgeries or even target the usual top service lines. We know that future health system growth will need to have an emphasis on sustainability due to continued margin compression and the changing mix of patient complexity. So we'll be paying attention to ways organizations are preparing for a future where outpatient growth is king and system misses table stakes. Stepping outside of service lines, we'll also be taking a look at how health systems are approaching capital spending. We'll share insights from our survey of over 100 health system financial leaders about how they're planning to deploy capital in 2025, and what's driving that decision-making. We'll be bringing all of these teachings on service line management and health system growth to several outlets next year, including written content for folks to access on advisory.com, as well as discussions at our summit events across the year. Hope to see you there.

- I'm Clare Wirth and I lead our value-based care research. Last year, our research answered this question, what does good look like in value-based care? So we developed a tool based on decades of Advisory Board research that paints the VBC landscape. We call that tool the VBC Self-Assessment, and I'll make sure that it's in the show notes. What it does is it helps provider executives to diagnose their progress in VBC and start formulating a strategy to get to their goal destination. When it came to defining that destination, we found a lot of leaders were hesitant. They were hesitant to deepen their VBC commitment because of a lack of consistently successful examples, particularly from health systems who have largely been left out of the VBC conversation. So this begs the question of how: How do a health system achieve the governance and vision, financial transformation, and clinical transformation necessary to generate meaningful cost savings and quality improvement? We've been on a hunt. We've been hunting for health systems deep in their VBC journey with an approach worth emulating. Not only did we find those organizations, but they gave Advisory Board access to their full leadership bench so that we could uncover the practices and tactics key to their success. They told us about how they won executive buy-in, how they integrated VBC into system level decision-making, how they negotiate risk-based contracts, how they develop productive partnerships with health plans, how they make VBC visible on their financial statements, how they make data analytics actionable for frontline care teams, and how they manage their network, including engaging specialists in VBC. We captured it all. Even the most advanced VBC organizations will learn from this research. In 2025, I'm excited to bring these in-depth, insight-rich case studies to our members. We'll have these at every Advisory Board summit next year, available on our website, available for virtual and in-person presentations. And who knows, maybe I can convince Abby and Rae to have us back on the pod next year to talk more about them. So if you wanna go from VBC dabbler to VBC powerhouse, stay tuned for some excellent research to make that happen.

- Hi, my name is Paul Trigonoplos. I'm the Director of Hospital and Health System Research at the Advisory Board. I mostly look at clinical operations. The topic that we'll be researching next year is care variation reduction. Now, you might be thinking, why is that the top priority for us to be researching next year? This is a topic that's been around for years and years, and for me, the interesting point that I wanna understand next year, and is why this is rising to the top, is we need to figure out what, if anything, is fundamentally new in how systems are approaching this evergreen problem. There's two factors at play, which I think get at this and make this an urgent topic to understand. First is the operating context of many providers. If we look back to 2018, 2019, which is the last time that we did substantial research here, the operating context is just different, right? Finances and margins are yes, recovering, but the waterline for cost is higher than ever. Systems are gonna be looking to root out any inefficiencies they can find. And it's also worth noting that there's been a lot of mergers and acquisitions since 2018 in the industry. And most of the integration, if any that has happened, sort of stopped at the back office efficiency front. We're hearing a ton now about how organizations are looking to shift from being a holding company to being an operating company. And clinical standardization and CVR are critical pieces of work to do as a system to accrue that benefit. The other shift that has happened is kind of the venue or the theater of where variation opportunity exists and how different this looks compared to 2019 or 2020. First, ambulatory, right? For the median system, ambulatory makes up over half of their revenue. CVR back in the day was an inpatient priority. Now you have much more opportunity on the outpatient and ambulatory side, and I don't think systems are prioritizing this enough. There's also been a shift in how we treat patients, right? Moving away from DRGs and sort of towards something like disease clusters or integrated pathways for more complex patients, that needs a different approach to reducing and identifying variation. So when it comes to the questions we'll be asking next year, first, again, anything fundamentally new in how systems are approaching this problem. And if there is anything new, right, what is making those things work? And second, not only what is the end goal, right, but what is the pathway that systems can take to get to that sort of advanced stage? What are the steps they can take? And for me personally, the thing I'm actually most excited about is AI, right? A lot of systems are using AI to solve a litany of problems and CVR's certainly on that list. We're already hearing about organizations using AI to identify very small and nuanced variation, whether that is on a pathway or length of stay approach, or whether that's clinical variation or supply spend, you name it, right? I think we'll be looking for the evidence and the use cases there as well.

- We'll be right back with more "Radio Advisory" after this short break.

- As healthcare becomes increasingly complex, organizations require leaders who can expertly navigate and adapt to rapid changes. The Advisory Board Fellowship is an immersive leadership laboratory and practice ground where leaders are challenged and supported by diverse industry peers, world-class faculty and executive coaches. Participants tackle pressing challenges, gain fresh perspectives on advancing critical priorities, and enhance their decision-making capacity to fulfill their organization's purpose. Visit advisory.com/fellowship or click the link in our show notes to learn more.

- Hi, I'm Ty Aderhold, and I lead our digital health and AI research here at Advisory Board. To regular listeners, it will come probably as no surprise that I will be studying AI in 2025. It's been my main area of focus for the better part of two years now, and that's not changing. What is changing, however, is the focus of this AI research. We're launching a new research study specifically focused on how AI will change clinical and coverage decision-making. Study is gonna focus on how AI could potentially better inform these decisions that are being made and make these processes more efficient. But before I get too far ahead of myself, I wanna note the emphasis on potentially. These benefits are not a given. And in fact, if we continue down the current path of payers, providers, and life sciences organizations investing in AI for these purposes really in silos, I don't think the industry is gonna see those benefits. Instead, we're just gonna have clinicians avoiding AI supports at the point of care, and then bots fighting bots over coverage decisions on the backend. That is why I think this research is so important. Right now, or still relatively early days in the terms of the use of AI and these processes, we have a chance to use this technology to transform and improve these processes, but that won't happen if the industry doesn't work together, and it won't happen if we just throw AI powered automation at the current bad processes. So to figure this out, we're gonna be asking a wide range of stakeholders about their current investments in their space, their future plans, how they're working with the partners and the barriers they face in doing so. And we'll be looking hopefully for stakeholders who are working together to transform these processes with AI. We're also gonna be pressure testing potential future scenarios in this space, trying to understand the different possible futures that could exist, and what decisions or actions could lead to thoes futures. And frankly, that's what I'm most excited about with this research, looking at not just at the investments in AI or the process improvements along the way, but looking at the potential consequences of those investments and what they could mean for the future of these complicated multi-stakeholder decisions around clinical care and around coverage.

- Hey everyone, my name is Chloe Bakst, and I'm a research consultant on our Life Sciences, Pharmacy, and Diagnostics team. In 2025, our team is going to be digging deeper into trends around specialty pharmacies, focusing on how providers and health plans are deploying their integrated pharmacy assets to achieve their strategic goals. And I'll be honest, I have been talking to you all about drug costs for a while now, and it doesn't look like we're gonna stop anytime soon. So let me quickly summarize three big takeaways that Advisory Board has uncovered in our past drug market research. First, we're moving from a healthcare system defined by costs associated with procedures to one defined by costs associated with drugs. Surgeries are getting less expensive while drugs are getting more expensive, and sometimes drugs are even taking the place of surgeries. Here, the latest example is, of course, how weight management medications are impacting bariatric surgery services. Second, the way that we currently pay for and deliver drugs is rife with questionable incentives. Sometimes it's unclear who actually wants to lower drug costs, aside from employers who are crying out for change. And the third point, and perhaps the most important, is that healthcare leaders are often overlooking the role that their pharmacy assets can play in achieving strategic business goals. And I wanna zoom in on what I mean by strategic business goals, because this is where our research is heading next. We've been talking for a long time about how specialty pharmacies are often the unsung lifeblood of hospital finances and revenue engines for PBMs as well, but the specialty pharmacy landscape is changing. Growing competition and tensions in the market, increasingly niche drugs and distribution networks, challenges like 340B, and new regulations are shifting the specialty pharmacy playing field. Yet that focus on specialty pharmacies isn't going away. In fact, it's changing to be even more strategic. Our conversations with provider and plan leaders have shown us that they are starting to recognize the potential of integrated pharmacies to support success in a risk-based healthcare environment. In other words, leaders are starting to think about how well-managed pharmacy assets can drive down costs and support their value-based contracts. Roll the tape forward five, 10 years, and maybe we're in a world where pharmacy is automatically part of any value-based contract. We want to know what do leaders need to be doing now to be ready for that future. Stay tuned in 2025 for research that will go beyond naming all the things that make specialty pharmacy strategy hard, and instead, call out the ways that having the strategy can be transformative for the future of your health system.

- I hope this gave you a flavor of what Advisory Board research has in store for 2025. And if I'm honest, we're still only scratching the surface on what we'll cover. Because remember, as always, we are here to help. Next week on "Radio Advisory." We are officially in the full swing of 2025, and I don't know about you, but it feels like this year has started off at a sprint. We're gonna focus on three areas in particular. We're gonna look at the upheaval in the Medicare Advantage market, the controversy around drug spend and PBMs in particular, and we're gonna talk about data, which has become one of the most important strategic assets healthcare organizations have, but arguably also their biggest security risk. New episodes drop every Tuesday. "Radio Advisory" is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Abby Burns. The episode was edited by Katy Anderson, with technical support provided by Dan Tayag, Chris Phelps, and Joe Shrum. Special shout out to our amazing team of producers, Chloe Bakst and Atticus Raasch. Additional support was provided by Leanne Elston and Erin Collins. See you next week.