The Biggest Growth Opportunities in Healthcare

https://www.managedhealthcareexecutive.com/healthcare-leadership/biggest-growth-opportunities-healthcare?rememberme=1&elq_mid=5658&elq_cid=876742&GUID=A13E56ED-9529-4BD1-98E9-318F5373C18F

Healthcare growth opportunities for 2019 should pivot around the three big themes: digital transformation, value-based care, and patient-centricity, according to a new report.

According to Frost & Sullivan’s report, “Global Healthcare Market Outlook, 2019,” digitization of products, services, and commerce models are democratizing current healthcare systems, manifesting a new era of healthcare consumerism.

“Now the new vision for healthcare is not just about access, quality, and affordability but also about predictive, preventive, and outcomes-based care models promoting social and financial inclusion,” says Kamaljit Behera, transformational health industry analyst at Frost & Sullivan, and author of the report. “This makes digital transformation and realization of long-pending policies reform a key growth priority for healthcare executives and major health systems during 2019 globally.”

According to Behera, increasing pricing pressure and shifting the focus of the healthcare industry from a volume- to value-based care model demands that drug and device manufacturers elevate their business models beyond products to customer-centric intelligent platforms and solutions.

“In 2019, the healthcare market will continue to transit and stick into the value-based model,” Behera says. “More sophisticated outcomes-based models will get deployed in developed markets, and emerging nations will start following the best practices suited to their local needs.”

Despite the promise of digital transformation, the potential promise and actual commercial application still remain the poles apart from some of the most touted technologies like AI and blockchain, according to Behera.

“Current technology is often perceived to increase the barriers between patient and providers,” he says. “In order to bridge these gaps, healthcare executives need to change the debate around digital transformation and start look beyond the mirage of technology novelty and really focus on the outcomes.”

Behera predicts that these five areas will be the biggest areas of growth for healthcare in 2019:

1. Meaningful small data

Healthcare data analytics focus will shift from ‘big data’ to ‘meaningful small data’ by hospital specialty, according to Behera. “Increasing digitization of healthcare workflows is leading us to a data explosion along the care cycle, globally,” he says. “This makes insights generation from existing healthcare data for targeted use cases a relatively low-hanging opportunity relative to other emerging technologies. Additionally, health data being the ‘holy grail,’ the analytics solutions are considered the first foundational step to catalyze complementing technology promises leveraging healthcare data (e.g., artificial intelligence, cloud computing, and blockchain).”

Entailing this, Frost & Sullivan research projects the healthcare analytics market revenue to cross $7.4 billion in the United States by the end of 2020.

 “The key pivotal theme driving this growth opportunity includes population health management, financial performance improvement, and operational automation by patients, payers, physicians, and procedures,” Behera says. “Also, the rise of value-based care and outcomes-based reimbursement programs will continue to boost the demand for specialized analytics solutions.”

In 2019, payers and providers will continue to prioritize and leverage the potential of specialty-specific analytics solutions to investigate drug utilization, treatment variability, clinical trial eligibility, billing discrepancy, and self-care program attribution specific to major chronic conditions, according to Beherea.

2. Digital health coming of age with increased focus on individual care

“During 2019, we project application of digital health will continue to go far beyond the traditional systems and empower individuals to be able to manage their own health,” Behera says.

Favorable reimbursement policies (e.g., toward clinically relevant digital health applications) will expand care delivery models beyond physical medicine to include behavioral health, digital wellness therapies, dentistry, nutrition, and prescription management, according to Behera.

“For example, major insurance bodies are already using digital health services to communicate with patients,” he says. “Traditionally, lack of formal reimbursement processes is actually a deterrent to the uptake of these—wearables, telehealth etc. The next 12 months will see a relaxation of reimbursement rules for digital health solutions.”

The global aging population and an expanding middle class are major contributors to the chronic disease epidemic and surging healthcare costs, Behera says. “This year will be a pivotal year for defining value for healthcare innovation and technology for digital health solutions catering to aged care and chronic conditions management to bending healthcare cost curve,” he says.

“Telemedicine in emerging markets will become more mainstream and will aim to become a managed services provider [rather] than being just a telemedicine platform,” he says. “Telemedicine will move into the public health space as well, with countries like Singapore is testing the platforms in a regulatory sandbox. Finally, as the lines between retail, IT, and healthcare continue to blur, non-traditional players such as Amazon, Apple, Google, Ali Health, Microsoft, and IBM, among others, will continue to make further headway into the individual care space— providing the required impetus to public health systems to ensure accessibility and affordability of care-leveraging, patient-centric digital health tools and solutions.”

Healthcare executives should prioritize their roadmap for growing IoMT and connected health ecosystems (device-, wearables-, and mHealth-generated individual health data) in order to monetize these new sources of innovation and service-oriented future revenue streams, according to Behera. “The future focus should shift from drug and device mind-set to intelligent solutions/services, demonstrating outcomes-based health benefits to individuals and their caregivers,” he says.

3. AI

In next 12 to 18 months, the priority will be to bring AI/cognitive platform technology use cases closer to clinical care to augment the physicians and even patients with actionable decision-making ability, according to Behera. “In next two to three years, AI will become a common theme across all digital initiative and platforms.”

AI-based work flow optimization use cases will represent more than 80% of the workflow market contribution. These include:

  • The elimination of unnecessary procedures and costs
  • In-patient care and hospital management
  • Patient data and risk analytics
  • Claim processing
  • Optimizing the drug discovery process

“For example, Google is already at work to use machine learning for predicting patients’ deaths, and the results boast a flattering figure of 95% accuracy, which is better than hospitals’ in-house warning systems,” says Behera. “AI application across clinical and non-clinical use cases will continue to show hard results and further bolster the growth in the healthcare space in 2019.”

AI-powered IT tools that manage payers’ and providers’ business risks (including clinical, operational, financial, and regulatory) continue to be important for the market, according to Behera. “Across all regions in the world, AI-based cognitive technologies are proving to be the most useful for medical imaging and clinical diagnostics—as a decision-support tool—followed by AI application to derive intelligence on remote patient monitoring data to promote outcomes-based personalized care.”

4. Regenerative medicine

Cell-gene therapy combinations are rapidly gaining momentum, which make use of gene-editing tools and vector delivery systems to devise innovative curative therapies, according to Behera.

“There is also a pipeline of induced pluripotent stem cells (IPSCs), mesenchymal stem cells (MSCs), and adipose-derived stem cells (ADSCs) for novel therapeutic treatments for neurological, musculoskeletal, and dermatological conditions, among others,” he says.

These are poised for growth because rising pressures to decrease healthcare cost globally, the emergence of value-based reimbursement models, and healthcare digitization trends are transitioning the treatment model from “one-size-fits-all” to stratified and outcomes-based targeted therapies, according to Behera.

“Many factors determine the rate at which the stem cell therapy market advances,” he says. “It is driven by the success of stem cell treatments in curing life-threatening diseases such as cancer, heart diseases and neuromuscular diseases in the world’s aging populations. Emerging gene-editing techniques such as CRISPR/Cas9 that offer high precision, accessibility, and scalability, compared to other genome editing methods, such as ZFNs and TALENs for cell and gene therapy applications will continue to attract high investment both from venture capital and pharma companies.”

As regenerative medicine is redefining medical technology synergies by combining stem cell technology with tissue engineering, market participants should be investing in innovative models such as risk sharing, in-licensing/out-licensing deals, fast-to-market models, and in-house expansions, according to Behera.

“With cell-therapy manufacturing being time sensitive, biopharma companies should implement IT-based solutions for improved manufacturing capabilities,” he says. “Despite the promises with novel cell and gene therapies such as CRISPR/Cas9, questions around ethical application challenge its future potential. This makes it necessary for the life science research executives to work closely with regulators in developing guidelines and regulations [that will] guide ethical and real-word unmet needs of the healthcare industry.”

5. Digital therapeutics

“Digital therapeutics are about to become a true medical alternative that will utilize communication-based technologies, apps, and software to improve patient outcomes and help to lower the cost of healthcare,” Behera says. “Digital therapeutics offer the benefit to improve patient outcomes and reduce treatment cost by replacing the need for a drug or augmenting a standard of care, but they are not endorsed by a regulatory body, such as the FDA.”

Frost & Sullivan projects that the overall digital therapeutics market is to grow at a CAGR of 30.7% from 2017 to 2023.

“Digital therapeutics will become an exciting healthcare option that adds a curative dimension to technology,” he says. “As care for these chronic diseases expands in scope, prevention and recovery are becoming the new focus areas—apart from diagnosis and treatment. This demands a holistic view of individual health, lifestyle, and environmental data beyond the clinical health records to efficiently stratify at-risk patients for a preventive and targeted treatment paradigm.” 

Defining digital therapeutics appears at first glance to be a simple task, but challenges develop when attempting to define digital therapeutics as a market opportunity, according to Behera.

“Healthcare executives exploring the growth opportunities should prioritize their market positioning, which is often dictated by focused use cases (e.g., condition management vs. behavior management) rather than the technology novelty,” he says. “At present, many companies are either claiming to be or cited in the media as digital therapeutics, but only a small number of early-stage participants are seeking FDA certification based on randomized clinical trials. They make it critical for healthcare executives to keep a close watch on progressing regulatory developments, such as the FDA precertification program.”

 

 

 

The No. 1 takeaway from the 2019 JP Morgan Healthcare Conference: It’s the platform, stupid

https://www.beckershospitalreview.com/hospital-management-administration/the-no-1-takeaway-from-the-2019-jp-morgan-healthcare-conference-it-s-the-platform-stupid.html

If you want to understand the shifting sands of healthcare, you’ll find no better place than the nonprofit provider track during the infamous JP Morgan Healthcare Conference that took place this week in San Francisco.

Over 40,000 players were in town from every corner of the healthcare ecosystem. However, if you want to hear the heartbeat of what’s happening at ground level, you needed to literally squeeze into the standing room only nonprofit provider track where the CEOs and CFOs of 25 of the most prominent hospitals and healthcare delivery systems in the country shared their perspectives in rapid-fire 25 minute presentations.

This year those presenters represented over $300 billion, or close to 10 percent of the annual healthcare spend in U.S. healthcare. These organizations play a truly unique role in this country as they are integrated into the very fabric of the communities that they serve and are often the single largest employer in their respective regions. In other words, if you work in or care about healthcare, understanding their perspective is a must.

Every year I take a shot at condensing all of these presentations into a set of takeaways so healthcare providers who aren’t in the room can share something with their teams to help inform their strategy. So what do you need to know? Glad you asked, here you go.

Shift Happens — Moving from Being a Healthcare Provider to Creating a Platform for Health and Healthcare in Your Community

Trying to synthesize 25 presentations into a single punch line is pretty stressful. I listened to every presentation, debriefed with other healthcare providers in the audience afterwards and then spent the next 48 hours trying to process what I heard. I was stumped.

But then, finally, it hit me. To take a new spin on an old phrase, “It’s the platform, stupid.” To be clear, even though I’ve been in healthcare for close to 30 years, “stupid” in that sentence is absolutely referring to me.

So the No. 1 takeaway from the 2019 JP Healthcare Conference is this — for healthcare providers, there is a major shift taking place. They are moving from a traditional strategy of buying and building hospitals and simply providing care into a new and more dynamic strategy that focuses on leveraging the platform they have in place to create more value and growth via new and often more profitable streams of revenue. Simply stated, the healthcare delivery systems of today will increasingly leverage the platform and resources that they have in place to become a hub for both health and healthcare in the future. There is a level of urgency to move quickly. Many feel that if they don’t expand the role that they play in both health and healthcare in their community, someone else will step in.

Folks in tech would think of this as the difference between a “product” strategy (old school) and a “platform” strategy (new school). Think of this as the difference from cell phones (Blackberry) to smartphones (iPhone and Android devices). One was a product, the other was a platform. Common platforms that we’re all familiar with such as Facebook, Amazon, Google, Apple and even Starbucks have always 1) started with a very small niche, 2) built an audience, 3) built trust and 4) then added other offerings on top of that platform. By now there is no need for a “spoiler alert.” We all know that this strategy works and these companies have created a breathtaking amount of value. The comforting news for hospitals and healthcare delivery systems is that many have already completed the first three steps and have many of the building blocks they need to leverage a “platform” as a business strategy. The presentations at the JP Morgan Healthcare Conference made it clear that most are now actually taking that fourth step to separate themselves from the pack.

There is enormous upside to those who understand this pivot and take advantage of this change in the market. Dennis Dahlen, CFO of Mayo Clinic, shared his perspective on this: “Thinking differently in the future is essential. In many ways, at Mayo, we are already operating as a platform today, but we have to continue to leverage this approach to uncover additional ways that we can be a hub for both health and healthcare in our community.” Mayo’s platform includes leveraging research, big data, expert clinic insights and artificial intelligence to create new value for Mayo’s clinical practice as well as new opportunities for Mayo’s partners.

To be clear, the mental shift here is massive. It’s the difference of being on defense (where most healthcare providers are) to be being on offense (which is where they know they need to be). Executive teams have focused their time, energy and resources on driving and supporting inpatient admissions via a traditional bricks and mortar presence coupled with the acquisition of physician practices. The difficulty of thinking through what it means to truly be “asset light” and taking a different approach shouldn’t be underestimated. The good news is that the recent financial results of many health systems have improved, providing a little breathing room for investments to enable this shift in strategy. Those who don’t may fall way behind.

A New Way of Thinking — What it Means to be a Hub

Being a hub is essentially bringing together people with common interests to spark innovation and facilitate work getting done more efficiently. Examples include Silicon Valley as a “tech hub,” Los Angeles as an “entertainment hub,” New York as a “financial hub,” Washington, D.C. as a “hub for politics” and how essentially every college town is or can become a “research hub.”

Given that hospitals and health systems are the largest employers in their community, they are already set up to become a hub. In the past, they leveraged that position to simply care for the sick. Increasingly in the future, these organizations will be health and healthcare hubs for innovation and building new companies, for bringing the community together to tackle issues like hunger and homelessness, for education and training, for research and development partnerships, for coordinated, compassionate and longitudinal care delivery for treatment, for support groups for specific chronic conditions, for digital and virtual care, and for thoughtful and effective support for mental and behavioral health. Changes in the care delivery market over the last 10 years have put the right building blocks in place to make this happen.

Hiding in Plain Sight — The Single Biggest Change in Healthcare We May Ever See Has Already Happened

Taking advantage of becoming a hub and leveraging the strategic concept of being a platform requires new thinking, new structures and new skill sets. The great news for healthcare providers is they have already made the toughest move of all in order to set this in motion.

Over the last decade, there has been a massive level of consolidation with hundreds of hospitals and thousands of physician practices being acquired every year. While more mergers and acquisitions will still happen, this stunning and fundamental restructuring of healthcare delivery has taken place and there is no turning back. This is likely the single biggest shift relative to how healthcare is structured in this country that will take place during our lifetime, and it barely gets mentioned. The strategy many were chasing was primarily being driven by a “heads in beds” pay-off that was both based on offense (“an easier way to grow”) and defense (“we better buy them before someone else does”). That said, as this consolidation happened most healthcare delivery systems were really just an amalgamation of stand-alone hospitals set up as a holding company that provided no real leverage other than more top-line revenue.

During the JP Morgan Healthcare Conference, it was clear that most have made the shift from a holding company into a single operating entity. Chicago-based Northwestern Medicine shared a very refined playbook for quickly bringing acquisitions onto their “platform,” and the results are pretty stunning as they have transformed from a $1 billion academic medical center into a $5 billion regional healthcare hub in a handful of years.

And over the last few years, these organizations have gotten super serious about making the toughest decisions right away. The mega-merger of Advocate Health and Aurora Health, the largest healthcare delivery systems in Illinois and Wisconsin respectively, was accompanied by a gutsy decision to fast-track the implementation of Epic at Advocate to get the leverage of a single EHR platform across the system. While many focus on the cost of the transition and the shortcomings of some of the applications, what gets missed is the enormous long-term leverage this provides regarding communication, integration, continuity of care and, of course, access to data and the potential to improve clinical and financial performance. This creates a “platform-like” experience for both employees and customers. 

So, the twist in the story is that the pay-off for consolidation will likely be very different and perhaps much better than many had originally intended. They have the building blocks in place to be a health and healthcare platform for their community. But now they need to figure out how to truly take advantage of it.

Your Action Plan — 6 Ideas from 25 Healthcare Delivery Systems on How to Leverage Your “Platform”

During their presentations the 25 non-profit provider organizations opened up their playbooks on how others can leverage their platforms and the idea of becoming the hub for health and healthcare in their respective communities. Here is what they shared.

1. Create the Digital Front Door — or Someone Else Will

The big shift in play right now is the moving away from traditional reliance on transactional face-to-face interactions with individual providers. Building relationships and trust is something that has been a core competency and core strategic asset for hospitals in the past. In the future, this simply won’t be possible without leveraging digital platforms as we do in every other aspect of our lives today. As Stephen Klasko, MD, CEO of Philadelphia-based Jefferson Health, shared, the real strategy will be to deliver “health and healthcare with no address.”

Many provider organizations are moving aggressively to create digital front doors. Kaiser Permanente delivered 77 million virtual visits last year. Intermountain introduced a virtual hospital that provides over 40 services and has delivered over 500,000 interactions. Nearly every health system leverages MyChart or a similar personal health record platform. There is an enormous amount of risk for hospitals and health systems that don’t take action here, as traditional healthcare providers will be competing with more mainstream and polished consumer brands for the relationships and trust of the folks in their community.

As the team from Spectrum Health shared, “87 percent of Americans measure all brands against a select few — think Amazon, Netflix and Starbucks.” Google, Apple and Facebook as well as Walgreens or CVS are all going after this “digital handshake,” and are big threats to healthcare providers. There is no question that some of these organizations will be “frenemies,” where they are both competing and collaborating. Healthcare organizations will need to approach any partnerships mindful of that risk.

2. Drive Affordability and Reduce Cost — or Risk Being the Problem

As the burden of the cost of care increasingly shifts to the patient’s wallet, healthcare providers will need to play in driving affordability. Coupled with the recent federal requirement to post prices online, there is a great deal of visibility around the price of care, even if the numbers are way off the mark. Understanding and reducing the total cost of care is now viewed as a requirement. As legacy cost accounting applications relied on charges as a proxy for cost and were limited to the acute care setting, most provider organizations have or are now in the process of deploying advanced cost accounting applications with time-driven and activity-based costing capabilities including a number that presented during the conference, such as Advocate Aurora Health, Bon Secours Mercy, Boston Children’s Hospital, Hospital for Special Surgery, Intermountain Healthcare, Northwestern Medicine, Novant Health, Spectrum Health and Wellforce.

This was one of the hottest topics during the conference, and there was significant buzz regarding having a single source of truth for the cost of care across the continuum. Vinny Tammaro, CFO of Yale New Haven Health, commented, “We need to align with the evolution of consumerism and help drive affordability in healthcare. How we leverage data is mission critical to making this concept a reality. Bringing clinical and financial data together provides us with a source of truth to help both reduce the cost of care as well as reallocate our finite resources to high impact initiatives in our community.” Organizations like Intermountain Healthcare, which implemented a 2.7 percent price reduction in exchange pricing, are taking the next step in translating cost reduction into lower prices for consumers. And now healthcare systems are starting to work together to create additional leverage via Civica Rx, which now includes 750 hospitals joining forces to help lower the cost of generic drugs.

3. Tackle Social Determinants of Health — or You Won’t Be the Hub for Health in Your Community

It is always less expensive to prevent a problem than it is to fix it. The good news is that the economic incentives for hospitals and healthcare delivery systems to both think and act that way are beginning to line up. They are certainly there already for providers that are also health plans such Intermountain, Kaiser Permanente, Providence St. Joseph Health, Spectrum Health and UPMC. They are also in place for providers that have aggressively taken on population-based risk contracts such as Advocate Aurora Health. With that said, it feels like every health system is starting to lean in here — and they should.

Being the central community hub for these issues makes a ton of sense. The way that Kaiser framed it is that while they have 12 million members, there are 68 million people in the communities they serve. Taking that broader lens both allows them to make a bigger impact but also broaden their market. Many organizations, such as Henry Ford Health System, are taking on hunger via fresh food pharmacies. Geisinger shared how a 2.0 reduction in Hemoglobin A1c reduction leads to a $24,000 cost reduction per participant in their fresh food “farmacy.” So while hospitals are perfectly positioned, have the resources and know it’s the right thing to do, they are now also beginning to understand the business model tied to targeting the social determinants of health. There is also strong strategic rationale associated with taking on a broader role of driving health versus only providing healthcare.

4. Create Partnerships for Healthcare Innovation — or Lose the Upside

Spectrum Health has a $100 million venture fund. Providence St. Joseph’s Health announced a second $150 million venture capital and growth equity fund. Mayo Clinic Ventures has returned over $700 million to their organization. Jefferson Health has a 120-person innovation team focused on digital innovation and the consumer experience, partnering with companies to build solutions. These are all variations on a theme as virtually every organization that presented is leveraging their resources to make a bigger impact and drive additional upside from their platform. “We have close to 900 agreements with over 500 partners,” stated Sanda Fenwick, CEO of Boston Children’s Hospital. “Our strategy is to be a hub for research, innovation and education in order to help evolve how care is delivered. This can only be done by collaborating with others.”

5. Become the Hub for Targeted Services and Chronic Conditions — or They Will Go Elsewhere

Perhaps the best example here is the work of Hospital for Special Surgery, the largest orthopedics shop in the world. It is has become a destination for good reason — fewer complications, fewer infections, a higher discharge rate to home and fewer readmissions. The most compelling data point is that when patients come to HSS for a second opinion, one-third of the time they receive a non-surgical recommendation. The same type of shopping is increasingly going to happen for chronic conditions.

Healthcare delivery systems that take a more holistic yet targeted approach have significant potential. They will need to think more deeply about the end-to-end experience and become immersed within the community outside of the four walls of the hospital. Other players in the community, such as CVS Health and Walgreens, would say they have a platform — and they would be right. The platform that healthcare providers have built and are building will absolutely be competing against other care delivery platforms.

6. Leverage Applied Analytics — or You’ll Lose Your Way

In order to enable everything listed above, the lifeline for every health and healthcare hub will be actionable data. Applied analytics is a boring term that is actually gaining traction and starting to dislodge buzzwords like big data, machine learning and artificial intelligence relative to its importance to healthcare providers.

Similar to how analytics are being used in a practical way in baseball to determine where to throw a pitch to a batter or position players in the field, healthcare providers are pushing for practical data sets presented in a simple, actionable framework. That may seem obvious, but it is simply not present in many healthcare organizations that have been focused on building data warehouse empires without doors to let anyone in. Many organizations, such as Advocate Aurora Health, Bon Secours Mercy and Spectrum Health, have deployed more dynamic business decision support solutions to access better insight into performance and care variation. This allows them to assess opportunities to reallocate resources to invest in more productive ways to leverage their platform.

While leveraging a platform as a business strategy is new to healthcare providers, the good news is that building blocks are already in place. It’s time to leverage that platform to drive better outcomes and more affordable care in the community. And now is the time to get started.

 

Envisioning the “asset-light” hospital of the future

 

Across December we have been sharing our framework for helping health systems rethink their approach to investment in delivery assets, built around a functional view of the enterprise. We’ve encouraged our clients to take a consumer-oriented approach to planning, starting by asking what consumers need and working backward to what services, programs and facilities are required to meet those needs. That led us to break the enterprise into component parts that perform different “jobs” for the people they serve. We think of each of those parts as a “business”, located at either the market, regional or national level depending on where the best returns to scale are found (and on the geographic scale of any particular system). First we shared  our view of the “access business”, pushing systems to create a broad web of access points across their market, with the goal of building consumer loyalty over time. Last week we described our vision for the “senior care” business, where an array of assets traditionally providing postacute care, including rehabilitation and skilled nursing facilities (SNFs), home health, and even hospital-at-home programs, could expand their capabilities to manage chronic disease exacerbations in elderly patients in lower-acuity, lower-cost settings. This week we’ll describe how the changes in these outpatient care settings will affect the profile of the traditional acute care hospital.
 
Shifting demographics will dramatically change the patient mix of American hospitals across the next decade. As Baby Boomers age into their Medicare years, ED and hospital beds will fill with elderly patients admitted for exacerbations of chronic diseases like congestive heart failure and diabetes, their care reimbursed at public-payer rates. Over time it’s easy to imagine hospitals starting to look like giant SNFs, filled with elderly patients receiving nursing care and drugs. With current cost and labor structures, this shift will be financially unsustainable for hospitals, as Medicare payment for many medical admissions does not cover the cost of the inpatient admission, forcing hospitals to pursue alternative care settings for these patients. As we described last week, as many as half of chronic disease admissions could be managed by an expanded “senior care” platform. Adding to this potential shift of medical admissions to an outpatient setting, we anticipate that an expanded postacute and home care platform could also accelerate the shift of inpatient surgeries to an ambulatory setting. If surgery centers could manage patients for 24- to 48-hour stays, and hospital-at-home capabilities supported recovery at home, some experts believe that a majority of non-emergent inpatient surgeries—including many orthopedic and general surgery cases—could shift away from the hospital. If this shift to alternative settings bears out, demand for traditional “med-surg” beds could decline significantly, even in the face of demographic shifts.  
 
The graphic below describes an alternative vision for the future acute-care hospital that takes into account these changes. This “hospital of the future” will be asset-light, focused on providing higher levels of emergency, medical and surgical care, with capacity weighted toward more intensive patient management. The acute care facility will be supported by a network of connected and expanded ambulatory resources, including outpatient surgery, postacute services, home care and access services, all enabled by remote monitoring technology. While payment changes covering expanded outpatient care will accelerate this movement, we believe that payer and patient mix shifts alone will provide motivation for hospitals to pursue these strategies. The cost of adding a new med-surg bed now tops $2M in most markets—trimming even a few beds that may not be needed will provide capital that can go a long way in expanding outpatient capabilities to support lower-acuity care.

 

The Disappearing Doctor: How Mega-Mergers Are Changing the Business of Medical Care

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Is the doctor in?

In this new medical age of urgent care centers and retail clinics, that’s not a simple question. Nor does it have a simple answer, as primary care doctors become increasingly scarce.

“You call the doctor’s office to book an appointment,” said Matt Feit, a 45-year-old screenwriter in Los Angeles who visited an urgent care center eight times last year. “They’re only open Monday through Friday from these hours to those hours, and, generally, they’re not the hours I’m free or I have to take time off from my job.

“I can go just about anytime to urgent care,” he continued, “and my co-pay is exactly the same as if I went to my primary doctor.”

That’s one reason big players like CVS Health, the drugstore chain, and most recently Walmart, the giant retailer, are eyeing deals with Aetna and Humana, respectively, to use their stores to deliver medical care.

People are flocking to retail clinics and urgent care centers in strip malls or shopping centers, where simple health needs can usually be tended to by health professionals like nurse practitioners or physician assistants much more cheaply than in a doctor’s office. Some 12,000 are already scattered across the country, according to Merchant Medicine, a consulting firm.

On the other side, office visits to primary care doctors declined 18 percent from 2012 to 2016, even as visits to specialists increased, insurance data analyzed by the Health Care Cost Institute shows.

There’s little doubt that the front line of medicine — the traditional family or primary care doctor — has been under siege for years. Long hours and low pay have transformed pediatric or family practices into unattractive options for many aspiring physicians.

And the relationship between patients and doctors has radically changed. Apart from true emergency situations, patients’ expectations now reflect the larger 24/7 insta-culture of wanting everything now. When Dr. Carl Olden began watching patients turn to urgent care centers opening around him in Yakima, Wash., he and his partners decided to fight back.

They set up similar clinics three years ago, including one right across the street from their main office in a shopping center.

The practice not only was able to retain its patients, but then could access electronic health records for those off-site visits, avoiding a bad drug interaction or other problems, said Dr. Olden, who has been a doctor for 34 years.

“And we’ve had some folks come into the clinics who don’t have their own primary care physicians,” he said. “So we’ve been able to move them into our practice.”

By opening clinics to compete with urgent care centers, Dr. Carl Olden’s practice in Yakima, Wash., was able to retain its patients and move some walk-ins into the fold.
Merger Maneuvers

The new deals involving major corporations loom over doctors’ livelihoods, intensifying pressure on small practices and pushing them closer to extinction.

The latest involves Walmart and Humana, a large insurer with a sizable business offering private Medicare plans. While their talks are in the early stages, one potential partnership being discussed would center on using the retailer’s stores and expanding its existing 19 clinics for one-stop medical care. Walmart stores already offer pharmacy services and attract older people.

In addition, the proposed $69 billion merger between CVS Health, which operates 1,100 MinuteClinics, and Aetna, the giant insurer, would expand the customer bases of both. The deal is viewed as a direct response to moves by a rival insurer, UnitedHealth Group, which employs more than 30,000 physicians and operates one of the country’s largest urgent-care groups, MedExpress, as well as a big chain of free-standing surgery centers.

While both CVS and UnitedHealth have large pharmacy benefits businesses that would reap considerable rewards from the stream of prescriptions generated by the doctors at these facilities, the companies are also intent on managing what type of care patients get and where they go for it. And the wealth of data mined from consolidation would provide the companies with a map for steering people one way or another.

On top of these corporate partnerships, Amazon, JP Morgan and Berkshire Hathaway decided to join forces to develop some sort of health care strategy for their employees, expressing frustration with the current state of medical care. Their announcement, and Amazon’s recent forays into these fields, are rattling everyone from major hospital networks to pharmacists.

Doctors, too, are watching the evolution warily.

“With all of these deals, there is so much we don’t know,” said Dr. Michael Munger, president of the American Academy of Family Physicians. “Are Aetna patients going to be mandated to go to a CVS MinuteClinic?”

Dr. Susan Kressly, a pediatrician in Warrington, Pa., has watched patients leave. Parents who once brought their children to her to treat an ear infection or check for strep, services whose profits helped offset some of the treatments she offered, are now visiting the retail clinics or urgent care centers.

What is worse, some patients haven’t been getting the right care. “Some of the patients with coughs were being treated with codeine-based medicines, which is not appropriate at all for this age group,” Dr. Kressly said.

Even doctors unfazed by patients going elsewhere at night or on weekends are nervous about the entry of the corporate behemoths.

“I can’t advertise on NBC,” said Dr. Shawn Purifoy, who practices family medicine in Malvern, Ark. “CVS can.”

Nurse practitioners allow Dr. Purifoy to offer more same-day appointments; he and two other practices in town take turns covering emergency phone calls at night.

And doctors keep facing new waves of competition. In California, Apple recently decided to open up its own clinics to treat employees. Other companies are offering their workers the option of seeking medical care via their cellphones. Investors are also pouring money into businesses aiming to create new ways of providing primary care by relying more heavily on technology.

Dr. Olden’s office door. In the age of urgent care centers and consolidations, the traditional doctor is being pushed closer to extinction.CreditDavid Ryder for The New York Times

Dr. Mark J. Werner, a consultant for the Chartis Group, which advises medical practices, emphasized that convenience of care didn’t equal quality or, for that matter, less expensive care.

“None of the research has shown any of these approaches to delivering care has meaningfully addressed cost,” Dr. Werner said.

Critics of retail clinics argue that patients are given short shrift by health professionals unfamiliar with their history, and may be given unnecessary prescriptions. But researchers say neither has been proved in studies.

“The quality of care that you see at a retail clinic is equal or superior to what we see in a doctor’s office or emergency department,” said Dr. Ateev Mehrotra, an associate professor of health care policy and medicine at Harvard Medical School, who has researched the retail clinics. “And while there is a worry that they will prescribe antibiotics to everybody, we see equal rates occurring between the clinics and doctor’s offices.”

Still, while the retail clinics over all charge less, particularly compared with emergency rooms, they may increase overall health care spending. Consumers who not long ago would have taken a cough drop or gargled with saltwater to soothe a sore throat now pop into their nearby retail clinic for a strep test.

Frustration with the nation’s health care system has fueled a lot of the recent partnerships. Giant companies are already signaling a desire to tackle complex care for people with a chronic health condition like diabetes or asthma.

“We’re evolving the retail clinic concept,” said Dr. Troyen A. Brennan, the chief medical officer for CVS. The company hopes its proposed merger with Aetna will allow it to transform its current clinics, where a nurse practitioner might offer a flu shot, into a place where patients can have their conditions monitored. “It requires new and different work by the nurse practitioners,” he said.

Dr. Brennan said CVS was not looking to replace patients’ primary care doctors. “We’re not trying to buy up an entire layer of primary care,” he said.

But people will have the option of using the retail clinic to make sure their hypertension or diabetes is well controlled, with tests and counseling provided as well as medications. The goal is to reduce the cost of care for what would otherwise be very expensive conditions, Dr. Brennan said.

If the company’s merger with Aetna goes through, CVS will initially expand in locations where Aetna has a significant number of customers who could readily go to CVS, Dr. Brennan said.

UnitedHealth has also been aggressively making inroads, adding a large medical practice in December and roughly doubling the number of areas where its OptumCare doctors will be to 75 markets in the United States. It is also experimenting with putting its MedExpress urgent care clinics into Walgreens stores.

Big hospital groups are also eroding primary care practices: They employed 43 percent of the nation’s primary care doctors in 2016, up from 23 percent in 2010. They are also aggressively opening up their own urgent care centers, in part to try to ensure a steady flow of patients to their facilities.

One Medical has centers in eight cities with 400 providers, making it one of the nation’s largest independent groups. 

HCA Healthcare, the for-profit hospital chain, doubled its number of urgent care centers last year to about 100, according to Merchant Medicine. GoHealth Urgent Care has teamed up with major health systems like Northwell Health in New York and Dignity Health in San Francisco, to open up about 80 centers.

“There is huge consolidation in the market right now,” said Dr. Jeffrey Le Benger, the chief executive of Summit Medical Group, a large independent physician group in New Jersey. “Everyone is fighting for the primary care patient.” He, too, has opened up urgent care centers, which he describes as a “loss leader,” unprofitable but critical to managing patients.

Eva Palmer, 22, of Washington, D.C., sought out One Medical, a venture-backed practice that is one of the nation’s largest independent groups, when she couldn’t get in to see a primary care doctor, even when she became ill. After paying the annual fee of about $200, she was able to make an appointment to get treatment for strep throat and pneumonia.

“In 15 minutes, I was able to get the prescriptions I needed — it was awesome,” Ms. Palmer said.

Patients also have the option of getting a virtual consultation at any time.

By using sophisticated computer systems, One Medical, which employs 400 doctors and health staff members in eight major cities, allows its physicians to spend a half-hour with every patient.

Dr. Navya Mysore joined One Medical after working for a large New York health system, where “there was a lot of bureaucracy,” she said. She now has more freedom to practice medicine the way she wants and focus more on preventive health, she said.

By being so readily available, One Medical can reduce visits to an emergency room or an urgent care center, said Dr. Jeff Dobro, the company’s chief medical officer.

As primary care doctors become an “increasingly endangered species, it is very hard to practice like this,” he said.

But more traditional doctors like Dr. Purifoy stress the importance of continuity of care. “It takes a long time to gain the trust of the patient,” he said. He is working with Aledade, another company focused on reinventing primary care, to make his practice more competitive.

One longtime patient, Billy Ray Smith, 70, learned that he needed cardiac bypass surgery even though he had no symptoms. He credits Dr. Purifoy with urging him to get a stress test.

“If he hadn’t insisted,” Mr. Smith said, “it would have been all over for me.” Dr. Purifoy’s nurse routinely checks on him, and if he needs an appointment, he can usually see the doctor that day or the next.

“I trust him 100 percent on what he says and what he does,” Mr. Smith said.

Those relationships take time and follow-up. “It’s not something I can do in a minute,” Dr. Purifoy said. “You’re never going to get that at a MedExpress.”

 

 

Medicare Advantage Plans Cleared To Go Beyond Medical Coverage — Even Groceries

Medicare Advantage Plans Cleared To Go Beyond Medical Coverage — Even Groceries

Air conditioners for people with asthma, healthy groceriesrides to medical appointments and home-delivered meals may be among the new benefits offered to Medicare beneficiaries who choose private sector health plans, when new federal rules take effect next year.

On Monday, the Centers for Medicare & Medicaid Services (CMS) expanded how it defines the “primarily health-related” benefits that private insurers are allowed to include in their Medicare Advantage policies. And insurers would include these extras on top of providing the benefits traditional Medicare provides.

“Medicare Advantage beneficiaries will have more supplemental benefits, making it easier for them to lead healthier, more independent lives,” said CMS Administrator Seema Verma.

Of the 61 million people enrolled in Medicare last year, 20 million opted for Medicare Advantage, the privately run alternative to the traditional government program. Advantage plans limit members to a network of providers, and similar restrictions may apply to the new benefits. In California, 40 percent of Medicare beneficiaries have joined Medicare Advantage.

Many Medicare Advantage plans already offer some health benefits not covered by traditional Medicare, such as eyeglasses, hearing aids, dental care and gym memberships. However, the new rules, which the industry sought, will expand that list significantly, adding more items and services that are not directly medical.

CMS said the insurers will be permitted to provide care and devices that prevent or treat illness or injuries, compensate for physical impairments, address the psychological effects of illness and injuries, or reduce the need for emergency medical care.

Addressing a patient’s health and social needs outside the doctor’s office isn’t a new concept. In California, for example, the Institute on Aging, a nonprofit, offers social, psychological and health-related services for seniors and adults with disabilities. It has helped people in San Francisco and Southern California move from nursing homes back to their own homes, and it provides a variety of services and goods — from kitchen supplies to wheelchair ramps — that help improve their quality of life.

“By taking a more integrated approach to address people’s social and health needs, we have seen up to a 30 percent savings in health care costs compared to the costs of the same individuals before they joined our program,” said Dustin Harper, the institute’s vice president for strategic partnerships. The agency serves 20,000 Californians a year, including former nursing home residents who qualify for Medicare, the federally funded health insurance program for seniors, or Medicaid, the federal-state program for low-income people — or both.

The institute also provides a number of other innovative services. Volunteers and staff members answer calls to its toll-free, ’round-the-clock Friendship Line (800-971-0016), which is intended to combat social isolation and loneliness. In partnership with the city and county of San Francisco, the institute also offers subsidized home care for a small group of low- and middle-income people who don’t qualify for other assistance and could not otherwise afford it.

The organization also runs one of California’s 38 Multipurpose Senior Service Program sites, providing Medicaid-funded, home-based care. Some 33 social service organizations are MSSP providers, including the Partners in Care Foundation in Los Angeles, which operates four sites. About 2 million older adults and people with disabilities rely on Medicaid for home-based services to live at home for as long as possible.

Although Medicare Advantage insurers are still in the early stages of designing their 2019 policies, some companies have ideas about what they might include. In addition to transportation to doctors’ offices or better food options, some health insurance experts said additional benefits could include simple modifications inside beneficiaries’ homes, such as installing grab bars in the bathroom, or aides to help with daily activities, including dressing, eating and other personal care needs.

“This will allow us to build off the existing benefits that we already have in place that are focused more on prevention of avoidable injuries or exacerbation of existing health conditions,” said Alicia Kelley, director of Medicare sales for Capital District Physicians’ Health Plan, a nonprofit serving 43,000 members in 24 upstate New York counties.

Although a physician’s order or prescription is not necessary, the new benefits must be “medically appropriate” and recommended by a licensed health care provider, according to the new rules.

Many beneficiaries have been attracted to Medicare Advantage because of its extra benefits and the limit on out-of-pocket expenses. However, CMS also cautioned that new supplemental benefits should not be items provided as an inducement to enroll.

The new rules “set the stage to continue to innovate and provide choice,” said Cathryn Donaldson, of America’s Health Insurance Plans, a trade group.

“CMS is catching up with the rest of the world in terms of its understanding of how we keep people healthy and well and living longer and independently, and those are all positive steps,” said Ceci Connolly, chief executive officer of the Alliance of Community Health Plans, which represents nonprofit health insurance plans. Some offer non-emergency medical transportation, low-cost hearing aids, a mobile dental clinic and a “grocery on wheels,” to make shopping more convenient, she said.

UnitedHealthcare, the largest health insurer in the U.S., also welcomes the opportunity to expand benefits, said Matt Burns, a company spokesman. “Medicare benefits should not be one-size-fits-all, and continued rate stability and greater benefit design flexibility enable health plans to provide a more personalized health care experience,” he said.

This is one of several vans that provides door-to-door service for seniors and adults with disabilities going to medical appointments and programs at the Institute on Aging in San Francisco.

But patient advocates including David Lipschutz. senior policy attorney at the Center for Medicare Advocacy, are concerned about those who may be left behind. “It’s great for the people in Medicare Advantage plans, but what about the majority of the people who are in traditional Medicare?” he asked. “As we tip the scales more in favor of Medicare Advantage, it’s to the detriment of people in traditional Medicare.”

The details of the 2019 Medicare Advantage benefit packages must first be approved by CMS and will be released in the fall, when the annual open enrollment begins. It’s very likely that all new benefits will not be available to all beneficiaries since there is “tremendous variation across the country” in what plans offer, said Gretchen Jacobson, associate director of the Kaiser Family Foundation’s Program on Medicare Policy. (Kaiser Health News, which produces California Healthline, is an editorially independent program of the foundation.)

In addition to next year’s changes in supplemental benefits, CMS also noted that a new federal law allows Medicare Advantage plans to offer benefits that are not primarily health-related for Medicare Advantage members with chronic illnesses. The law and the agency’s changes are complementary, CMS officials said. They promised additional guidance in the coming months to help plans differentiate between the two.

 

Expert Advice For The Corporate Titans Taking On Health Care

Expert Advice For The Corporate Titans Taking On Health Care

An announcement Tuesday by three of the nation’s corporate titans — Amazon, Berkshire Hathaway and JPMorgan Chase & Co. — that they are joining forces to address the high costs of employee health care has stirred the health policy pot. It immediately sent shock waves through the health sector of the stock market and reinvigorated talk about health care technology, value and quality.

Though details regarding the undertaking are thin, the companies said in a release that their partnership’s intent is to improve employee satisfaction and hold down costs by bringing “their scale and complementary expertise to this long-term effort.”

They plan to create an independent company, “free from profit-making incentives and constraints,” to focus on “technology solutions.”

Berkshire Hathaway CEO Warren Buffett described health care costs as “a hungry tapeworm on the American economy,” and Amazon founder and CEO Jeff Bezos said the partnership was “open-eyed about the degree of difficulty” ahead. Jamie Dimon, chairman and CEO of JPMorgan, said the results could benefit the employees of these companies and possibly all Americans

But what does all of this mean and how can it be successful when so many other initiatives have fallen short? KHN asked a variety of health policy experts their thoughts on this venture, and what advice they would offer these CEOs as they go forward. Some of the advice has been edited for clarity and length.


Tom Miller, resident fellow, American Enterprise Institute (Courtesy of Tom Miller)

Tom Miller, resident fellow, American Enterprise Institute:

“It’s great that someone theoretically with resources would try to build a better mousetrap. But it’s been difficult to do, and part of it is regulatory and competitive barriers are well-constructed in the health care sphere, which tend to make it less receptive or subject to competitive pressures.

“I welcome any new capital trying to disrupt health care. … The incumbents are comfortable and could use disruption. If Amazon has an idea, and is willing to put some money behind it, that’s wonderful. What they are willing to do other than fly low-cost providers for home visits in drones — I don’t know. They’d probably have to miniaturize them, wouldn’t they?”


Stan Dorn, senior fellow, Families USA (Courtesy of Stan Dorn)

Stan Dorn, senior fellow, Families USA:

“Number one, look at prices. America doesn’t use more health care than European countries, but we pay a lot more and that’s because of prices more than anything else. Look at hospital prices and prescription drug prices. I would also say, look to eliminate middlemen operating in darkness. I’m thinking in particular of pharmacy benefit managers. Often, the supply chain is hidden and complex and every step along the way the middlemen are taking their share, and it winds up costing a huge amount of money.”


Bob Kocher, partner, Venrock (Courtesy of Bob Kocher)

Bob Kocher, partner, Venrock:

“It has been said that health care is complicated. One thing that is not complicated is that the way to save money is to focus on the sickest patients. And that’s the only thing that has proven to work in great primary care. I hope Amazon realizes this early and does not think that [its smart digital assistant] Alexa and apps are going to make us healthier and save any money.

“It would sure be nice if they invest in a ‘post-CPT-ICD-10-and-many-bills-per-visit’ world where we know prices, can easily know what is known about quality and experience, and have same-day service.”


Tracy Watts, senior partner, Mercer (Courtesy of Tracy Watts)

Tracy Watts, senior partner, Mercer:

“Everyone thinks millennials want to do everything on their phones. But that’s not necessarily the case.

“[There was a recent] survey about this — specifically, millennials are the most interested in new health care offerings, but it wasn’t as much high-tech as it is convenience they are interested in — same-day appointments with a family doctor, guaranteed appointments with specialists, home visits, a wider array of services available at retail clinics. That was kind of an ‘aha’ — this kind of convenience and high-touch experience is what they’re looking for. And when you think of ‘health care of the future,’ that’s not what comes to mind.”


John Rother, president and CEO, National Coalition on Health Care (Courtesy of John Rother)

John Rother, president and CEO, National Coalition on Health Care:

“Health care is complex and expensive, so the aim should always be simplicity and affordability. Three keys to success: manage chronic conditions recognizing the life context of the patient, emphasize primary care-based medical homes and aggressively negotiate prescription drug costs.”


Suzanne Delbanco, executive director, Catalyst for Payment Reform (Courtesy of Suzanne Delbanco)

Suzanne Delbanco, executive director, Catalyst for Payment Reform:

“The biggest driver of health care costs is prices. Those are being driven up by health care providers who have consolidated and will continue to consolidate and amass more market power.

“It sounds like they [the companies] are limiting the use of health plans, but if they’re going to get into that business, they’re going to come up with the same challenges health plans face. What would be really innovative would be to build some provider systems from the ground up where they can truly get a handle on the actual costs and eliminate the market power that drives the prices up, and they can have control over their prices.”


Brian Marcotte, president and CEO, National Business Group on Health (Courtesy of Brian Marcotte)

Brian Marcotte, president and CEO, National Business Group on Health:

“They recognize this is [a] long-term play to get involved in this. I’d have to say, this industry is ripe for disruption.

“I think we know technology will continue to play an increasing role in how consumers access and receive health care. We’ve also learned most consumers do not touch the health care delivery system with enough frequency to ever be a sophisticated consumer. What’s intriguing about this partnership is Amazon for many consumers has become part of their day-to-day world, part of their routine. It’s intriguing to consider the possibilities of integrating health care into consumer routine.

“And I think that therein lies the opportunity. Employers offer a lot of resources to their employees to help them maximize their experience, and their No. 1 challenge is engagement.”


Joseph Antos, health economist, American Enterprise Institute (Courtesy of Joseph Antos)

Joseph Antos, health economist, American Enterprise Institute:

“My first suggestion is to look at what other employers have done (some unsuccessfully) and consider how to adapt those ideas for the three companies and more broadly. Change incentives for providers. Change incentives for consumers. Work on ways to reduce the effects of market consolidation. The bottom line: Don’t keep doing what we are doing now. I don’t see that these three companies have enough presence in health markets to pull this off anytime soon, but perhaps this should be viewed as the private-sector version of the Affordable Care Act’s Innovation Center— except, this time, there may be some new ideas to test.”


Ceci Connolly, president and CEO, Alliance of Community Health Plans (Courtesy of Ceci Connolly)

Ceci Connolly, president and CEO, Alliance of Community Health Plans:

“We know that 5 percent of any population consumes 50 percent of the health care dollar. I would encourage this group to focus on how to better serve those individuals who need help managing multiple chronic conditions.”


David Lansky, CEO, Pacific Business Group on Health (Courtesy of David Lansky)

David Lansky, CEO, Pacific Business Group on Health:

“The incumbent providers of services to our members are not doing as much as we need done for affordability and quality. So, we are pleased to see them go down this path. We don’t know what piece of the puzzle they will tackle.

“We know well-intended efforts over the years haven’t added up to material impact on cost and quality. I would suspect they are looking at doing something broader, more disruptive than initiatives we have tried before.

“I think across the board they have the opportunity to set high standards for the health system in whatever platform they use. These companies have a history of raising the bar. Potentially, it could be a help to all of us.”

The uninsured are overusing emergency rooms — and other health-care myths

https://www.washingtonpost.com/news/wonk/wp/2017/12/27/the-uninsured-are-overusing-emergency-rooms-and-other-health-care-myths/?utm_term=.98d00c3511a6

In the search for ways to bring down American health-care spending, there are certain ideas that are close to dogma. Chief among them: If you provide health insurance to people, they will stop overusing the emergency room.

“A lot of people just didn’t bother getting health insurance at all. And when they got sick, they’d have to go to the emergency room,” President Obama said in a 2016 speech. “But the emergency room is the most expensive place to get care. And because you weren’t insured, the hospital would have to give you the care free, and they would have to then make up for those costs by charging everybody else more money.”

The idea that uninsured people are clogging emergency rooms looks more and more like a myth, according to a recent study published in Health Affairs. Uninsured adults used the emergency room at very similar rates to people with insurance — and much less than people on Medicaid. Providing insurance to people can have many benefits, but driving down emergency room utilization doesn’t appear to be one of them.