A review of health care costs: deck chairs and the Titanic, part 1

https://stateofreform.com/news/federal/2019/02/deck-chairs-and-the-titanic-part1/?utm_source=State+of+Reform&utm_campaign=ccf3275364-5+Things+CA+July+2_COPY_01&utm_medium=email&utm_term=0_37897a186e-ccf3275364-272256165

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This article is Part I of a two-part series on the cost of health care and its component parts. Part I explores the recent growth of health care costs in the United States as well as the utilization inputs in the cost equation.

Part II will break down the pricing component of cost, determined by market leverage and the cost of delivering services. 


 

If you ask policymakers, industry leaders, and health care consumers, many will tell you that their number one concern with health care today is the cost.

For the most part, as a society we’ve moved past the days when access or quality were of primary concern to stakeholders. I would wager it’s not because those issues aren’t important.  Everyone knows we have wild challenges still with access and quality.

Rather, the acuity of the cost problem has risen so much, so quickly, that cost as an issue overshadows everything else.

This is a big topic, but it’s not really that hard to understand. Health care costs are actually a simple story.

There are only two categories of health care costs in America today. There are the deck chairs, and there is the Titanic.

Context matters, so let’s start there

Here’s one data point, but it’s largely the same point everywhere you look in health care.

These are average annual premiums for single and family coverage in the employer-based market. Those costs have doubled in the last 14 years, reflecting an average annual growth rate of roughly 5 percent since 2004.

 

 

Here’s another data point. According to CMS in an article in Health Affairs, “health care spending growth averaged 4.3 percent per year during 2008–17, compared to an average annual rate of 7.3 percent over the 1998–2007 period.” That might seem like costs are slowing, but it’s not the whole story.

Remember the “Great Recession?” It was the period of time when the economy almost fell apart. So, measuring health care spending growth should be done within some context of the overall economy.

For this, we can use a standard inflation calculator of the overall economy to compare its growth to the growth of health care costs. When viewed this way, health care inflation grew at a multiple of 2.7x the broader economy’s inflation rate between 1998-2007 and a multiple of 3.0x during 2008-2017.

So, not only are costs high in health care today, but they are growing faster than ever compared to overall inflation in the US economy.

 

Moving around the Titanic’s deck chairs

Let’s explore this metaphor a bit.

The Titanic is a big ship with a big deck. And so there are lots and lots of deck chairs to move around. And moving them around can cause authentic improvement to the quality of the experience.

A view out over the bow at a setting sun is a much better view than the one provided by a chair facing the steam funnel. Sometimes, chairs facing other chairs can foster comity and community through conversation. Sometimes, having alone time to ponder the stars in the night sky from the ship deck is nice.

How the chairs are deployed has a meaningful impact on the user’s experience of sailing on the Titanic.

I run with this analogy because there are a lot of things we do in health care today that meaningfully improve the experience, outcome and cost of health care.

You can probably name 10 such efforts without blinking an eye: improved care coordination, tele-health, community health workers, shared risk payment methods, integration of behavioral health, access to oral health, strong vaccination standards, online forums for shared patient experiences, good bedside manners, etc., etc.

All of these initiatives, as well as others, improve care and the user experience. They all can address cost in various ways, too. They can reduce hospital utilization, allow patients to access care remotely, reduce re-admissions or complications from drug interactions. There is a lot to like here that is meaningful and worth our time as a society to implement.

Put differently, in the cost equation where total health care cost equals utilization times prices (THC = U x P), I would categorize these initiatives as part of the utilization input of the cost equation. All of these initiatives address how we access and use health care in our system today.

But, at the end of the day, these are deck chairs.

 

 

Walmart drops price of virtual visits from $40 to $4

https://www.beckershospitalreview.com/telehealth/walmart-drops-price-of-virtual-visits-from-40-to-4.html

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Walmart is offering employees a 90 percent discount on telemedicine, dropping the price of a virtual visit from $40 to $4, The Denver Post reports.

The retailer reduced the cost of telemedicine services Jan. 1 to increase options for employees seeking care, a spokesperson confirmed to Becker’s Hospital Review. Walmart’s health benefits currently cover more than 1 million people enrolled it its Associates’ Medical Plan. Through this plan, virtual visits through the Doctor On Demand app are covered like a normal physician’s office visit.

Walmart is one of many employers to offer telemedicine benefits to workers. Eighty percent of large and midsize companies offered the benefit in 2018, according to the report. However, factors like emotion, forgetfulness and preference have kept utilization down. Just 8 percent of employees at large and midsize companies used telemedicine benefits in 2017, according to the report.

Read more here.  

CYBERSECURITY IS TOP ISSUE FOR HOSPITAL IT PROFESSIONALS, CREATING NEW WORKFORCE DYNAMICS

https://www.healthleadersmedia.com/innovation/cybersecurity-top-issue-hospital-it-professionals-creating-new-workforce-dynamics?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_190220_LDR_BRIEFING_resend%20(1)&spMailingID=15165362&spUserID=MTY3ODg4NjY1MzYzS0&spJobID=1581568052&spReportId=MTU4MTU2ODA1MgS2

Cybersecurity is top issue for hospital IT professionals

HIMSS survey suggests focus on other IT priorities may lag; influence of security leaders may cause tension.

Cybersecurity, privacy, and security are creating such pressing issues for hospitals, other technology projects may be waylaid and discord among IT leadership could occur if the emerging influence of security professionals is not handled properly, according to the 2019 HIMSS U.S. Leadership and Workforce Survey.

The annual study included feedback from 269 U.S. health information and technology leaders between November 2018‒January 2019. The 30th edition of the survey examines trends and provides insights into the rapidly changing market for healthcare and IT professionals.

Among the key takeaways for hospitals:

  • The emergence of information security leaders as the third influential member of hospital IT leadership teams—following CIOs and senior clinical IT leaders—may create tensions for some organizations.
  • The top issue for hospital IT leaders is cybersecurity, privacy, and security.
  • The focus on security is so predominant, authors of the study suggest that other technological priorities may be put on the back burner.

Information about trends and issues for vendors and non-acute care facilities are also addressed in the full report.

ROLE OF SECURITY LEADERS EXPANDS

The study examines employment trends for specific job titles and, in some cases, compares rates to the prior year. Information security leaders continue to expand their presence in hospitals.

While employment of CIOs and senior clinical IT leaders remains fairly steady; employment of senior information security leaders at hospitals rose by 14% between 2018 and 2019. The study also documents how many hospitals employ professionals for other emerging technology leadership roles, such as chief technology, innovation, and transformation officers, but does not provide comparisons to previous years.

Hospital employment of IT leaders in the following positions for 2019 includes:

  • Chief Information Officer 84% (-3% compared to 2018)
  • A senior clinical IT leader (CMIO, CNIO, CHIO) 68% (+1% compared to 2018) 
  • A senior information security leader (CISO) 56% (+14% compared to 2018)
  • Chief Technology Officer 36%*
  • Chief Innovation Officer 19%*
  • Chief Transformation Officer  7%*
  • None of the above  9%*

“The emergence of a third leader overseeing a hospital’s information and technology efforts is bound to result in internal tensions as competing interests and overlapping jurisdictions present themselves,” says Lorren Pettit, MS, MBA, vice president at HIMSS in a news release. “These challenges have the potential to stymy a hospital’s progression if hospital leaders are not careful to manage these hurdles effectively.”

The report further elaborates that unless roles and responsibilities are clearly delineated, the influence of security professionals could impede a hospital’s progression on information and technology priorities as leaders “work through internal territorial challenges.”

INFORMATION TECHNOLOGY PRIORITIES

The survey gauges interest from IT professionals about 24 topics. While cybersecurity outranked all other responses, “improving quality outcomes” and “clinical informatics and clinician engagement” also was highly rated for hospital respondents. Telehealth ranked ninth; innovation took the twenty-first spot.

Survey participants ranked these topics on a scale of one (not a priority) to seven (essential priority). Following are the ranking and mean scores for hospital respondents:

  1. Cybersecurity, Privacy, and Security 5.81
  2. Improving Quality Outcomes Through Health Information and Technology 5.28
  3. Clinical Informatics and Clinician Engagement  5.24
  4. Process Improvement, Workflow, Change Management 5.03
  5. Culture of Care and Care Coordination 4.92
  6. Data Science/Analytics/Clinical and Business Intelligence 4.91
  7. Leadership, Governance, Strategic Planning 4.90
  8. User Experience, Usability and User-Centered Design  4.86
  9. Telehealth 4.82
  10. Consumer/Patient Engagement & Digital/Connected Health 4.80
  11. Population Health Management and Public Health 4.77
  12. Safe Info and Tech Practices for Patient Care 4.62
  13. HIE, Interoperability, Data Integration and Standards 4.62
  14. Public Policy, Reporting, and Risk Management 4.31
  15. Healthcare App and Tech Enabling Care Delivery  4.20
  16. Social, Psychosocial & Behavioral Determinants of Health 4.06
  17. Consumerization of Health 3.75
  18. Clinically Integrated Supply Chain 3.66
  19. Healthy Aging and Technology  3.60
  20. Health Informatics Education, Career Development & Diversity  3.53
  21. Innovation, Entrepreneurship and Venture Investment 3.47
  22. Precision Medicine/Genomics  3.47
  23. Disruptive Care Models 3.39
  24. Grand Societal Challenges 2.88

SECURITY NEEDS MAY SLOW DOWN FOCUS ON OTHER IT PRIORITIES

Study authors characterized the prioritization of cybersecurity, privacy, and security by providers as “remarkably higher” than the next highest priority. The focus is so predominant, the authors suggest that other technological priories may be put on the back burner.

“Of the array of priorities presented respondents, ‘cybersecurity, privacy, and security’ was one of the only ‘defensive’ business tactics respondents were asked to consider,” states the report. “That providers (especially hospital respondents) responded so passionately to this priority suggests a growing number of provider organizations realize the need to protect existing business practices before aggressively pursuing other information and technology issues. If true, then there are potential downstream implications for the market as other information and technology priorities considered in this study may be put on hold or ‘slow walked’ until the security concerns of organizations are settled.”

In addition to this survey, HIMSS also released a related report last week, the 2019 HIMSS Cybersecurity Survey, which sheds additional light on some of these issues. Among the highlights:

  • A pattern of cybersecurity threats and experiences is discernable across U.S. healthcare organizations. Significant security incidents are a near universal experience with many of the initiated by bad actors, leveraging e-mail as a means to compromise the integrity of their targets.
  • Many positive advances are occurring in healthcare cybersecurity practices and healthcare organizations appear to be allocating more of their IT budgets to cybersecurity.
  • Complacency with cybersecurity practices can put cybersecurity programs at risk.
  • Notable cybersecurity gaps exist in key areas of the healthcare ecosystem. The lack of phishing tests in certain organizations and the pervasiveness provides insight into what healthcare organizations are doing to protect their information and assets, in light of increasing cyber-attacks and compromises impacting the healthcare and public health sector.

 

 

 

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.”

 

 

 

Top Six Healthcare Executive Challenges in 2019

http://www.managedhealthcareexecutive.com/executive-express/top-six-healthcare-executive-challenges-2019

The pace of change in healthcare is not slowing down; in fact, it is accelerating. Healthcare organizations that are most successful in 2019 will know what challenges and changes are coming down the pipeline, and they will prepare accordingly.

To help ensure you don’t get left behind, we’ve assembled the top six challenges the industry will face in 2019.

1. Shifting the focus from payment reform to delivery reform. For the past few years, C-suite leaders at healthcare organizations have been focused on navigating healthcare payment reform—attempting to preserve, improve, and maintain revenue. Amidst those efforts, delivery reform has sometimes taken a back seat.

That will need to change in 2019. Organizations that are the most successful will focus more on patient care than revenue, and they will see improved outcomes and reduced costs as a result.

Many organizations are already exploring delivery reform with initiatives that focus on:

  • Remote health monitoring and telemedicine;
  • Population health management;
  • Patient engagement;
  • Social determinants of health; and
  • Primary care.

In 2019, however, they will need to bring all of these initiatives together to implement sustainable improvements in how healthcare is delivered.

An added bonus? Organizations that accomplish this will see enhanced revenue streams as value-based reimbursement accelerates.

2. Wrestling with the evolving healthcare consumer. Healthcare consumers are demanding more convenient and more affordable care options. They expect the same level of customer service they receive from other retailers—from cost-estimation tools and online appointment booking to personalized interactions and fast and easy communication options such as text messaging and live chats.

Organizations that don’t deliver on these expectations will have a difficult time retaining patients and attracting new ones.

That’s not the only consumer-related challenge healthcare organizations will face. In 2019, millennials (between the ages of 23 and 38), will make up nearly a quarter of the U.S. population.

This generation doesn’t value physician-patient relationships as highly as previous generations. In fact, nearly half of them  do not have a personal relationship with their physician, according to a 2015 report by Salesforce.

Finding ways to maintain or increase the level of humanity and interaction with millennials will be a key challenge in 2019. Patient navigator solutions and other engagement tools will be critical to an organization’s success.

3. Clinician shortages. Physician and nurse shortages will continue to intensify in 2019, creating significant operational and financial challenges for healthcare organizations.

The most recent numbers from the Association of American Medical Colleges predict a shortage of up to 120,000 physicians by 2030. On the nursing side, the Bureau of Labor Statistics projects a need for 649,100 replacement nurses by 2024.

The implications of the shortages, combined with the fact that healthcare organizations face a number of new challenges in the coming years, are many. Fewer clinicians can lead to burnout, medical errors, poorer quality, and lower patient satisfaction.

Healthcare organizations that thrive amidst the shortages will find new ways to scale and leverage technology to streamline work flows and improve efficiencies.

4. Living with EHR choices. Despite the hype and hopes surrounding EHRs, many organizations have found that they are failing to deliver on their expectations.

recent Sage Growth Partners survey found that 64 percent of healthcare executives say EHRs have failed to deliver better population health management tools, and a large majority of providers are seeking third-party solutions outside their EHR for value-based care.

The survey of 100 executives also found that less than 25% believe their EHRs can deliver on core KLAS criteria for value.

As we recently told Managed Healthcare Executive, that statistic is striking, considering how important value-based care is and will continue to be to the industry.

Despite the dissatisfaction surrounding EHRs, switching EHRs may be a big mistake for healthcare organizations. A recent Black Book survey found 47% of all health systems who replaced their EHRs are in the red over their replacements. A whopping 95% said they regret the decision to change systems.

Hospitals and physician may not be entirely happy with their EHR choices, but the best course may be to stick with their system. Highly successful hospitals and health systems will find ways to optimize workflow and patient care which may involve additional IT investments and best of breed investment approaches, rather than keeping all of the proverbial eggs in the EHR basket.

5. Dealing with nontraditional entrants and disruptors. In 2018, several new entrants entered and/or broadened their reach into healthcare.

Amazon acquired online pharmacy retailer PillPack, and partnered with JPMorgan Chase and Berkshire Hathaway to create a new healthcare partnership for their employees. Early in 2018, Apple announced it was integrating EHRs onto the iPhone and Apple watch, and recently, Google hired Geisinger Health CEO David Feinberg for a newly created role, head of the company’s many healthcare initiatives.

New partnerships have also arisen between traditional healthcare entities that could result in significant healthcare delivery changes. Cigna and Express Scripts received the go-ahead from the DOJ for their merger in September, and CVS and Aetna formally announced the completion of their $70 billion merger November 28.

Read more about the top two ways the CVS-Aetna merger could change healthcare.

All of these new industry disruptors and mergers will impact healthcare organizations, likely creating new competition, disrupting traditional healthcare delivery mechanisms, creating price transparency and pressures, and fostering higher expectations from consumers in 2019. Keeping an eye on these potential disrupters will be important to ensuring sustained success in the long term.

6. Turning innovation into an opportunity. From new diagnostic tests and machines to new devices and drug therapies—the past few years in healthcare have seen exciting and lifesaving developments for many patients. But these new devices and treatment approaches come with a cost.

One of biggest 2018 developments that best exemplifies the challenge between innovation and cost is CAR T-cell therapy. This new cancer treatment is already saving lives, but it racks up to between $373,000 and $475,000 per treatment. When potential side effects and adverse events are accounted for, costs can reach more than $1 million per patient.

Finding the best way to incorporate new treatments like this one, while balancing outcomes, cost, and healthcare consumer demands, will be a top challenge for healthcare organizations in 2019.

 

 

 

Payer, provider trends to watch in 2019

https://www.healthcaredive.com/news/payer-provider-trends-to-watch-in-2019/545612/

Ripple effects from 2018 will continue well into the new year as players deal with some massive policy and business shifts.

 

 

Scaling the “specialty care business” across the health system

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Over the past month we’ve 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 providers 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). So far we have described how a consumer-oriented health system should be organized at the market level, with expanded access and senior-care businesses providing lower-cost care in an outpatient setting for many services that were previously delivered in an acute-care hospital, and how the profile of the local hospital needs to change in response.

This week we shift our attention to health system services that can be scaled at the regional level, starting with specialty care, the medical and surgical specialty services that comprise many hospital service lines. Today nearly every community hospital is a “jack of all trades” with the same portfolio of services: obstetrics, cardiac care, orthopedics, and cancer care are the marquee service lines. Incentives, both market-based and internal to the health system, have encouraged this. Hospitals build services aimed at capturing the same handful of profitable (and usually procedurally-focused) DRGs. And many health systems reward local hospital leaders on the profitability of the hospitals they run, creating no incentive for those leaders to shift profitable volume to other hospitals in the system, and often resulting in redundant, inefficient, and sub-scale specialty care services.
 
We believe many specialty care services could be improved by moving care “up and out” of the community hospital. As we described before, a large portion of routine surgical care could be moved “out” of the hospital to lower-cost outpatient centers, supported by short-stay capabilities and expanded home health. At the same time, more complex specialty care should move “up” in the health system and be concentrated in regional “centers of excellence”, where expensive talent and expertise can be scaled, and systems can aggregate the volume needed for highly-efficient operations that lower the cost of delivering complex specialty care.

While the center of excellence model is not new, it’s often little more than a marketing slogan. Few systems have deployed it for operational efficiency, redirecting specialty care patients to high-volume-centers—and shuttering their low-volume or sub-standard local programs. Even fewer have invested in the infrastructure needed to effectively coordinate care between a regional center and local providers: telemedicine for effective provider collaboration and consultation, effective information sharing, and strong local care management support. One question inevitably arises: will patients travel for care? As individuals bear a larger portion of the cost of care, they do seem to be willing to travel longer distances in pursuit of better value. Understanding how the consumer “travel radius” changes with higher levels of financial accountability, and how that radius differs among services, ought to rank high on the priority list of systems looking to determine what business to consolidate at regional centers.