2015 was another year of big investment numbers for digital health according to a recent Rock Health report. At the same time, 2015 was a big year in terms of the ongoing impact of the transition to fee-for-outcomes models on the healthcare stakeholders. A lot is changing in the healthcare space – from innovative care delivery models to the fast-changing Payer landscape, to policy changes, growing consumerism, advances in patient engagement and analytics, and the ongoing concerns about security and the lack of inter-operability. This article explores 10 healthcare trends for 2016 – specifically among the Payers, Providers, Patients, and the Digital Health companies working at the intersection of these stakeholders.
1. Delivery Innovation: Care Moves outside the Hospital
As payment shifts to value-based models, health systems are pursuing lower-cost care settings more aggressively and creatively than before. There continues to be a major shift to the outpatient setting, both in volume and revenue. Perhaps the most telling example of this trend was the recent quote by Geisinger’s CEO, Dr. David Feinberg, who said in response to a question about his priorities – “I think my job ultimately is to close every one of our hospitals..because we should take care of you at home”. Several other examples of this trend were seen recently and emerging telehealth business models will further accelerate this transition.
- Retail Healthcare is going mainstream with retail chains like Walgreen, Rite Aid, and Safeway partnering with health systems and diagnostic labs to provide healthcare access points in their stores. Advocate has announced that it would operate the 56 Walgreens retail clinics in the greater Chicago area.
- Dignity is partnering with Emerus to launch micro hospitals to expand access. Dignity is also partnering with Adeptus for free standing emergency rooms.
- Dignity recently expanded its access points through their occupational health clinic acquisition of U.S. HealthWorks.
- UnityPoint Health, an Iowa-based health system now has 100 + clinics throughout Iowa, Wisconsin and Illinois.
- Teladoc, a telehealth company that went public in 2015, had 12.6 Million members as of the 3rd quarter of 2015, up from 8.1 million in 2014 from 1.9 million the year prior, and continues to expand. Other similar companies like American Well, Doctor on Demand, and MDLive continue to increase access and reduce costs for delivery of healthcare for a growing number of consumers.
- Startups like Higi and MedWand are facilitating the transition to alternate care locations by enabling remote capture of vital clinical data with their innovative devices.
2. Policy Changes accelerating the shift towards value
The Center for Medicare &Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) have been the driver of the transition to value-based care, starting with the Meaningful Use incentives program. Recent announcements from these organizations indicate their intent to accelerate the transition in the coming years.
- Early last year, HHS set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.
- Passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which considers quality, cost, and clinical practice improvement activities in calculating how Medicare physician payments are determined.
- Earlier this year, CMS announced a new initiative called the Next Generation ACO Model that builds upon experience from the Pioneer ACO Model and the Shared Savings Program. One of the key features of the Next Generation ACO model is that the participants will have the opportunity to take on higher levels of financial risk – up to 100 percent risk – than ACOs in current initiatives.
- Earlier this year, CMS also announced their intention to change Meaningful Use as we know it. Key guidelines for the changes include rewarding Providers for outcomes (not clicks), giving them the flexibility to customize, leveling the technology playing field to promote innovation, and prioritizing interoperability.
3. Providers Push towards Scale
Several factors are pushing hospitals to get larger through M&A and partnerships. Key among these factors are the declining reimbursements, increasing need for investments in population health infrastructure and information technology, and the need to respond to increasingly savvy consumers. Larger scale allows health systems to reach more patients, manage populations more effectively and to negotiate better rates from suppliers/insurers.
- Barnabas Health and Robert Wood Johnson University Health merger announced last year will create the largest hospital chain in the state of New Jersey.
- Advocate Health Care and NorthShore University Health System announced their intention to combine to create the largest integrated health care delivery system in Illinois.
- Aurora Health Care has started a partnership with seven other health systems in Wisconsin called ‘About Health.’ They compete with these organizations in some markets, but also partner with them to create scale.
4. Changing Payer Landscape
The health insurance industry is also facing pressure to lower costs following the Affordable Care Act. An analysis by McKinsey & Co. showed that private insurers lost $2.5 billion in 2014 from the plans they sold to 8 million Americans through federal and state health insurance exchanges, or about $163 for every person they covered. The industry’s ongoing shift from a fee-for-service payment model has incentivized companies to do more, for less. The industry is responding in different ways to adapt to these changes – from consolidation to new entrants to new innovative models.
- Consolidation among traditional Payers: In Q4 2015, shareholders at Aetna and Humana approved Aetna’s $37 billion purchase of Humana. Separately, two other major insurers –Anthem and Cigna — declared their intent to join forces earlier in 2015. The companies claim that combining will help them negotiate with hospitals and pharmaceutical companies for cheaper care, and cut operational costs.
- New Entrants: Open API access to healthcare business and data transactions is enabling innovators like Oscar Health to offer competitive premiums and gain market share through lower operational overhead, dynamic network management and superior customer segmentation.
- Providers becoming Payers: More health systems are launching insurance plans as health systems see the financial and quality advantages of controlling premium dollars from beginning to end and steering patients toward their services. It frees them from having to share with insurance companies any savings they generate from improved quality and efficiency. Some examples from the previous years include the launch of an insurance plan on the Ohio HIE by Catholic Health Partners (a Cincinnati-based health system), and the launch of a health plan called CareConnect on the NY state health insurance exchange by North Shore-Long Island Jewish Health System (a Long-Island, NY-based hospital system). A new entrant that resembles this model is ZOOM+PHI – an integrated healthcare delivery system and plan – described by some as the Kaiser Permanente for the 21st century without the baggage.
- New Models: Innovators like Collective Health are trying to bring an alternative to the traditional health insurance solutions by offering employers a way to pick and choose which things they want covered for their employees in a less expensive and more efficient process.
- Bypassing Payers: Direct primary care (DPC) is an emerging model that has gained attention in the last few years. DPC practices generally do not accept health insurance, instead serving patients in exchange for a recurring monthly fee for a defined set of clinical services. Some large examples of DPC practices include Iora Health, Paladina Health, and WhiteGlove Health.
5. Consumerism on the rise
As more financial risk in paying for health care migrates from payers to individuals, it means an increasing obligation for the healthcare consumer to pay a greater share through rising premiums, deductibles, co-pays, and coinsurance. As a consequence, healthcare consumers are now more actively navigating the system to get the best value for their health care spending. This trend is leading to several new business models.
- Big-box retailers like Wal-Mart and retail drug chains see opportunity in consumer-driven health care and are disrupting the existing system by offering care centers with longer opening hours, a low fee, access to basic diagnostic tests, and greater convenience.
- Consumers are looking for more transparency from both doctors and hospitals regarding the quality of care and prices. Transparency solutions providers such as Castlight Health and Healthcare Bluebook are driving access to cost and quality information to help consumers make health care choices and better manage health expenditures.
- Another group of innovators like ZocDoc is smoothing the interface between patients and the health care system by helping patients find and connect with physician and schedule office visits online.
- The “quantified self movement”, where individuals track behavioral and activity levels through wearable technologies such as accelerometers for personal health and fitness reasons, indicates that consumers are expecting personalized and real-time access to health services and information round the clock.
6. Security Concerns – an ongoing hot issue
Medical information is worth 10 times more than credit card numbers on the black market. The stolen medical information can be used to file fraudulent insurance claims, obtain prescription medication, and advance identity theft. With more people using digital health apps and services than ever before, privacy and cyber security will be top of mind for both consumers and providers. Insurers have already had a rough go of it recently, facing hacks that have affected hundreds of millions of customers in total. And this will continue to be a hot issue for 2016.
- An estimated 85% of large health organizations experienced a data breach in 2014, with 18% of breaches costing more than $1 million to remediate.
- Hackers infiltrated a database containing personal information on as many as 80 million customers and employees of insurance giant Anthem in 2015.
- Data breaches could be costing the healthcare industry $6 billion each year, according to a recent study.
There is growing chatter among the security experts about the applicability of “Blockchain” a technology that has been used in the financial services industry for data security. A blockchain secures data with multi-signatures and cryptography. The data is hashed onto the blockchain and then, using multi-signatures, people can gain access only if there is approval from the appropriate number of people.
7. Patient Engagement – From Patient Portals to Care Management Systems
Meaningful Use Stage 2 tried to promote patient engagement by incenting Providers to give Patients secure online access to their health information. EHR vendors and other companies scrambled to build Patient Portals to help Providers comply with the MU requirements, and for a while Patient Portals were synonymous with Patient engagement. However, over time Providers and CMS have realized that more is needed to effectively engage Patients to achieve the triple-aim objective. This has led to the development of care management platforms that include patients in the management of their care across the care continuum, not just inside a hospital. Further, these platforms engage with the patients in a personalized way (with content that is specific to their needs, in a language they prefer, using a mode of communication they prefer, at the time they prefer), and help them modify their behavior using behavioral science strategies (rewards, gamification, social competition) to manage their health and wellness.
Patient engagement efforts have a come a long way, but much more needs to be done to understand how to engage and motivate the majority of the population, not just the English-speaking, tech-savvy population. It will take time because it requires not only change in patient behavior, but also change in physician behavior, and change in the culture of healthcare organizations that have only worked in the fee-for-service reimbursement models where patient engagement was not needed. However, effectively engaging patients is so critical to the success of the fee-for-outcome models, that failure in not an option. No wonder, patient engagement has been called the blockbuster drug of the century.
8. Behavioral Health – Not on the backburner anymore
One out of five American adults experiences a mental illness every year. These conditions cost US businesses more than $440 billion annually. Yet behavioral healthcare has long languished on the backburner. This is beginning to change as employers and insurers recognize the importance of mental health to their employees’ and customers’ well-being and productivity. Failure to consider mental health could mean misdiagnosis and poor treatment of physical illness, leading to worse outcomes for patients and, ultimately, wasted healthcare dollars. With growing demand, new cost-effective strategies for delivering care are emerging.
- The Boston-based Pediatric Physicians’ Organization at Children’s Hospital and the Charlotte, NC-based Carolinas HealthCare System are integrating behavioral health within primary care. Using strategies such as on-site integration and tools such as videoconferencing, these groups connect primary care clinicians with behavioral health specialists.
- Behavioral healthcare providers also are using technology to conduct virtual visits directly with patients. In 2014, the US Department of Veterans Affairs delivered 325,000 behavioral telehealth visits to over 100,000 veterans at local community-based clinics using videoconferencing
- Start-ups such as Lyra Health and Doctor-on-Demand are driving change in the private sector, connecting consumers with mental health clinicians.
9. Analytics – transforming data into meaningful and actionable insights
The digitization of medical records, wearable technologies, mobile, and the Internet of Things are contributing to a deluge of data in the healthcare industry. Healthcare organizations are moving rapidly to leverage analytics to transform this data into meaningful and actionable insights that enhance patient care and experience, reduce overall costs, and make healthcare organizations operationally efficient. After spending the last couple of years establishing the infrastructure for handling big data and merging clinical and financial data, the leading healthcare organizations are now beginning to apply the capabilities to actual use cases. Some of these use cases include:
- Enabling value-based care by aligning clinical, quality, and financial analytics. Reimbursement in the value-based models requires health systems to measure and report various process and performance measures, for example for the Value-based purchasing programs and the Accountable Care Programs.
- Drive insights for effective population health management by integrating clinical and claims data.
- Improve care coordination by integrating data across the care continuum
- Using predictive analytics to reduce patient readmissions, increase the accuracy of patient diagnosis, and deliver more targeted care to high-risk patients.
10. Interoperability – Information Blocking? Technology? Or Both?
While over $28 Billion has been spent so far on implementing Electronic Health Record Systems (EHR), these systems are not interoperable, meaning that information does not flow seamlessly between them. In April 2015, the Office of the National Coordinator for Health Information technology (ONC) released a report on health information blocking that has been undermining healthcare reform and called for congressional intervention to address the issue. The same report notes that 63% of hospitals and 69% of health systems expect interoperability to be one of the top three data-related challenges over the next three years in performing analytics.
- CMS, through its recent comments has indicated the intention to level the tech playing field for startups and new entrants with open APIs to allow apps, analytic tools, and connected technologies to get data in and out of an EHR securely, as I mentioned in my recent article. Further, they have indicated intention to guide meaningful use implementation towards interoperability that builds on use cases coming from physicians and patients, and fights data blocking
- There is growing interest in the HealthIT community in an emerging data exchange technology known as FHIR (pronounced “fire”). FHIR, or Fast Health Interoperability Resources, is a proposed interoperability standard developed by the health care IT standards body known as HL7.
- Startups like Pokitdok, Apigee, and Redox are also recognizing the struggle to tap into EHR data, and operationalize it in new and engaging ways by using open standards such as HL7 and FHIR to create simple and secure RESTful interfaces atop incumbent EHR providers.
So why is this important? At $2.9 Trillion, the US health economy is about 17% of the GDP, and growing at about 6% to 7% per year. As a comparison, US spending as a percent of GDP is almost 50% more than the next highest spender France (11.6% of GDP) and double what was spent in the U.K. (8.8% of GDP). Despite being the highest spender, for the most part, our higher healthcare spending does not deliver demonstrably better outcomes. Studies have suggested that aggressively migrating to outcomes-based payment has the potential to reduce healthcare spending in the United States by a trillion dollars over the next decade while improving patient well-being. Addressing the healthcare cost and quality crisis in the United States is a daunting challenge but also a noble and necessary one. The trends outlined above have the potential to advance US healthcare towards that future. Godspeed to everyone trying to make that happen!