Change is happening at warp speed: BETTER GET PREPARED

13 March, 2018

 

Health plan CEOs around the country admit to a sense of trepidation as the new year begins. So, it seems like the right moment to introduce ODH's new blog, in the hope it will serve as a forum for issues roiling the industry. 

If you are unfamiliar with ODH, Inc., here’s a bit of background:

ODH, Inc. is a Princeton, N.J.-based health technology company, affiliated with a Japanese multi-national conglomerate. We provide actionable insights to our health plan clients which enable them to improve outcomes for their members. We do this by aggregating, integrating and analyzing health data, stratifying populations by risk, and identifying individuals with complex illnesses.


So, what’s causing the unease out there?

In a word, change. In just the past few weeks, we’ve seen traditional industry norms being upended at an ever faster pace.

Consider:

  • In a blockbuster deal that could reshape the health care landscape, drugstore giant CVS is buying Aetna for $69 billion. Experts are busy assessing the implications. Some see it as a way to contain costs and promote preventive care as CVS expands its network of retail clinics. Skeptics, on the other hand, doubt that significant benefits will be passed on to consumers in the form of lower costs.
  • With its announcement that it is joining JPMorgan Chase and Berkshire Hathaway to form a health care company, Amazon continues its push into health care. Amazon has also received, pharmacy licenses in many states. Consider Amazon’s options: it could conceivably acquire Rite Aid to compete with the CVS/Aetna juggernaut, becoming a PBM managing drug costs for employer-based plans and negotiating rebates. Alternatively, it could use its Whole Foods foot print or Amazon Go stores to automate the entire process. Imagine a vertical integration approach where Amazon receives an electronic prescription, processes and fulfills it. Patients could then pick up their medications from a kiosk where a virtual pharmacist answers their questions.
  • Humana announced plans to acquire a minority stake in Kindred Healthcare’s home health and hospice care businesses. The intent is to improve care for seniors with chronic conditions through remote monitoring and telehealth, enabled by robust data sharing.
  • Several major hospital systems are forming a new non-profit generic drug company to address shortages of some medicines and to combat sudden price hikes of off-patent drugs. With about 300 hospitals in the group, and others expected to join, the effort could dramatically shake up the drug market.

All this activity points to a blurring of the lines among health care players. Pharmacy chains and traditional health insurers are increasingly becoming providers of care, while hospitals move into the drug business.

These announcements – at least the first two – also highlight two other trends:
  • A big push to provide care in lower cost settings
  • The need to integrate large data sets, and apply analytics and predictive modelling to help close gaps in care

What’s going on?

Health care players of all kinds realize they must innovate as the industry transitions from fee-for-service to a value-based care model. Adding Aetna’s claims data to its pharmacy data, for instance, can give post-merger CVS deeper insights into patients’ health status and enable targeted population health interventions. As for Humana, it’s chief medical officer notes: “Sometimes I think we’re becoming more of a data analytics company than anything else.”

As for big tech companies’ incursion into health care, how worried should you be? Well, not everything they touch turns to gold. Remember a few years ago when Google Health entered the personal health portal space – it didn’t succeed. And Microsoft recently discontinued its HealthVault Insights app-based research project - launched just a year ago – which helped users access their medical records.     

Nevertheless, big tech players do have some significant advantages: innovation at their core, sophisticated retail and distribution networks, and a keen sense of what consumers want. So, it’s a safe bet that they are looking to make their mark in health care which, unfortunately, has been painstakingly slow to modernize.

In the meantime, sitting on the sidelines isn’t an option. As the rash of boundary-crossing activities discussed above makes clear, health plans, hospital systems and provider groups should be shoring up their data platforms, getting smart about new technologies like artificial intelligence and blockchain, and seeking potential partners to help navigate the changing health care world.

To put it bluntly, legacy players who don’t understand and adapt to new market forces risk becoming irrelevant and getting left behind.

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