Finding the Cause

LOOKING BEYOND “TOP TEN PREDICTIONS FOR HEALTHCARE” LISTS TO DISCOVER THE UNDERLYING REALITIES

This year, like every year, has kicked off with countless healthcare prognosticators releasing articles, op-eds, and webinars to outline the top ten healthcare predications for physicians, hospitals, IT vendors, pharma, and others. While there are many unique perspectives, a lot of these lists cite the same sources and underscore the same trends.

While we often get fatigued reading these, there’s something very interesting emerging from these lists this year: these predictions are outlining the symptoms of healthcare change, but they aren’t looking at the cause. Underlying these trends are a handful of key truths that strike at the heart of what is shaping how providers, payers, vendors, and patients engage with the healthcare market.

TRUTH #1: PROVIDERS ARE BEING THREATENED BY LOW-COST, CONVENIENT DELIVERY MODELS.

As provider organizations shift to a fee-for-value mindset while still driving some fee-for-service volume, they run the risk of losing patients and office visit volume to new, alternative delivery models, such as the following:

• Retail clinics offer patients convenient, lower-cost care. Staffed by nurse practitioners and physician assistants, these clinics deliver quick, hassle-free sick visits and well checkups at low cost. Retail visits represented 2 percent of all primary care visits in 2015; expect that number to grow rapidly.
• Telemedicine vendors offer health plans a low-cost, convenient method of treating patients. The global telemedicine market is expected to expand at a compound annual growth rate of 14.3 percent through 2020, growing from 14.3 billion in revenue today to $36.2 billion in five years.
• Direct primary care, sometimes referred to as concierge or retainer medicine, offers healthcare consumers an alternative to insurance for primary care—for a fixed monthly fee, patients receive unlimited primary care.

TRUTH #2: NEW PAYMENT MODELS DEMAND NEW THINKING.

Alternative payment models are quickly coming to market, shifting payment from a fee for each individual service to episodic—and even global—payments. These payment dynamics change the way healthcare organizations drive revenue; to remain viable, they have to shift their thinking as well.

• Risk management will become a common term. Healthcare organizations will need to understand the health risk of their populations more effectively so they can shift how they deliver care to those patients. Population analytics will be critical investments for organizations to better manage the financial risk of new payment models.
• Margin management will be the new financial metric as revenue become predictable and repeatable with capitated, episodic, or global payments. Looking at unnecessary services as expense lines rather than revenue lines will be a tough transition for many to make—but failing to do so bears strong negative consequences.
• Creating capacity of the physician practice will be essential to grow revenue. When revenue is capped per patient, or per episode, the revenue of the practice grows with the size of its population. This growth creates the need to increase capacity for the practice without growing expenses—just one more reason for physician practices to look to low-cost, convenient delivery models.

TRUTH #3: BIG DATA IS NOT AS HELPFUL AS INDUSTRY ANALYSTS PREDICTED.

We’ve been waiting for years for the promise of big data and big analytics to be realized. Watson is still trying to find a job, and big data analytics vendors are struggling to find a market that allows them to solve the unmet challenges healthcare organizations have with payment reform and the triple aim. What healthcare organizations really need is not the same thing that’s being sold.

• Data rich, information poor is the plight of many healthcare organizations. Billing, clinical, claims, and socio-economic data from multiple sources is piling up to no benefit. All the data in the world is useless without a way to extract meaningful information from it. Aggregating, cleansing, and interpreting data effectively is critical to getting the right insights.
• Information without insight is not what organizations need. In an industry inundated with legislative and insurance requirements physicians find that nearly 35 percent of their day is spent on something other than patient care. To shift thinking around care delivery and respond to changing consumer demands, healthcare organizations are starved for the big insights they have yet to get from big data.
• Action is the difference between winning and losing. Winners in the analytics field will help healthcare organizations understand not only the data, but what that data implies. Organizations may need to pivot their practice or delivery models to be successful.

TRUTH #4: NEW PAYER AND INSURANCE MODELS CONTINUE TO CHALLENGE TRADITIONAL INSURANCE.

While many think of ACA as the driver of healthcare reform, it’s really more a matter of health insurance reform. The rules, mandates, and programs it launched are geared at making health insurance—not healthcare—more affordable and accessible for all. Insurance must respond to ACA requirements while reducing healthcare costs and improving quality outcomes. This new environment represents an opportunity for fundamental market disruption by new entrants—something that we’re seeing happen more and more.

• Provider-sponsored plans are on the rise. Whether health systems are reinvigorating existing plans or starting something new, traditional plans will see pressure from large health systems who can easily spin up plans with compelling narrow networks.
• Customer-experienced focused plans, like Oscar Health, promise consumers a better healthcare experience. These plans offer enhanced web-based access, modest premiums, and guaranteed preventative care visits.
• Direct primary care plans are also making headway. These plans are modeled after concierge plans, and offer patients unlimited primary care services for a modest monthly payment. While it doesn’t eliminate the need for catastrophic coverage, these plans can pull the healthier patients from traditional plans, leaving them with riskier populations.

TRUTH #5: THE TRUE EMERGENCE OF THE HEALTHCARE CONSUMER IS FINALLY HERE.

How long have we heard about the rise of consumerism in healthcare? We are finally see this prediction come true, as the patient-as-consumer emerges and demands healthcare change. For more than a decade, the healthcare industry has tried to prepare for this by offering more insurance options and increasing deductibles, forcing patients to make choices based on cost, quality, and need. This has primed the market for the healthcare consumer, and now that they’re here, the market shift is happening.

• Patients are demanding more convenient and cost-effective care alternatives. Eight percent of patients ask for healthcare discounts, and primary care practices are at risk of losing their patients to new care delivery models. Insurance companies need to find new methods of patient engagement as they continue to expand their choices.
• Patients should be treated as consumers. As healthcare organizations make the shift to value-based care, increasing patient panels is what will drive growth. Creating capacity is necessary, but appealing to patients who are now making more informed choices will be critical to healthcare organizations’ continued success.
• Patient satisfaction will rule the day. Ignore patient satisfaction to your peril. Unsatisfied patients will leave you—count on it.

These underlying issues demand focus and critical engagement from any physician who wants to thrive in healthcare’s changing market. We will expand on each of these topics in an upcoming white paper, and focus on strategies for how to turn these challenges into opportunities, and emerge as a leading provider in the new landscape of healthcare.

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