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Disruption and the Future of Healthcare: Industry Leaders Parse the Challenges, and Strategic Opportunities

April 4, 2018
by Heather Landi
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Just in the past three months, news headlines have signaled the potential for disruptive change in the healthcare space—from Amazon teaming up with Berkshire Hathaway and JPMorgan Chase to form a healthcare company, to speculation of a Walmart-Humana deal, to tech behemoth Apple launching its Health Records platform.

With continued vertical integrations, mergers and acquisitions and big tech companies making healthcare moves, it’s clear the pace of disruption in healthcare is accelerating, but what does this mean for the future of healthcare? Is there an upside to disruption for industry stakeholders?

A cross-industry panel representing financial, health, technology and life science leaders discussed the implications of this sudden digital disruption during a webcast on Wednesday hosted by Ernst and Young (EY), the New York City-based advisory services firm. The panelists dissected the opportunities made possible by digital disruption, what these changes may mean to stakeholders across the health value chain and what organizations can do to seize the upside of technological disruption.

Kristen Vennum, EY Americas advisory health sector leader, a panelist during the webcast, summed up the current landscape and dizzying pace of change when she urged healthcare executives to “find their strategy within the chaos.”

“We have to change as quickly as our marketplaces are changing, or we’re on the wrong side of the S curve. And this speaks to the amount of change that healthcare executives are facing now, and it’s going to increase as opposed to decrease. Finding your strategy within the chaos is critical,” she said. “Six or eight months ago, or a year ago, we thought disruption might come from Washington D.C., [with] regulatory changes. And now, the conversation has really changed; disruption is coming from unexpected sources and new places. The ability to be agile in our strategy and to be able to take in a lot of input, then set a course and adjust it over time, is an important asset.”

Along with Vennum, the panel was comprised of Roger Park, financial services, innovation leader at Ernst & Young; Mike India, transaction advisory services, Ernest & Young; and Simon Mathews, M.D., head of clinical innovation, Armstrong Institute for Patient Safety and Quality at Johns Hopkins Medicine in Baltimore. Jacques Mulder, U.S. health sector leader for Ernst & Young, moderated the panel discussion.

The panelists kicked off the discussion by first describing the current landscape in the healthcare industry and what they saw as signals for change. According to data provided by EY, Fortune 500 companies spent more than $265 billion in healthcare costs in 2017. Large employers pay, on average, $9,800 for annual healthcare costs for their employees.

What’s more, the industry is facing enormous cost pressures. According to EY data, the calculated cost of the end-to-end healthcare marketplace as it relates to U.S. gross domestic product (GDP) is $3.4 trillion. It’s estimated that the U.S. healthcare system wastes about $765 billion a year. And, healthcare costs are projected to grow 5.7 percent, outpacing U.S. GDP and inflation. This all points to an industry with ongoing market inefficiencies, unmet consumer demands and unmet employer needs, the panelists noted.

Providing a physician’s point of view, Dr. Mathews said, “There is a consensus that in the healthcare delivery space, there are pockets of excellence, such as advancing new technologies and specific health outcomes, such as post-stroke mortality, but if you zoom out, you see a different story. The statistic that medical errors are the third leading cause of death, if you think about the magnitude of this problem, it’s clear that there are challenges and opportunities going forward.”

The panelists first tackled the disruptions taking place on the business side, such as increased mergers and acquisitions (M&A) activity as organizations look to consolidate and scale as well as ongoing vertical integrations.

“One of the things we’re seeing is organizations turning themselves into pretzels; we have clients who have become payers, providers, suppliers or distributors, and [we have] changing business models,” India said, with regard to vertical integrations. A few notable examples include UnitedHealth buying DaVita Medical Group for $4.9 billion, CVS’s plans to buy Aetna for $69 billion and four leading U.S. health systems announcing plans to develop a not-for-profit generic drug company.

Vennum said healthcare organizations have three options—deny change, get bigger, or “get different.” “Those are not mutually exclusive, but ‘getting different’ is new. It’s part of a journey that will reshape what the healthcare market looks like in North America and reshape how the value chain works. The end game might be to just ‘be different’,” she said.

The question moving forward, Mulder said, it whether vertical integration will create value. India said he believed it would, noting “The thing that strikes me about the U.S. healthcare market is how extremely fragmented it is. Even the biggest businesses throughout life sciences, including payers and providers, none are bigger than 3 percent of the total market. Even the big businesses are struggling to direct traffic as much as they would like. For stakeholders along the health value chain, with vertical integration, they can streamline throughput, take hand-offs out of the process, lower costs in a meaningful way and find standardization and consistency,” he said.

Park noted parallels between financial services and healthcare: “There is going to be a lot of integration, as it creates value, vertically and horizontally. It’s about creating the ecosystems and the networks that allow parties to work with each other to create value for consumers, end users,” he said.

Digital Disruption and Potential Benefits

The panelists next tackled the digital disruption taking place in healthcare, with non-traditional players (Google, Amazon, Apple, etc.) looking to offer better technological platforms for administering healthcare, particularly with a focus on providing more optionality and access as well as price transparency. Examples include the Amazon/Berkshire Hathaway/JPMorgan Chase partnership, Apple’s plans to open two health clinics in California for its employees, and reports that Google is looking to break into the managed care space.

“What’s different about this digital disruption is this idea of finally brining the consumer to the forefront, and that’s different than just having health records implementation in the health system, or having apps. It’s about consumers owning their own data. We’re seeing signals that large companies are working to actually put the data in the hands of the consumer,” Vennum said.

“Data is the currency that the health economy trades on,” India said. “Right now, it sits with insurance companies and providers; it sits with everyone but the patient or consumer. These latest announcements are aimed at shifting who controls the power in the health economy. That causes our clients to think about how they engage the patient or member, as they will have more choice and optionality, which could drive value.”

A digital healthcare ecosystem will significantly disrupt healthcare by providing consumers/patients with more choice, access, transparency, curation of medical information, and discovery, with information being more focused and analytics-driven.

As a physician, Mathews said there is tremendous value in shifting control of healthcare data to the patient. “It’s about empowering patients with data and tools, and ultimately driving the outcomes that matter.”

He continued, “At a hospital level, what we don’t do enough of, and what needs to happen to realize value, is that we need to be integrating by designing systems to deliver on outcomes.”. “At the unit level, technology in and of itself is in a vacuum, and a reality in the clinical environment is that it needs to integrate with clinical workflows and culture. Technology needs to augment, facilitate and work with these other elements.”

The promise of a digital healthcare platform is the ability to integrate all the information that a patient needs in one place, Vennum said. “Someone shared an observation at HIMSS (the Healthcare Information and Management Systems Society Conference in Las Vegas last month), where they looked at the exhibit floor and said, ‘This is the problem with healthcare—there are tens of thousands of point solutions. I don’t want tens of thousands of places to go; I want to go to one trusted place and everything else plugs into that’,” she said.

Despite the dizzying pace of change and the shifting landscape, the panelists noted that there are upsides to disruption. “It’s an exciting time, and you almost can’t keep up with all the announcements in health. What does this mean? The first point is that every organization needs a strategy to capture, protect and influence their demand. Or, you risk being commoditized,” Vennum said.

To this end, organizations should evaluate their M&A and partnership strategy to accelerate strategic partnerships and consider non-traditional M&A partnerships (vertical integration) to reduce complexity and cost, India said. And, organizations should work to build interfaces and demand aggregation platforms.

On the technology side, organizations should work to become leaders in digital and mobile engagement, establish digital marketplaces and use digital to influence population health. “As you’re evaluating platforms and technologies, one simple thing to look for is, does this enable better behavior, does it enable the customer to make better choices and make it easier for them to do the right thing?” Vennum said.

“The upside of disruption is that we can use these technologies and capabilities to create better outcomes and create a better experience for the end user. The upside is the opportunity to reimagine the industry,” Park said.


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Survey: Healthcare Orgs Ramping up Investment in AI, Confident about ROI

November 16, 2018
by Heather Landi, Associate Editor
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The majority of health care executives (91 percent) are confident they will see a return on investment (ROI) on artificial intelligence investments, although not immediately, and foresee the greatest impact of AI will be on improving health care, according to an OptumIQ survey.

Most (94 percent) health care leaders responded that their organizations continue to invest in and make progress in implementing AI, with 75 percent of healthcare organizations say they are implementing AI or have plans to execute an AI strategy, based on OptumIQ’s survey of 500 senior U.S. healthcare industry executives, primarily from hospitals clinics and health systems, life sciences organizations, health plans and employers. OptumIQ is the intelligence arm of data and analytics of Optum, an information and technology-enabled health services business that is part of UnitedHealth Group.

While many healthcare organizations have plans, progress is mixed across sectors. Of the 75 percent who are implementing AI or have plans to execute an AI strategy, 42 percent of those organizations have a strategy but have not yet implemented it. Employers are furthest along, with 22 percent reporting their AI implementations are at a late stage, with nearly full deployment.

The average AI implementation is estimated to cost $32.4 million over five years. The majority of respondents (65 percent) do not expect to see a ROI before four years with the average expected period being five years. However, employers (38 percent) and health plans (20 percent) expect ROI sooner, in three years or less, according to the survey.

The survey found that health care leaders universally agree the greatest impact of AI investment will be on improving health care. Thirty-six percent expect AI will improve the patient experience; 33 percent anticipate AI will decrease per-capita cost of care; and 31 percent believe AI will improve health outcomes.

Most health care leaders believe AI can make care more affordable and accessible. Ninety-four percent of respondents agree that AI technology is the most reliable path toward equitable, accessible and affordable health care.

AI will make care more precise and faster, according to respondents. The top two benefits respondents expect to see from incorporating AI into their organizations are more accurate diagnosis and increased efficiency.

The survey found that respondents are looking to AI to solve immediate data challenges – from routine tasks to truly understanding consumers’ health needs. Of those health organizations that are already investing in and implementing AI: 

  • 43 percent are automating business processes, such as administrative operations or customer service;
  • 36 percent are using AI to detect patterns in health care fraud, waste and abuse; and
  • 31 percent are using AI to monitor users with Internet of Things (IoT) devices, such as a wearable technology

With more organizations seeing the benefit of adopting an AI strategy, 92 percent agree that hiring candidates who have experience working with AI technology is a priority for their organization. To meet this need, nearly half (45 percent) of health care leaders estimate that more than 30 percent of new hires will be in positions requiring engagement with or implementation of AI in the next 12 months. However, health organizations seeking to hire experienced staff will likely face talent shortages.

“Artificial intelligence has the potential to transform health care by helping predict disease and putting the right insights into the hands of clinicians as they treat patients, which can reduce the total cost of care,” Eric Murphy, CEO of OptumInsight, said.

“Analytics isn't the end, it's the beginning – it's what you do with the insights to drive care improvement and reduce administrative waste,” Steve Griffiths, senior vice president and chief operating officer of Optum Enterprise Analytics, said. “For AI to successfully solve health care’s biggest challenges, organizations need to employ a unique combination of curated data, analytics and health care expertise... We are already seeing a race for AI talent in the industry that will grow as adoption continues to increase.”

 

 

 

 

 

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Breaking: The 2019 Healthcare Informatics Innovator Awards Program is Open

November 15, 2018
by the Editors of Healthcare Informatics
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Providers and vendors can now submit their entries to the Healthcare Informatics Innovator Awards Program

The 2019 Healthcare Informatics Innovator Awards Program is now open for submissions. As always, it’s a great privilege and pleasure for us to sponsor this program.

And as many readers know, the concept of team-base recognition, which began with the 2009 edition of the program, has encompassed numerous sets of multiple winning teams that our publication has recognized for their achievements across a very broad range of areas.

As it always does, the Healthcare Informatics Innovator Awards Program recognizes leadership teams from patient care organizations—hospitals, physician groups, clinics, integrated health systems, payers, HIEs, ACOs, and other healthcare organizations—that have effectively deployed information technology in order to improve clinical, administrative, financial, or organizational performance.

The Innovators Program, as it has in the last few years, also recognizes vendor solution providers who are asked to describe their core products or services in five categories. We are asking vendors to submit their innovation in one of five critical health IT areas: Data Security; Value-Based Care; Revenue Cycle Management; Data Analytics; and Patient Engagement.

Indeed, again this year, the Innovator Awards program will again include two tracks for innovation recognition—one for healthcare provider organizations and one for technology solution providers.

The submission form link for both tracks is right here. The deadline for submissions is January 4, 2019.

What’s more, the winning teams will be featured in an upcoming issue of Healthcare Informatics, and winning vendor teams will be awarded free digital distribution of whitepapers to all HIT Summit Series attendees.

At Healthcare Informatics, we are honored to be able to showcase these kinds of case studies from both providers and vendors, which we believe embodies the spirit of innovation around adaptive change that will light the way for their colleagues from across the industry.

At a time of extraordinary change in healthcare, now is as great a time as ever to showcase your innovations. Please consider submitting an entry to our program, and good luck in your entry!

--The Editors of Healthcare Informatics

 


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New Blockchain Project Sets to Tackle Provider Credentialing

November 12, 2018
by Rajiv Leventhal, Managing Editor
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A group of five healthcare enterprises—National Government Services, Spectrum Health, WellCare Health Plans, Inc., Accenture, and The Hardenbergh Group—are linking up to participate in a distributed ledger program aimed at resolving administrative inefficiencies related to professional credentialing.

The project, Professional Credentials Exchange, is being developed by ProCredEx and Hashed Health, a blockchain innovation consortium. The exchange leverages “advanced data science, artificial intelligence, and blockchain technologies to greatly simplify the acquisition and verification of information related to professional credentialing and identity,” according to officials.

In an announcement, officials noted that credentialing healthcare professionals “is a universally problematic process for any industry member that delivers or pays for patient care.  The process often requires four to six months to complete and directly impedes the ability for a healthcare professional to deliver care and be reimbursed for their work.”

They added, “Hospitals alone forfeit an average of $7,500 in daily net revenues waiting for credentialing and payer enrollment processes to complete.  Further, nearly every organization required to perform this work does so independently—creating a significant administrative burden for practitioners.”

As such, the groups, via the exchange, will aim to address the time, cost, and complexity associated with these processes by facilitating the secure, trusted exchange of verified credentials information between exchange members.

Included in the collaboration are WellCare Health Plans, which serves about 5.5 million members, and Spectrum Health, a 12-hospital health system in western Michigan. National Government Services is a Medicare contractor for the Centers for Medicare & Medicaid Services (CMS), and processes more than 230 million Medicare claims annually.

"A fundamental component of developing the exchange lays in building a network of members that bring significant verified credential datasets to the marketplace," Anthony Begando, ProCredEx's co-founder and CEO, said in a statement.  "These are the leading participants in a growing group of collaborators who bring data and implementation capabilities to accelerate the deployment and scaling of the exchange."

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