5 Items to Include in Your 2020 Budget

October 1, 2019

From personalized therapies to new technologies, the line items you shouldn’t overlook next year.

It’s that time of the year when organizations begin developing their budgets for the coming year by projecting membership growth, medical loss ratio, administrative expenses as well as the investment in new initiatives. Most of these costs can and will be developed based on past trends that are adjusted incrementally for competitor, product, and market changes.

Beyond this, executives in the most successful organizations will also take a step back to think about what could go wrong and what could prevent their organization from reaching its goals. Aside from the inherent risk that all organizations have of unexpected staffing changes or poor sales performance, what are some of the biggest potential disruptors looming in 2020?

Personalized therapies

As personalized approaches to cancer treatment like CAR T-cell therapy become more applicable to wider a range of malignancies, oncology centers will face significant pressure to incorporate these therapies in addition to surgery, chemotherapy, and radiation.

Because CAR T can, in specific malignancies, deliver such dramatic and rapid results, it has the potential to be a major disruptor, forcing providers and managed care organizations to include it as a first line therapy. At a total cost ranging from $700,000 to well over $1 million, CAR T therapies could have a great impact on the cost of cancer treatment as well.

Blockchain

The use of integrated, distributed systems of recording, storing, and viewing information critical to providers, payers, and regulators has the potential to address problems inherent in keeping provider directories up-to-date, tracking member prescription use from multiple pharmacies, integrating patient medical records in real time, and eliminating redundant diagnostic tests.

Many of the major managed care organizations have begun efforts to employ blockchain powered approaches to provider data management, including credentialing and directories. Challenges with trusting data, lacking ownership of information, and violating HIPAA requirements will reshape how managed care organizations approach this major disruptor.

Artificial intelligence

Applications for machine learning, or artificial intelligence (AI) in managed care organizations range from claims review for fraud or manipulative billing to identification of high-risk members and the development of care plans, to viewing and approving authorizations, to data quality review and interface with electronic medical records.

In short, AI has the potential to change virtually every area of a healthcare organization and have a tremendous impact on staffing skillsets managed care organizations require.

Related:  Nine Reasons Health Execs Are Excited for the Future

Social determinants of health

Social determinants of health (SDoH) are the conditions in which people are born, live, and work and have been found to have a significantly greater impact on an individual's health than any clinical or genetic factor.

For most health plans, the SDoH conditions affecting their members are related to adequate housing, access to healthy food, and lack of transportation. Addressing these conditions on a member-by-member basis can have a dramatic impact on healthcare cost-but requires a new set of tools and employee skills and a transformation on how an organization defines itself and deploys its resources.

Amazon-like competitors

While Apple, Google, and Amazon have discussed their interest in the healthcare market, most of their activities have been relatively modest to date. That could change very rapidly.

These data-obsessed behemoths have the resources, technological capabilities, and loyal customers to be major disruptors when they enter the market in a larger way. Amazon’s purchase of PillPack is already raising significant concerns at large pharmacy chains and among PBM companies. Amazon’s Haven joint venture with Berkshire Hathaway and J.P. Morgan is starting to take form as a new intermediary focusing on outcomes-based reimbursement.

How much impact each of these or other potential disruptors will have in 2020 remains to be seen. But organizations that don’t take the time and effort to prepare for disruptors-do so at their own peril.

Don Hall, MPH, is principal of DeltaSigma LLC, a consulting practice specializing in strategic problem solving for managed care organizations. He most recently served as president and chief executive officer of a nonprofit, provider-sponsored health plan. 

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