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Experts discuss what these trends entail, what’s giving them momentum, and how executives can get on board.
As the new year marches on, four trends that are helping to shape healthcare stand out.
These include consolidation of payers and providers, a rise in consumerism, technological advances, and integrating care based on population health. Managed healthcare executives will need to embrace these trends in order to survive in the healthcare landscape. Here, experts discuss what these trends entail, what’s giving them momentum, and how executives can get on board with these trends.
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1. Consolidation of payers and providers
The trend of health insurance companies and providers such as health systems, hospitals, and pharmacy chains consolidating began in 2013 with the passage of the ACA. “This legislation initiated a massive industry shift away from volume-based reimbursement toward value-based reimbursement,” says Ben Kraus, CEO and founder of Stellar Health, which helps insurers and providers improve the long-term health of managed care beneficiaries. The number of practices owned by big health systems has risen by approximately 80% since 2012; many would have gone out of business otherwise due to financial pressures. Similarly, health insurers have been buying up providers to consolidate vertically rather than horizontally, at an historical rate.
“For the first time ever, insurers (and indirectly, providers) are on the hook for keeping people healthy (i.e., avoiding additional medical services) rather than encouraged to provide more services,” Kraus says. “This fundamental change is forcing industry players to reinvent themselves. Providers are consolidating to create an integrated clinical network that is more coordinated and well-positioned to keep a large population of members healthy and therefore perform well financially in the new system or because they lack capital and scale to survive in an industry that requires a fundamental overhaul of the provider business.”
Similarly, health insurers are buying up providers because from the insurers’ perspective, everything has changed-their business is no longer an underwriting exercise that they price and then passively observe outcomes. Rather, their new business model is actually impacting the risk, rather than simply pricing and managing it. The health insurers that will win this new game are companies that can increase their provider networks’ efficiency and make their populations healthier. Post 2013, insurers rely heavily on providers managing their members in a certain way (i.e., focusing on prevention, coordinating transitions, avoiding expensive over-hospitalization) in order to remain profitable as insurance companies.
Despite the benefits, the combined integration of insurers and providers has not, and will not, be easy, says Steve Jackson, president, NRC Health, a healthcare customer experience solutions provider. For most of the last 60 years, the two entities have been on opposing sides. “For these new combinations to truly achieve their desired potential, it requires a focus on consumers,” he says. Consumers want ease; 80% reported that they would switch providers for convenience factors alone. “Benefits will be achieved if healthcare is made more affordable, accessible, and cost transparent as well as less administratively burdensome for clinicians, affording them more time to spend serving patients and families.”
A starting point for any insurer looking to partner with a health system would be to understand the hospital’s current and historical focus on customers. “Health systems that already deliver a great customer experience will be predisposed to build upon that foundation through a vertical integration with insurance partners,” Jackson says. “Measuring progress against these efforts must extend beyond a segmented, episodic view of patient experiences to one that more holistically encompasses the consumer relationship with the healthcare organization and measures their loyalty. The NRC Healthy Loyalty Index gives healthcare organizations a single metric to assess consumer loyalty-taking into account brand awareness, Net Promotor Score, access, needs, engagement, motivation, and experience.
2. A rise in consumerism
Today’s consumers increasingly want to interact with the healthcare industry as more than just passive patients. “Just like any other purchasing decision they make-from cars, to clothing, to hotel choices-they want to be in control and are demanding more choice than ever,” says Ross Goldberg, president, Kevin/Ross Public Relations, an agency that helps healthcare clients with marketing communications challenges.
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“This trend has emerged because of the rise in digital tools and the incredible amount of data that is now available at the click of a button to help consumers make intelligent decisions and better manage their health,” Goldberg says. “Access to information gives consumers a feeling of empowerment and a belief that not only can their opinions be heard, but that they can also have the ability to influence matters more than ever before.”
Furthermore, health plans are accountable for achieving financial outcomes for Star Ratings and HEDIS reporting, and receive financial incentives when they attain certain population health outcomes, says Paul Meyer, president of the public and community market at Welltok, a software as a service company for consumer health.
The ACA played a key role in the rise of consumerism when it launched the online marketplace. “More than ever, consumers are shopping for their health insurance and are weighing their options and purchasing decisions,” Goldberg says. Non-traditional players entering the market are also giving the trend momentum, because they offer consumers even more choices on how they will access and pay for their healthcare.
Another reason that consumerism is growing is that consumers have lost trust in the healthcare system. “This is because costs continue to soar, defining quality remains mysterious, moral debates have morphed into political rhetoric, reports on medical errors continue to emerge, and unencumbered access remains elusive to many,” Goldberg says. “Consumers don’t believe that that those steering the healthcare ship-including health plans-put members first. Until trust is restored, consumers will want more control over decision making.”
To embrace this trend, Meyer says that healthcare executives need to continue to employ technology. “Consumers expect a digital experience first, but healthcare is still largely relying on paper and the postal service in an attempt to reach members,” he says. Using ingrained communication channels such as texting to engage Medicaid beneficiaries in their health and wellbeing has been successful. For example, 90% of consumers read text messages within three minutes and nearly 60% of low-income Americans have used their phone to access health information.
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Along these lines, Goldberg says, “Healthcare organizations will need to embrace digital health, telemedicine, wearable monitoring and fitness devices, online resources, social media, and other technologies to develop effective consumer engagement strategies.”
One example of consumerism at the federal level is the newly proposed HHS rule requiring drug companies to give list prices for their products in television ads. “The HHS proposal will require direct-to-consumer television advertisements for prescription drugs and biological products paid for by Medicare or Medicaid to include the list price in certain situations,” says Carolyn L. Mitchell, JD, MHA, senior counsel, Jackson Walker LLP, a law firm that advises businesses, including healthcare entities. “If a manufacturer’s list price for a prescription drug is greater than $35 for a one-month supply, or the usual course of therapy, then TV ads must include the price.”
3. Technology acceleration
As an industry that’s often viewed as antiquated, the opportunity for digital transformation in healthcare is great. Administrative burdens account for up to 30% of the multi-trillion-dollar healthcare spend; much of this was caused by inefficient data entry processes, says Peter Kirk, CEO, SERMO, a global social network for physicians. A recent JAMA study found that despite the United States spending about twice what other high-income nations do on healthcare, U.S. health outcomes are still inferior.
In light of this, health insurers face immense pressure with rising costs, evolving consumer demand, and changing industry dynamics. Out-of-pocket costs are growing, with 63% of employees seeing single-coverage deductibles rise from 2011 to 2016. Growing complexity has resulted in half of consumers struggling to navigate the health system on their own. “When you combine that with demographic shifts-an older population and more chronic disease-the cost and complexity of healthcare is only expected to increase,” says Kaveh Safavi, MD, JD, head of global health practice, Accenture, a global professional services provider.
Consumers' expectations are also changing, driven by experiences and perceptions outside of healthcare. This is evidenced by observations such as 37% of millennials being willing to switch a health plan to get personalized benefit options. “People expect a personal touch-round-the-clock service, easy-to-use, wherever they are, on their terms-in all areas of their lives,” Safavi says. “Healthcare is no exception. This means transparent pricing, more frequent communications, and personalizing service options to individual needs.”
In order to lower a healthcare company’s costs while meeting consumer expectations, companies must tap into digital technologies to increase productivity while making care more personalized, Safavi says. “To make care more productive, we must find ways to move elements of care to machines as well as on to the patients themselves,” he says.
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By staying on top of how other industries leverage technology to solve key pain points, Kirk says healthcare executives can be better equipped to implement technological solutions into their own organizations or be inspired to build technology that meets specific needs.
The biggest obstacle to technological adoption can often be an organization’s company culture, as employees may be reluctant to adopt new technologies for fear of change. “When rolling out new technology and processes company-wide, it’s crucial to highlight not only the benefits for the business, but also for each individual,” Kirk says. “SERMO has seen success by emphasizing how technology will free up time spent on manual tasks and allow employees to focus on business initiatives which may have fallen by the wayside, therefore empowering talent to rise through the ranks.”
4. Integrating care based on population health
Integrated care involves complementary care and coordination across a patient’s entire care needs and provider network, starting with the primary care provider (PCP) and extending across all specialists. “It is a vehicle to treat the whole patient, comprehensively addressing their care needs, while aligning financial incentives to do the right thing for the patient,” says Hank Schlissberg, president, DaVita Health Solutions, which provides comprehensive, integrated care for high-risk, poly-chronic patients. Those care needs often vary and span clinical, social, palliative, and behavioral, among others.
Comprehensive, coordinated care might include transportation assistance, social services, support navigating multiple doctors and care plans, medication management, and after-hours support. “The additional resources built into integrated care models help time-limited PCPs ensure that their patients receive the extra attention needed to successfully manage their health,” Schlissberg says.
As the industry moves to value-based arrangements, many health systems are evolving their approach to care. “This includes managing populations to keep them healthy, aligning incentives for everyone who has a stake in healthcare, creating care process models that further define how care and services should be provided, improving access to care by addressing the social determinants of health, and working to make care more affordable,” says Steven Barlow, MD, senior medical director, SelectHealth, an insurance company in Murray, Utah.
Schlissberg expects this trend to gain momentum because as healthcare costs continue to skyrocket, they are unsustainable. “Savvy healthcare leaders are finding success with integrated care models that deliver high-quality care and generate lower costs,” he says. “Keeping patients healthy and out of the hospital or emergency room is the goal.”
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Jeff Brown, BA, vice president of payers,CarePort Health, an Allscripts company that provides care coordination software solutions, says there’s a huge upside to payers investing in population health and creating tighter financial and clinical alignment with providers, particularly around their high-risk patient populations. “These strategies demonstrably improve patient engagement, resulting in higher member satisfaction and retention, and they also yield better clinical outcomes,” he says. The tremendous growth of Medicare Advantage-an entire insurance program developed around appropriately meeting the needs of the Baby Boomers in a cost-efficient way-is clear validation of population health approaches.
At a high level, the primary thing that health insurers need to do is set reasonable and achievable population health goals that are calibrated over time. “For some, it’s a significant change to deliver integrated care and to enter into risk-sharing agreements with providers,” Brown says. “Population health should be viewed as an ongoing process, not a one-time event.”
As plans set their population health strategies, they should be mindful of the need to build integrated processes that scale, Brown cautions. “Today we see plans sending case workers into post-acute care settings to check on patients and when necessary, intervene, and redirect their care,” he says. “The intention is good, but it’s not scalable. Insurers that are offering Medicare Advantage plans need to devise strategies that support the exponential growth of that population.”