Top 10 takeaways from managed healthcare State of Industry Survey

During the third quarter of 2016, more than 160 executives from provider organizations, benefit management organizations, health plans, long-term care organizations, and group purchasing organizations took Managed Healthcare Executive’s annual State of the Industry Survey.

Their responses reveal how healthcare executives feel about the industry moving into 2017, the biggest worries they face, and how they are progressing with some of the biggest healthcare transitions, such as the shift to value-based payment and increasing emphasis on “big data.”

Here are 10 of the biggest survey takeaways.

When asked, “What do you think is the biggest challenge facing healthcare organizations?” the most popular response among all respondents (36%) was “complying with new government requirements and mandates.”

These requirements and mandates likely include:

• The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA);

• Requirements associated with Medicare Advantage; and

• Requirements associated with Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations

Compared to payers, providers appear to be struggling more when it comes to government mandates and requirements. When we broke down the survey responses by provider organizations and payer organizations, 45% of respondents from provider organizations said complying with new government requirements and mandates was their biggest challenge, while 41% of payers said it was.    

The election of Donald Trump and a GOP-controlled Congress, raises further questions and uncertainty for healthcare executives regarding policy changes and mandates that will affect them in 2017. For example, Trump has vowed to repeal and replace the ACA (though he recently appeared to soften this stance), and he has leaned toward more power for individual states to control Medicaid coverage, possibly through block grant funding.

Read: What Trump’s victory means for healthcare: Industry leaders sound off

As these changes come into play, healthcare executives will need to re-strategize and modify their existing plans and compliance strategies.

Despite mounting pressure to implement value-based pay (CMS vows to have 30% of payments tied to value by the end of 2016, and 50% by 2018), payers and provider organizations are moving slowly.

 “The policy of moving Medicare payments away from their current fee-for-service format to alternative payment models such as performance-based payment systems has long been the goal of healthcare reform,” G. William Hoagland, senior vice president, Bipartisan Policy Center in Washington, D.C., told Managed Healthcare Executive. “For executives … this announcement by the Administration, confirms the march toward fundamental payment reform will not turn back and the need for them to double down on developing systems that focus not just on costs, but quality of the service provided.”

Read: Survey reveals 3 value-based payment trends to watch

Our survey findings indicate, however, that payers and providers are not as eager to pursue value-based pay. When asked, “Where would you say your organization is in the shift toward value-based care?” only 11% of all respondents said most of their business/operations are focused on value, and only 20% of respondents said they have many value-based initiatives started.

Nearly 50% said they have “a few” initiatives started, and 22% said they have not yet started.

When asked, “How well would you say your organization is using big data to improve healthcare quality and reduce costs?” only 11% of respondents said, “very well,” and 16% said “not very well at all.”

So what’s the problem? While interoperability is improving, there’s still a long way to go before data is seamlessly exchanged between healthcare systems, payers and providers, and other critical entities. When certain key pieces of data are missing, it can be difficult to turn data into actionable information.

Other big data challenges c include a lack of expertise in data analytics. Another Managed Healthcare Executive Survey (the 2016 Technology Survey – full findings to be released in February 2017), found that only 37% of organizations employ data scientists whose sole job is to analyze and interpret data, spot trends, and provide feedback to their organization. In addition, 32% of respondents to the technology survey said they plan to increase their IT staff in 2017.

Read: Making sense of big data: Data projects spur progress

When the State of the Industry Survey responses are broken down between respondents at payer organizations and those at provider organizations, providers appear to be struggling more than payers with big data.

Only 5% of provider respondents said they are using big data very well, and 21% said they are not using it very well at all. On the other hand, 14% of payer respondents said they are using it very well, and only 5% said they are not using it very well at all.

Despite increasing popularity of remote patient monitoring (RPM) and mobile health solutions, health execs feel that improving consumer engagement requires getting back to the basics.

When asked, “What is the most effective way to increase consumer engagement in managing their own health?” 36% of respondents said improved/more patient education, and 29% said incentives/wellness programs. Only 14% pointed to remote patient monitoring and mobile health.

This doesn’t necessarily mean that payers and providers aren’t using RPM, or don’t see other benefits for it.

According to the report, “Trends in Remote Patient Monitoring 2015,” from the Spyglass Consulting Group, 66% of hospitals and health systems surveyed have deployed RPM solutions to support population health.

Read: Survey: More providers embrace remote health monitoring

These solutions were used to manage value-based risk associated with supporting large patient populations with complex chronic conditions including congestive heart failure, COPD, diabetes, and hypertension.

The majority of survey takers (60%) believe the increasing consolidation of payers and providers will lead to higher overall healthcare costs.

Only one quarter said it will lead to lower costs, and 16% said it will not affect costs.

When survey responses were broken down by provider organizations and payer organizations, the response percentages aligned.

Read: Payer mega mergers in question: Industry expert weighs in

While the highest profile mergers of 2016 have been the potential Anthem-Cigna and Aetna-Humana mergers, consolidation is occurring throughout the marketplace.

In the second quarter of 2016, there were 239 announced deals in the U.S. health services market worth a total of $16.1 billion in deal value. Both deal volume and value in this sector increased by approximately 8% and 4% quarter-over-quarter compared to the first quarter of 2016, respectively.

When asked, “What do you think will have the biggest impact on controlling rising specialty drug costs?” the most popular response (33%) was government interference.

Other responses were utilization management (20%), integrated pharmacy and medical benefits (18%), cost-effective pharmacy plan design (15%), and PBMs and specialty pharmacies (10%).

Though it remains to be seen how President-Elect Donald Trump will address rising pharma costs, prior to the election, it seemed that he supported having Medicare negotiate lower drug prices.

Read: How three hospitals are countering rising drug prices

“Medicare has a lot of market power because a high proportion of healthcare purchases are made by people aged 65 and older,” Peter Hilsenrath, PhD, Joseph M. Long Chair in Healthcare Management and professor of economics, University of the Pacific, Stockton, California, told Managed Healthcare Executive. “This could bring down the cost of prescription drugs.”

Trump also called for removing barriers to entry into free markets for drug providers that offer safe, reliable, and cheaper products.

When asked, “If you could venture a guess, how do you think your business revenue in 2017 will compare to 2016?” nearly 40% of all survey respondents said it would be about the same. Slightly fewer (35%), said it will be a better year revenue-wise. Only 25% said it will be worse revenue-wise.

However, when broken down by segment, respondents from provider organizations had a more negative outlook, with 38% saying it would be a worse year revenue-wise, 34% saying it would be a better year, and 28% saying it would be the same.

In contrast, 57% of respondents from payer organizations said it will be a better year, only 10% said it would be a worse year, and 33% said it would be about the same.

When asked, “Which of the following three therapeutic categories and/or disease states will your organization be focusing on most in 2017 on to improve care and reduce costs?” the most popular responses among all respondents were:

#1. Diabetes

#2. Cardiovascular

#3. Obesity

Following those selections (in order of response popularity), were:

#4. Cancer

#5. Respiratory illnesses

#6. Hep C

#7. Rheumatoid arthritis

According to the “Economic Cost of Diabetes” study by the American Diabetes Association (ADA), the total estimated cost of diagnosed diabetes in the United States is $245 billion, including $176 billion in direct medical costs and $69 billion in reduced productivity.

Read: Watch list 2016: Top therapeutic areas

“The numbers of those affected by pre-diabetes and diabetes are significant, the health threat to the country is real, and the costs of treating the complications are high, both physically, emotionally, and monetarily,” Rob Danoff, DO, MS, FACOFP, program director, Family Medicine Residency, and program director, Combined Family Medicine/Emergency Medicine Residency, Aria Health System, Philadelphia, Pennsylvania, told Managed Healthcare Executive. “In light of this, managed care and evidence-based medicine are launching key initiatives to help individuals with diabetes work together with their physicians toward a healthier quality of life and better diabetes control.”

When asked, “What patient-centered areas is your organization most focused on to expand and secure market share?” one of the most popular responses among all survey takers was more cost/quality transparency (43%).

This is a promising sign, as many believe cost/quality transparency can play a key role in reducing healthcare costs.

Read: Healthcare price transparency: Where are we now?

“Insufficient public data on the price of healthcare services contributes to this waste by denying consumers the information they need to make smart choices,” Kristof Stremikis, MPP, MPH, senior manager, Pacific Business Group on Health, San Francisco, told Managed Healthcare Executive earlier this year. “Greater price transparency will improve the functioning of healthcare markets and lead to better, more affordable care across the U.S. healthcare system, particularly when combined with meaningful information on quality.”

When asked, “Which value-based reimbursement initiatives are you participating in?” about the same percentage of survey takers from provider organizations said they are participating in CMS/CMMI initiatives (39%) as the percentage that said they are participating in commercial payer initiatives (32%). *Survey takers were able to select both options, if applicable.   

However, about the same percentage of respondents (32%) said they are not participating in any value-based initiatives at this time.

Some providers not participating in commercial payer initiatives may feel that they haven’t been presented with enough opportunities to do so, according to a recent survey of 60 C-suite healthcare system executives by Premier Inc., a healthcare alliance with approximately 3,750 U.S. hospital and 130,000 other provider members.

Read: Fed up providers pursue provider-sponsored health plans

That survey found that 67% of respondents are interested in starting their own health plan or working with an already-established provider-owned health plan rather than continuing to wait for commercial payers to develop and implement value-based arrangements.