What’s to come? Top Healthcare Trends for 2019
As an expensive and rapidly changing industry, healthcare is constantly looking for solutions to old and new problems. Due to rapidly accelerating and converging trends, 2019 may be one of the most consequential years ever in healthcare. Buckle-up, reshaping of the healthcare industry is shifting to into warp speed.
Blockchain
The healthcare industry is plagued by inefficiencies, errors, and high administrative costs driven, to a large extent, by lack of trust between parties. Enter blockchain technology. Blockchain is essentially an innovation in database technology. Initially used to provide a high-trust ledger for cryptocurrencies (like Bitcoin), the underlying technology was found to have much broader application. Persistent and reference-able data typically stored in a database is at the heart of every application. Blockchain does not depend on new technology, but on an innovative methodology for recording transactions in a database such that you can establish a trusted ledger of these transactions. The combination of blockchain and what is called “zero-knowledge proof” could dramatically change how we manage healthcare data. Zero-knowledge proof is a method by which one party (the prover) can demonstrate to another party (the verifier) that something is true, without revealing any information apart from the fact that a specific statement is true. In other words, this technique lets you validate the truth of something without revealing how you know that truth or sharing the content of this truth (i.e. sensitive medical data) with the verifier. This approach enables transparency but, at the same time, privacy. Another important attribute of blockchain is that it makes hacking more difficult and exposes hacking as soon as it occurs. Blockchain also reduces the need for costly reconciliation and auditing. Transactions are in a sense audited and verified at the time of the transaction and then locked into place into the database in an immutable format. There are challenges to using blockchain including scalability and speed, but it’s a promising approach to managing healthcare data. With several international consortia beginning to explore the use of blockchain, 2019 may represent a tipping point in the practical application of blockchain in healthcare.
Digital Transformation
Digital transformation removes friction. When you place more data in a standardized, machine-readable format, you can use the computer to do more of the work through algorithms and automation. Unlike many other industries that are truly driven by market forces, healthcare has resisted this movement to digital architectures. However, the HITECH act and $30 billion in incentives have pushed healthcare into the modern era. Today, most hospitals and medical groups use Electronic Health Records (EHRs). Most patients now have access to portals, Patient Health Records (PHRs) and/or smartphone apps. The exposure of this data and the opportunity to leverage technology within the clinical workflow has opened up opportunities. It has also exposed the second level barriers of usability, non-standard data structures, interoperability (see below), and privacy/security. Despite these barriers, we should continue to be motivated by the possibilities of combining big data, advanced analytics, Machine Learning/Artificial Intelligence, and Robotic Process Automation (RPA) as well as cloud and mobile computing in healthcare. Consumers now walk around with the power of a mainframe computer in their hands with multiple tools (e.g. microphone, still/video camera) and an always-on connection to the internet. They are becoming accustomed to using this power to interact with businesses in new digitally enabled ways. There are few other industries as information intensive as healthcare and where the value created is of the highest utility, to improve the length and quality of life. Healthcare business drivers will provide the motivation because the next generation business models based on value-based care, including ACOs and vertical integration, will depend on robust analytics and information integration enabled by a digital infrastructure. The pace of digitization in healthcare will increase in 2019 as many of the barriers will succumb to the business imperatives, and advanced models of care delivery will emerge.
Interoperability
Healthcare has fundamental, built-in delays to information flow, which are critical for not only patient experience, but also for effective care and better outcomes. Many health conditions are time-based and progressive with the highest of stakes if not addressed early. The timing of intervention can mean the difference between life or death, rapid recovery or a complicated course. The real-time flow of information is therefore critical. Even though EHRs have created a new source of digital information, they have also created another silo. Real-time collaboration of care teams with the patient and caregivers in the context of digital transformation would open up new and innovative care options. There’s excitement in this area due to the rapid maturation of the interoperability standard, Fast Healthcare Interoperability Resources (FHIR). FHIR was developed by Health Level Seven International (HL7), a veteran organization in developing healthcare standards. FHIR supports healthcare digital transformation by opening up healthcare data access to the modern tools driving change in many other industries. FHIR has gained support from even fiercely competitive EHR vendors such as Epic Systems, Cerner and AthenaHealth. Expect 2019 will be a year of exploration and expansion of the potential of FHIR and other interoperability techniques that may finally begin to break down healthcare industry silos.
Consumerism and Patient Engagement
As costs have increased over the years, the moral hazard concept in health insurance has been considered a contributing factor. In economics, moral hazard occurs when someone is indifferent or increases their exposure to risk because someone else bears the cost of those risks. This is particularly a concern in healthcare because of the imbalance of knowledge. Doctors have the expertise to determine diagnosis and treatment and could prescribe expensive but unnecessary treatment that the patient is indifferent towards because insurance is bearing the cost. Since the advent of employer-based insurance, Medicare and Medicaid, the consumer has been shielded from the full costs of care. This factor combined with volume-based incentives is thought to be a major factor in the explosion of costs in the US. In an effort to change this dynamic, there’s been growth of consumer-driven plans and cost sharing with the goal of increasing individual choice and responsibility. This has huge implications for every stakeholder, but particularly for health plans. Although they are the natural navigators in the healthcare ecosystem due to their role as benefits and membership administrators, the low level of trust that plans generally have with consumers make it challenging for them to be a trusted advisor. However, this evolution from an administrator for employers to a trusted navigator and care coordinator for the emerging retail healthcare consumer will be critical for plans. As systems begin to align around Accountable Care Organizations (ACOs) and Integrated Delivery and Financing Systems (IDFSs), appealing to the consumer with efficient and high-quality care will be critical. Providers will need to become better at patient engagement and population management as reimbursement shifts to payment for value. These consumers will also bring their high expectations of service, convenience and digital access they have experienced in other industries. In 2019, expect these models to continue to spread, evolve and mature.
Evolving Market Positioning
There has been a tremendous increase in merger and acquisition activity in recent years as organizations position themselves for the next generation of the industry evolution. There’s a push to get more value from our healthcare dollar either by improving the quality at the same cost or keeping the quality the same at reduced costs. It’s estimated that over 30% of the spend in the $3 trillion US healthcare economy is waste. This represents a tremendous opportunity for a true value-creating disruptor to not only capture profits but to also redefine the basis of competition. We have seen surprising M&A activity (e.g. CVS buying Aetna), horizontal integrations to gain scale (e.g. CHI and Dignity merger) and well-funded and potentially disruptive new entrants (e.g. JPMorgan, Berkshire and Amazon alliance). Most recognize that we have to move from reimbursing on volume to value. The elephant in the room is that this must mean that there will be financial losers in the process. The problem with cost in the US is not primarily utilization, it’s price. To achieve price reductions, some stakeholder(s) will have to create value by establishing new efficiencies and reducing overhead (meaning primarily FTE reductions in healthcare) or go out of business because they have been disintermediated or priced out of competition. Entities will have to do more for less or do the same for less. The common denominator is “less.” Expect to see tectonic shifts in 2019 and beyond as incumbents defend their territory, mergers and acquisitions occur to drive new market dynamics, aspiring disruptors enter the industry, and new business models emerge to attempt to redefine the basis of competition. Deloitte predicts that by 2040, the healthcare industry as we know it today will no longer exist. The groundwork is being established now for these new models.
Providers Navigating to Value & Outcomes
Because we have hit the wall regarding the costs of care, every purchaser is now feeling the pain of the increasing price of healthcare. Importantly, there’s a clear sense we simply cannot afford to spend more on healthcare. Over 50% of the costs of healthcare are related to provider services. Of wasteful spending, the majority is controlled or influenced by providers. At the same time, we clearly are not receiving commensurate value for the high price we are paying when you compare international quality outcomes. These factors are driving the impetus for providers to be paid for value and outcomes rather than volume. The frequently unarticulated assumption is that as we go from volume to value is that prices must also go down. Shifting from volume to value and paying the same price doesn’t help. Therefore, as providers make this shift to value, they must also reduce their cost structure to maintain margins and enable value-based reimbursement to be a viable business model. This begins to align all incentives. As providers take on more risk, they progressively enter a business where health maintenance and the appropriate and efficient delivery of care are critical for financial success. In 2019, expect to see more movement of providers along the continuum towards greater risk-bearing as all government and private payers continue to shift to reimbursement based on value and outcomes and Accountable Care Organizations (ACOs) other related structures begin to mature.
Evolution of Primary Care
Primary care is carrying the weight of healthcare transformation. As the usual source of initial and longitudinal care and with dramatically increased responsibilities and accountabilities over recent years, effective primary care is a critical success factor for high-quality and cost-effective care. The success of value-based models and ACOs largely depend on an effective primary care network and population health management. Unfortunately, this increasing demand, time burdens of using Electronic Health Records (EHRs), relative low reimbursement and changing practice structures have all contributed to increasing burnout. . Primary care is a team sport and expect 2019 to advance more mature models of the Patient-Centered Medical Home (PCMH) and connect the dots to the “medical neighborhood.” This will be very much technology driven and enabled. The EHR and much of the ecosystem pieces are now all in place to create a new primary care experience. There are new models emerging like Iora and Oak Street Health. In Kaiser Permanente, over 51% of visits are electronic. Mature health systems will begin to optimize their core primary care capabilities to drive improved patient experience, outcomes, and cost-efficiency while reducing physician burnout. Successful navigation to the next generation of healthcare will depend on improving the satisfaction, capability, and resilience of the primary care clinician. Expect 2019 to begin to demonstrate successful models and what strategies hurt or help primary care and population health management.
Personalized Medicine
Mapping of the human genome ushered in the possibility of tailoring medical treatment to the individual genetic profile. It’s been a long road to developing practical applications. However, as the cost of genome mapping has come down, increasingly personalized medical treatment is becoming a reality. Particularly in the field of oncology, precision medicine that is focused on targeting mutations in cancerous tumors is making the concept of the silver bullet treatment a possibility. It’s important to realize that the amount of data generated by personalized medicine analysis will make the practice of medicine dramatically more computer dependent. As recent as 50 years ago, a physician needed to consider perhaps 5–10 data elements to treat conditions, enough to hold and understand in your head. Over the past 20–30 years, with the explosion in research, increasing demands for chronic and preventive care, and new treatment options, that number increased into the hundreds. With personalized medicine, thousands of data points per patient will need to be considered. High-powered big data analytics will be necessary to deliver care in the near future. Oncologists are beginning to practice in this model of care today with treatments increasingly based on genomic data and sophisticated guidelines. Expect that in 2019 personalized medicine will continue to grow exponentially and begin to move beyond oncology with increasing dependence on big data analytics and AI to manage protocols.
Specialty Drugs
Specialty drugs are a designation of pharmaceuticals that are classified as high-cost, high complexity and/or high touch. Specialty drugs are often termed biologics or”drugs derived from living cells.” A recent study in California showed that although specialty drugs accounted for 3% of prescriptions, they represented over 50% of drug spending in 2017. The expense of these drugs in our current healthcare climate presents challenging ethical and policy issues. These drugs may represent the only alternative for rare, life-threatening and often emotionally charged diseases. The success in developing treatments for these conditions is challenged by affordability questions. Expect this to be an important battleground in 2019 as the government enters the fray to address rising drug costs.
