The Impact Advisor 4Q19
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November 19, 2019
GOOGLE ADVANCES IN CONSUMER HEALTH DATA COMPETITION
Google has reached a deal to buy Fitbit for roughly $2.1 billion, “a move that intensifies the battle among technology giants to capture consumers through devices other than smartphones,” according to the Wall Street Journal. As this article in MedCity News points out though, “Google likely has many reasons for [acquiring] Fitbit but access to healthcare data may be the driving force.”
Why It Matters:
With this announcement, Google joins Apple and Amazon in the last-mile quest for consumer health data. It is now clear that data, and deriving next-generation insights and engagement, is the competitive battle for healthcare disruption. These three companies, along with Microsoft (Azure cloud platform and state-of-the-market business intelligence tools), are providing the platforms necessary to enable digital health technology, and disruptive change, in healthcare over the next 3 to 5 years. Health systems will need to align, partner, or collaborate with these disrupters early on – or risk being left behind.
STILL EARLY IN THE MATCHUP OF VOLUME VS. VALUE
According to a new study from the Health Care Payment Learning & Action Network, 36% of U.S. healthcare payments in 2018 were tied to Alternative Payment Models (APMs), up only slightly from 34% in 2017. Perhaps most importantly, the report found that less than 15% of all U.S. healthcare payments in 2018 actually involved “shared accountability” (i.e., providers assuming some level of financial risk for the cost and quality of care). See full infographic here, which includes a breakdown by payer type.
Why It Matters:
There has been a considerable amount of attention over the last 5-10 years about the shift from “volume to value” – and how it will impact providers. We think this report is an important reminder that when it comes to the true measure of change – i.e., the level of financial risk that providers are actually taking on – the transition remains in the early stages. Success today in a mostly fee-for-service (FFS)-based world with scattered financial incentives but little shared risk will not translate to success in the future. Sooner rather than later, providers will need to take on significantly more financial risk for the costs and quality of care. This will require new processes and new workflows, as well as more robust analytics tools and risk management capabilities than what most health systems currently use today. Given the complexity and degree of change, there is no substitute for real-world experience – and the health delivery organizations who are actively seeking out reimbursement models that involve taking on tangible financial risk (e.g., voluntary federal programs, pilots/partnerships with commercial payers, etc.) will be far better positioned than those who are not.
MORE (NON-TRADITIONAL) FIRMS STEP INTO HEALTHCARE RING
Recent articles in Modern Healthcare and Healthcare Dive look at growing interest from private equity firms in orthopedics and other specialty physician groups. According to Modern Healthcare, private equity firms are “attracted to specialties that promise rich revenue from ambulatory surgery centers, lab, imaging and other ancillary services.” In particular, Healthcare Dive reports that a “wave” of activity is expected in orthopedic care, as the number of private equity deals this year in that space “already matches all of 2018.” (See chart from Preqin below.) Per Modern Healthcare: “The proliferation of these deals has raised alarms about whether ownership of physician practices by investors eyeing a 400% return on their cash investment within a few years will affect overall healthcare spending and quality of care.”
Why It Matters:
This is an extremely complex topic that we obviously can’t come close to fully covering in just a single paragraph. At a high level though, we think the two articles underscore the continuing trend of non-traditional competitors trying to carve out profitable health delivery services (like orthopedics). The long-term impact of private equity firms acquiring specialty physician groups will certainly be interesting to keep an eye on. We agree that private equity investors could potentially bring more operational discipline and overall efficiency to health delivery. At the same time, we also think many of the concerns about cost and quality of care are justified. In particular, we question the idea that a private equity-backed specialty physician practice is somehow better suited for the transition from volume- to value-based reimbursement. Value-based reimbursement is about reducing unnecessary healthcare spending for a population of patients across the continuum while ensuring high-quality care. That is not necessarily the same thing as creating value for investors in 3-5 years and maximizing profits of a service line. Either way, cost and quality are big points of debate between advocates and critics of private equity investment in healthcare, and the trend will definitely be important to monitor moving forward on a number of different fronts.
DON’T THROW IN THE TOWEL ON PRICE TRANSPARENCY
Almost half of consumers who had a negative billing experience during their last hospital visit said the biggest factor was either “price transparency” or “insurance coverage,” according to a survey from Waystar. Only 12% of respondents said they “price-shopped in advance of a planned or routine visit.” See charts below.
Why It Matters:
It is not a surprise that roughly half of patients cited either “price transparency” or “insurance coverage” as the biggest cause of a negative hospital billing experience – especially since the two are so interrelated. It is also not necessarily a surprise that so few patients price-shopped before a planned visit given the relative scarcity of effective tools that provide both access to information and the context needed to make decisions. That doesn’t diminish the critical importance of addressing issues with price transparency though. Shifting from a “provider-centric” to a patient-centric approach means actually understanding and adapting to the needs and wants of the consumer. Healthcare is admittedly unique from other consumer-facing service industries when it comes to pricing. However, that doesn’t mean that consumer demands and expectations will be different – especially given that price-shopping has long been a staple of the digital experience in industries like hospitality, travel, and online retail.
IN THIS CORNER: EVOLVING PATIENT EXPECTATIONS
A survey conducted by the Harris Poll finds that 65% of patients want their physician to be “involved in all aspects of their health management,” while an additional two-thirds wished their physician shared more resources with them about “self-care.” Per the survey: “physicians and patients agree that exercise (94% physicians, 71% patients), eating healthy foods, (93% physicians, 74% patients) and getting enough sleep (92% physicians, 73% patients) qualify as self-care.” See charts below.
Patients Wish that Physicians…
Why It Matters:
We think the results underscore how consumer demands and expectations are evolving – not just in terms of access and convenience, but also in terms of care itself. Specifically, many patients are now looking for a more comprehensive and holistic care experience that focuses on wellness, prevention, and overall health. There has certainly been a lot of attention on how companies like CVS Health are competing with traditional provider organizations on access and convenience – and rightly so. However, we think another important way that non-traditional competitors are now differentiating themselves – and attracting new patients – is by addressing demand for health and wellness services. For example, look no further than CVS Health’s new HealthHUB locations, which (in addition to basic chronic disease management services) offer sleep assessments, nutritional counseling from licensed dieticians, and even space “for group events like health seminars and yoga classes.”
Q: What does a successful Legacy Data Management strategy incorporate?
A: The potential savings from an effective Legacy Data Management strategy can be significant for your organization. Although there will be costs associated with extracting data from the legacy system and implementing a data archiving solution, the substantial maintenance and support fees from legacy EHR and other legacy vendors are usually much greater. Maximizing savings from Legacy Data Management – while still complying with state and federal rules – requires a full understanding of the provider organization’s unique needs.
An effective Legacy Data Management strategy consists of three unique areas of focus – conversion, abstraction and archival. These three areas are distinct and needed at different times throughout the transition.
- Conversion: Automated movement of key clinical/revenue cycle data elements from the legacy system to the new EHR. This step begins and ends prior to go-live.
- Abstraction: Manual data entry of key clinical/revenue cycle data elements from the legacy system into the new EHR. Abstraction of data begins prior to go-live, but can continue for weeks or months after go-live.
- Archival: Automated effort of storing historical data from legacy systems being retired, primarily due to state/federal regulations and data retention polices of the organization. This is a separate strategy from conversion and abstraction and should be developed during the implementation phase. It can encompass not only just clinical and revenue cycle areas, but other data sets such an ERP.
(Response provided by Shaman Akhtar, Senior Advisor at Impact Advisors)