In our post “Podcast Preview – 2018: Year in Review,” Privia Health CEO Shawn Morris summarized the trends and barriers that shaped the healthcare landscape in 2018. A recent report from S&P Global Ratings echoes his observations, noting the “increasing shift to a pricing model that is more dependent on quality and outcomes will be a major disruption to the healthcare industry, likely pressure sales growth and margins, and create new winners and losers.” As healthcare costs continue to rise — accounting for nearly 20 percent of gross domestic product — innovation can help to curb spending.
What are these innovations, and how do they relate to the healthcare industry as a whole, novel and existing technological tools, and accountable-care organizations and value-based care?
A recent Capital One poll found that 72 percent of healthcare leaders anticipated a thriving 2019 for the healthcare industry, surpassing even 2018’s robust business development. Leading the charge is mergers and acquisitions (M&A), which 90 percent of respondents believed will equal or exceed M&A activity in 2018.
2018 saw mega-mergers between payers and pharmaceutical benefits managers (e.g. the $67 billion Cigna-Express Scripts transaction), and 2019 is likely to experience more hospital mergers, such as the proposed deal between Dallas’s Baylor Scott & White Health and Houston’s Memorial Hermann Health System. A key component of these strategic decisions is to combat declining hospital margins and anticipate the shift to value-based care.
Experts believe organic growth by “revitalizing and updating existing offerings” will make up 25 percent of healthcare business growth strategies in 2019, while “launching new segments or lines of business” and “opening a new facility or office” comprise 21 percent and 11 percent of growth, respectively. While these projections are optimistic about business performance in 2019, 43 percent of respondents believe regulation and reimbursement changes may stunt development.
Funding for digital health tools hit a record-breaking $8.1 billion in 2018 and is showing no signs of slowing down according to a report from Rock Health. If the same growth from 2017 to 2018 occurs, 2019 can expect to see $11.5 billion in digital health deals. However, recent stock-market volatility may slow growth until stability is reached. The previously mentioned Capital One poll showed that 46 percent of leading executives believe healthcare IT will be the fastest-growing market segment.
Technology often happens in fits and starts; look at the iPhone’s unveiling in 2007 or Uber’s disruptive progress over the past decade. As such, it’s hard to tell which will hit the market and make an impact for patients and providers. Given that healthcare is a primary target of security breaches, we could expect to see the implementation of blockchain technologies to help secure and protect patient records. Additionally, the growing use of cloud-based technologies — such as Microsoft and Allscripts partnership to coordinate study protocols — require further protections.
Since frustration with electronic health records (EHRs) is the leading cause of physician burnout, we can hope to see improvements in these technologies. One promising way to reduce physicians’ workload around EHRs is a “virtual scribe” technology. This combines voice-recognition technology and artificial intelligence to translate physician-patient interactions into data in a patient’s EHR, thus saving physicians the labor and time of manually inputting that information while also reducing the incidence of human error. Michael Banihashemi, MD, has piloted a program in which an off-site scribe turns the physician’s speech into appropriate codes and data “to reduce administrative burdens so providers can focus more on treating and less on documentation.”
Accountable-Care Organizations & Value-Based Care
The Centers for Medicare and Medicaid Services (CMS) recently finalized the “Pathways to Success” rule designed to accelerate the shift to performance-based, downside risk. The revised rules replace the Medicare Shared Savings Program, effectively reducing the amount of time an accountable-care organization (ACO) can take on only upside risk from six to two years for new ACOs or three years for physician-led ACOs. Instead, ACOs will have to take on downside value-based contracting, which risks sharing losses as well as savings. With this revision, ACOs will have until July 1 to apply for the new agreement.
“The rule strikes a balance between encouraging participation in the ACO program and advancing the transition to value, ultimately protecting taxpayers and patients,” CMS Administrator Seema Verma said. “Medicare can no longer afford to support programs with weak incentives that do not deliver value. As we structure new payment arrangements, the impact on the overall market will be top of mind.”
Since CMS is the nation’s leading payer, covering more than 100 million individuals, these trends are likely to trickle down to other payers as value-based care builds momentum.
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