Entries in Trends & Strategies (111)


Healthcare Incumbents: Watch Your Sides as Well As Your Back For Disruptions

By Clive Riddle, March 22, 2019 

Reuters reports that “United Parcel Service Inc wants to get beyond U.S. doorsteps with a new push into healthcare.” They tell us “the world’s largest package delivery firm is preparing to test a U.S. service that dispatches nurses to vaccinate adults in their homes, Reuters has learned, as the company and its healthcare clients work to fend off cost pressures and competitive threats from” 

Deloitte, in a recent paper on the Health Plan of Tomorrow, that is the subject of an upcoming webinar, asks who will win the future of healthcare and health insurance: incumbents or disrupters> They tell us that “incumbents’ decisions will determine wither disrupters will be willing to partner with them in the transformation or compete and disrupt their business models.” 

Disrupters and Incumbents, it seems, are relative terms. We often think of disrupters as startups, and incumbents as established companies. But clearly the terms apply to lines of business, as opposed to the business as a whole. So UPS the incumbent in package delivery can become a disrupter in healthcare. Existing healthcare incumbents need to not just watch their backs for startup disrupters seeking to pass them by, but watch their sides as well, from established disrupters. 

UPS has touted healthcare supply chain management for some time. Then in May last year they announced “Chris Cassidy as vice president of global healthcare logistics strategy. He is charged with leading and advancing UPS’s commitment to the healthcare supply chain, which remains a top company priority….Cassidy possesses 18+ years of global logistics and business change experience, holding various supply chain operations, strategy and transformation roles at global healthcare company GlaxoSmithKline (GSK).”

Reuters states that “the world’s largest package delivery firm is preparing to test a U.S. service that dispatches nurses to vaccinate adults in their homes, Reuters has learned, as the company and its healthcare clients work to fend off cost pressures and competitive threats from UPS did not disclose which vaccines it would be using in the project, but drug and vaccine maker Merck & Co told Reuters it is looking at partnering with the company for the initiative.” 

How far and how disruptive this plays out to be remains to be seen, but the transformative potential is there for more healthcare to be transferred from provider settings to the home. And then of course, when patients with more complex needs have to set foot outside the home into provider settings and back again, there is now the disruption taking place with UberHealth and Lyft Healthcare, who have been around long enough to be incumbents in personal transportation but now disrupt in healthcare transportation. The Uber and Lyft disruption is being further fueled by SDOH (Social Determinants of Health), causing CRM incumbent Salesforce to recently roll “out new ‘social determinant’ tool for patients who need other kinds of help, like a ride to the doctor.” And now Uber and Lyft face startups like Veyo solely focusing on peer-to-peer healthcare transportation. 

So who is an incumbent and who is a disruptor? While answering be sure to watch your sides as well as your backs.



An Innovative Acquisition for HCA

by Clive Riddle, March 15, 2019

Nashville-based HCA Healthcare has just announced that HCA will become the majority owner of the parent company of Galen College of Nursing, one of the largest educators of nurses in the nation.  HCA, of course, is one of the nation’s leading providers of healthcare services, comprising 185 hospitals and approximately 1,800 sites of care.

The announcement states that “The innovative new strategic partnership brings together two of the top nursing organizations in the country in order to increase access to nursing education and provide career development opportunities in nursing to improve patient care. With 94,000 registered nurses, HCA Healthcare is one of the largest employers of nurses in the country, with nurses holding positions from bedside caregivers in a variety of healthcare settings to leadership positions throughout the organization.”

Hospital funding and partnerships for nursing education certainly isn’t new. For example, here’s a website providing a state-by-state listing of 123 such hospital arrangements, which they acknowledge is only a partial list.

But what is innovative is to move beyond strategic partnerships with an outright acquisition.  Not only does the move create synergy for HCA’s staff career development, it should also serve as a burse recruitment tool for HCA, in an environment where hospitals compete for nursing staffing.

Furthermore, this perhaps signals that healthcare organizations will continue to peek and climb further out-of-the-box with acquisitions beyond traditional M&A of other healthcare providers.  Deloitte, in a discussion of the Health Plan of Tomorrow that is the subject of an upcoming webinar, writes that "buy, share or build? is a question many health plan leaders will face as they begin this transformation journey. And accessing these capabilities may require an industry-agnostic approach. As new players break the rules around who plays what role in the industry, health plans may need to turn to want might today be considered strange bedfellows: competitors, providers, manufacturers, technology companies, transactional sector companies, and/or other industries for answers."

The same holds true for healthcare providers as for health plans.  And so HCA and Galen seem to be pairing up on a transformative journey as well.


The End of Health Insurance

By Kim Bellard, February 20, 2019 

Paul Tullis has an interesting article in Bloomberg about how self-driving cars might kill auto insurance “as we know it.” After all, if human error is responsible for 90% of auto accidents, and those humans are taken out of the equation, what’s left to insure? 

Many people don’t think much about autonomous vehicles, but Mr. Tullis reports that Michelle Krause, an Accenture insurance expert, says that their impact on auto insurance “…comes up in every strategic conversation” within insurers. 

It made me wonder: what would it take to kill health insurance…as we know it? 

Let’s think about what health insurance is for: Averting losses, Budgeting and Subsidization. I’ll take these in reverse order: 


Health insurance is not the right mechanism to do wealth transfers. It’s not what it is designed for, and it is not what it is good at. 


We need to stop expecting health insurance help us budget for expenses that, in any other aspect of our lives, we’d be paying for ourselves. 

Averting losses

Even if we accomplished both of the above, health insurance would still probably not look too different than it does now. Our healthcare system would still have catastrophic expenses, and we’d be looking for protection against them. We’d still have networks, negotiated prices, and tensions between those who deliver health care and those who pay for it. 

We have to attack the root problem, which is not just the prices, but also the costs. Some examples of how this can happen: 

Virtual care will allow us to get advice and even treatment where/when we want it, and increasing reliance on A.I. rather than human expertise will both cut direct costs and, hopefully, unnecessary treatments. 

DIY health is a trend that has promise to greatly impact costs. Whether it is hearing aidsinsulin pumps, or “biohacking,” we’re starting to move away from reliance on expensive solutions from traditional healthcare sources to cheaper, even home-grown solutions.

Robots, right now, fall within the “more technology, more expensive” ethos of our current healthcare system, but that cannot last. Robots will get smarter and more versatile, we’ll get better at building them, and they’ll allow us to take costs out of healthcare in the way they’ve taken costs out of manufacturing. 

Hospitals are, as I’ve stated previously, “19th century institutions operating under 20th century business models in the 21st century.”

Prescription drugs are one of the biggest pain points for consumer healthcare spending. Part of this looks a lot like greed, part of it is the U.S. not negotiating prices as other countries do, and part of it reflects the long pipeline for drug discovery and development. The former two are more price issues than cost ones, but the latter one is one 21st century technology can help address.

We shouldn’t accept the status quo; not in how care is delivered, not in how much care costs, and certainly not in how it is financed. If auto insurers are discussing merging with automakers, Apple is thinking about its post-iPhone era, Ikea wants to become the “Amazon of furniture,” and Amazon’s own future may be more about cloud computing than retail, then certainly health insurers should be looking to a very different future.


This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting


A Tour of 2019 Healthcare Predictions

By Clive Riddle, January 4, 2019 

We recently released our own 2019 healthcare prognostications, and now it’s time to take a tour of a selected healthcare weather forecasts for the year ahead, on a variety of fronts. 

First for a general overview, we stop at the PwC Health Research Institute’s 13th annual report on the year ahead, with six healthcare trends to watch in 2019

  1. Connected health devices and digital therapies will become integrated into care delivery and the regulatory process for drug and device approvals, with several new products coming to market
  2. Healthcare organizations will have to make major capital and training investments in artificial intelligence robotics, automation and data analytics in order to keep pace.
  3. The 2017 Tax Cuts and Jobs Act will continue to create tax savings for healthcare organizations while creating new challenges. 
  4. The healthcare industry is ready for a disruptor like Southwest, the budget airline provider was to that industry. 
  5. The pace of healthcare private equity investment will accelerate 
  6. Republican changes to the ACA will shift the law's winners and losers. Providers are on the losing end of most of these changes.

Also, providing an overall view is CareMore’s Sachin H. Jain in Forbes magazine with these: 10 Healthcare Industry Predictions for 2019:

  1. Humanism and humanity in healthcare will make a real comeback.
  2. The epidemic of loneliness will take center stage.
  3. Medicare Advantage will be seen as a template for the healthcare system of the future
  4. Quality measurement will focus on what happens in the exam room.
  5. The health care industry will make progress on new models for drug pricing.
  6. We will finally learn what Amazon, Berkshire Hathaway and JP Morgan are up to.
  7. Tech companies will get into the health care delivery business.
  8. More buzzwords: I’m not sure what language mashups we can expect next year, but rest assured they’ll generate plenty of conferences and spam emails.
  9. Another unlikely, head-scratching mega-merger will occur.
  10. We will all keep our new year’s resolutions: Each of us will lose fifteen pounds. We will all read a book a week. We’ll learn Mandarin, remember to call our grandparents, wash the dog more often and write that mystery novel about the doctor who uncovers a crime syndicate operating out of the hospital cafeteria 

One more overview entry on the tour comes from the 2019 HCEG Top 10 by the Healthcare Executive Group 

  1. Data & Analytics: Leveraging data (especially clinical) to manage health and drive individual, provider and payer decisions.
  2. Total Consumer Health: Improving members’ overall medical, social, financial, and environmental well-being.
  3. Population Health Services: Operationalizing community-based health strategy, chronic care management, driving clinical integration, and addressing barriers to health such as social determinants.
  4. Value-based Payments: Transitioning to and targeting specific medical conditions to manage cost and improve quality of care.
  5. The Digital Healthcare Organization: HSAs, portals, patient literacy, cost transparency, digital payments, CRM, wearables and other patient-generated data, health monitoring, and omni-channel access/distribution.
  6. Rising Pharmacy Costs: Implementing strategies to address growth of pharma costs along with benefits to quality of care and to total healthcare costs.
  7. External Market Disruption: New players like Amazon, Chase, Apple, Walmart, and Google.
  8. Operational Effectiveness: Implementing lean quality programs, process efficiency (with new core business models), robotics automation, revenue cycle management, real-time/near-time point of sales transactions, etc.
  9. Opioid Management: Developing strategies for identifying and supporting individuals and populations struggling with substance abuse/addiction or at risk of addiction.
  10. Cybersecurity: Protecting the privacy and security of consumer information to maintain consumer trust in sharing data 

Here’s a venture capital perspective on the healthcare industry from Venrock, featured in Fortune magazine: 10 Health Care Predictions for 2019 From a Pair of Venture Gurus 

  1. More payer consolidation
  2. Physician-led Accountable Care Organizations will grow rapidly
  3. Doctors get less dissatisfied
  4. Interoperability becomes interoperable: Five years after being declared successful, forces will finally come together to lead breakthroughs on cross health system and platform interoperability. 
  5. Consolidation in digital health
  6. We think that we are near peak hype cycle for insurance technology. 2019 is likely to be a year of toe stubbing for many. 
  7. Dialysis disrupted: Just as Sears has been replaced by home delivery, dialysis centers will be supplanted too. 
  8. Telemedicine takes off
  9. PBM disruption talk becomes reality
  10. Real progress with new DNA sequencing platforms 

Turning toward technology, CIO Magazine offers Healthcare technology markets: 5 predictions for 2019: 

  1. Health systems are investing in specific programs such as telehealth and remote monitoring. While these initiatives gather momentum, other digital health programs are struggling to emerge from pilot deployment and also face competing priorities for discretionary budgets.
  2. AI will make steady progress but will struggle with adoption gaps
  3. Big tech is yet to figure out its play for healthcare markets, with one possible exception (Apple Watch)
  4. Digital health startups will face a continuing struggle for growth and stability
  5. Blockchain will remain a solution looking for a problem 

On the policy front, Morning Consult offer thse Top 5 Health Policy Predictions for 2019

As cost of health care continues rising, states and industry set to act 

  1. Affordable Care Act: A ruling from a federal judge finding the Affordable Care Act unconstitutional has cast uncertainty on the future of the nation’s health care system — and reframed national debate on health reform ahead of the 2020 elections.
  2. CMS waiver guidance: Armed with a majority, House Democrats are poised to probe how the Trump administration has handled the ACA during the last two years
  3. Drug-pricing policy: Addressing the cost of prescription drugs is sure to continue dominating health priorities in 2019, although there is a long road from bipartisan commitment to reducing prices — to bipartisan consensus on how best to do so.
  4. Shift toward value-based payment structures: Increasing pressure on hospitals, which contributed to one-third of total health care spending last year, could drive a shift toward value-based payment models next year — a top priority in the Department of Health and Human Services’ Choice and Competition 2018 report.
  5. Digital therapeutics and e-health: After years of being just within reach, digital therapeutics and e-health initiatives stand to finally emerge in in the industry and transform care delivery next year. 

Next, we’ll consider employer benefit trends, with the selections of Mercer thought leader predictions posted here and here: 

  1. AI everywhere!  Healthcare will be the next industry to be transformed by AI. 
  2. Account-based plans create buzz.  
  3. Personalization of health care. 
  4. Value on investment: The new yardstick for benefits will be how they affect employees’ perception of their employer. 
  5. Transparency in Rx pricing.  
  6. Getting family-friendly fast. 
  7. Extreme claims get real.   A number of factors are driving an increase in both the prevalence and the size of extreme claims
  8. More stop loss. With the severity and frequency of catastrophic claims, employers will up their stop loss insurance levels and those that don’t buy it now will reconsider. 
  9. More outsourcing.  HR and health and wellbeing functions will increasingly be outsourced t
  10. Midsized employers doing something really different.  While jumbo employers are typically the trailblazers, this year midsized employers will take the lead with a couple of truly radical benefit strategies:
  11. Moderate cost growth allows longer-term focus. 
  12. Big things for behavioral health Change is happening in the behavioral health care delivery system.
  13. Specialty drugs will command attention. 
  14. Rx management gets yet more complicated. PBMs, carriers, pharma companies, and wholesalers will continue to face intense scrutiny regarding profits, delivery models and alignment (or lack of alignment) with plan sponsor goals.
  15. Employers mix it up with clinical services. 
  16. The issue of bill coding will surface. As doctors and hospitals become health systems, they are hiring coding experts at an increasingly rapid rate as a means of maximizing reimbursements. 

Finally, let’s end the tour peeking into pharmaceuticals, as CFO magazine features Deloitte’s Greg Reh in Four Trends That Could Shape Life Sciences in 2019 

  1. Greater scrutiny over drug pricing. 2018 was one of the biggest years for policy efforts to reduce drug prices and out-of-pocket expenses for patients. 
  2. Increased interest in contracts that demonstrate value. The launch of several gene and cell therapies has been a catalyst to advance the discussion of alternative payment models. 
  3. The declining return on investment for R&D. A Deloitte analysis on the ROI of R&D among 12 large-cap biopharma companies portrays a steep decline over the nine years that the analysis has been performed.
  4. Evolving regulatory frameworks and collaboration between industry and regulators. The U.S. Food and Drug Administration’s (FDA) pre-certification program, which launched in late 2017, is an example of how collaboration between industry and regulators can drive more self-regulation that is rooted in a culture of quality, organizational excellence, and performance monitoring. 



What College Can Teach Healthcare

by Kim Bellard, December 19, 2018 

Mitch Daniels, the former Governor of Indiana and current President of Purdue University, gave an interesting interview to The Wall Street Journal about what Purdue has been up to during his watch. Mr. Daniels — who knows a thing or two about healthcare — drew an explicit parallel to healthcare in the interview: 

“You’re selling something, a college diploma, that’s deemed a necessity. And you have total pricing power.” Better than that, “when you raise your prices, you not only don’t lower customers, you may actually attract new ones.” For lack of objective measures, “people associate the sticker price with quality: ‘If school A costs more than B, I guess it’s a better school.’” A third-party payer, the government, funds it all, so that “the customer — that is, the student and the family — feels insulated against the cost. A perfect formula for complacency.” 

Higher education is one area where prices seem to be rising even faster than in healthcare, and both much faster than wages. Student debt just hit a record $1.465 trillion — yes, trillion — and now trails only mortgage debt in size. 

We spend a lot more — nearly twice as much per student annually — on higher education than almost any other developed country, according to OECD. Yep, sounds like U.S. healthcare all right. 

Mr. Daniels is trying to change that. For one thing, he’s focused on holding the line on costs, such as by bringing Amazon in to help lower textbook prices. Purdue had raised tuition 36 years in a row prior to his arrival, and now has not raised them since 2012. 

But here’s what really caught my eye. Purdue pioneered the use of Income Share Agreements (ISAs), an idea attributed to economist Milton Friedman. Students don’t owe tuition during college, but six months after graduation they begin to pay a percentage of their income for a fixed number of years (e.g., 10 years). Repayment is capped at 2.5 the initial funding. Several other universities are now rolling out their own versions. 

The application of ISAs to healthcare may not be obvious. In an earlier post, for example, I suggested treating our health as a capital asset. We would seek to spend — invest — money on things that increase it, and avoid things that decrease it. It would, admittedly, be hard to quantify any of this, but doing so would force us to measure and to track. 

Perhaps a Healthcare Share Agreement (HCSA) would have a healthcare organization make a quantifiable prediction about your health, and what you pay each year would depend on how they do against that prediction. We’d have to agree on how to measure it, over what period of time, but both the prediction and the measurement are feasible (e.g., QALY). 

The payment could be in lieu of health insurance premiums or health care organization’s charges. The healthier-than-expected you are, the more you pay; the worse-than-expected you are, the less you pay. It’s value-based payment at the next level. It could be done as agreements with individuals and organizations, or, say, between health plans and health organizations at a population level. 

The key thing is for healthcare organizations to do what Purdue is doing: bet on their ability to actually make a positive impact in the lives of the people they serve. 

I don’t know how it would work. I don’t know if it can work. But I’d sure like for someone to give it a try, because the existing business models sure don’t seem to be working.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting