For the healthcare industry, the new year promises to be just as noisy as the old one. Besides the looming election and regulatory pressures, Amazon, Google and Microsoft continue to pour money into tech investments that promise more disruption. And despite pending breakthroughs in fields as diverse as RNA therapy and robotic surgery, life expectancy is now in its third straight year of decline.
With so many healthcare trends colliding, here are five we are watching closely.
1. Providers must get on board with virtual care.
People have been predicting the mainstreaming of telemedicine for years, but it still hasn’t happened. Only 8 percent of consumers have used virtual care, according to a new survey from American Well. But 66 percent –and 74 percent of millennials–are willing to give it a try.
Until now, part of the problem has been that most models work from the inside-out, with more concern for improving provider workflow than making life easier for patients. So, it’s not surprising that research has found that as many as 60 percent of young adults have bailed on a health system because of underwhelming digital services.
Smart players–including Teledoc, PlushCare and American Well–are focusing on experience-driven care that patients love, tapping into the millennial and Gen Z appetite for convenience and mobile tech. As these new digital time-savers expand, fueled by 5G networks, providers who aren’t on board face major competitive risks.
It’s also been hard for providers to get paid. But regulatory obstacles are coming down: Medicare and FCC are loosening the reins, and 40 states now have parity laws.
Insurers and employers appreciate the savings, which explains why one recent study says 90 percent of employer-sponsored plans now include a telemedicine option. United Healthcare estimates its Virtual Visit has delivered $11.2 million in savings. And on a broader scale, it says telemedicine could save it $6 billion a year. That explains why United Healthcare is pouring millions into an aggressive advertising campaign, pushing the convenience–and occasional comedy–of virtual visits.
2. Looking for next-generation innovation? You’ll find it in employers’ plans.
Amid political paralysis and growing dissatisfaction with the status quo, employers are tired of waiting for payers to give them options that both engage their workforces and help them get costs under control.
General Motors is one of the latest looking to sidestep insurers, in an innovative new plan for its salaried workers with Henry Ford Health System. Preventative care and quality customer service are key metrics in the five-year deal, as well as excellence in caring for chronic conditions like heart disease and diabetes. Smaller companies, aware of this growing frustration with payer red-tape, are going straight to large employers themselves.
Another green shoot of promise comes from Castlight, a healthcare navigation company, partnering with AT&T and its 230,000 employees. Noticing a rising number of medically unnecessary back surgeries, AT&T is developing predictive personalization. Using data from claims and searches, it tailors outreach efforts with non-surgical suggestions. And just by making programs more accessible, it generated a 40 percent jump in participation in wellness programs.
We expect to see more of these innovations, now that the years-long migration to self-insured plans is nearly complete. Employers continue to face pressure to bend the curve. (About 79 percent of large companies now offer their own plans.)
3. Experience innovation becomes as important as molecule innovation.
Moving “beyond the pill” has been pharma’s mantra for years. Pharma and device companies are finally getting there, skillfully integrating analytics to engage patients as never before.
Early pioneers include diabetes tools, like mySugr, backed in part by investments from Roche, and Medtronic’s Sugar.IQ, a collaboration with IBM Watson. The results are impressive: When patients use Guardian Connect system with Sugar.IQ, for example, they spend 4.1 percent more time in range compared to those who used the Guardian Connect alone–about an hour more each day.
And Eli Lilly and Co. is investing in a new experience aimed at people with irritable bowel disease. Called HealthVoyager, it’s based on an app developed by Boston Children’s Hospital and Klick Health, leveraging a customizable software platform so doctors can create personalized and immersive educational experience.
Look for more pharma companies to go beyond apps, building meaningful and effective platforms to manage depression, obesity and cancer care.
4. Venture capital shifts to late-stage investments.
Venture funds have been pouring cash into healthcare start-ups, and this has also been a good year for health IPOs, including Health Catalyst, Shockwave Medical, Livongo Health, Phreesia, Change Healthcare and Peloton.
But there’s growing uncertainty in young digital companies that can’t prove their value.
“We see money flowing more into later-stage deals than earlier-stage opportunities, and I would expect that trend to continue,” says Steven Collens, CEO of Matter, a healthcare start-up incubator. “But if capital markets contract, then digital health may not fare so well in the IPO market.”
5. Those cross-pollinating mergers finally bear fruit.
Merger synergy takes time, but these remixed companies are beginning to exert their new power. When CVS and Aetna announced their $69 billion merger in 2017, there were plenty of skeptics.
But as it rolls out its HealthHubs, the strategy is emerging. For now, they seem more or less like the walk-in clinics drug retailers have been operating for decades. But the game-changer is the goal of caring for chronic diseases, addressing issues of cost, quality and access.
A key strategic element is that its pharmacists can help manage care between provider visits. And while initial pilots are just for Aetna members, we expect to see them expanded to other health plans.
Just as intriguing are the changes that are starting to emerge from the $67 billion deal between Cigna and Express Scripts, still working its way through the final stages. In press interviews, Chief Executive Officer David Cordani has said its early efforts pitching medical, pharmacy and behavioral health benefits have been well received.
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