- The healthcare industry is no stranger to changes. Its history is one of evolution, progression, discovery, and invention. Challenges are a constant, but so too have been solutions. From antibiotics and keyhole surgery to artificial hearts and 3D imaging studies, innovation is a given for providers across all disciplines.
But healthcare’s latest challenge may also be one of its biggest and one of the hardest to overcome. Healthcare is turning into a consumer-driven industry, and providers won’t only be competing against themselves to create the most attractive, intuitive, and impactful experiences for a population that is no longer shy to express what it wants.
User-friendly experiences are at the top of the wish list for patients as they look around at what is on offer from other segments of their lives. Online shopping and banking are everywhere, and even ordering coffee with an app or filing taxes with a photo are now expectations instead of novelties.
Even the mere mention of a company like Amazon in conjunction with healthcare has sparked ten thousand speculative essays about disruption and revolution, despite the utter lack of detail or clear direction in the company’s recent joint announcement with Berkshire Hathaway and JP Morgan Chase.
Investors and futurists clearly believe that the healthcare sector is ready for the type of consumer-focused change that a data-rich, cash-laden behemoth like Amazon, Apple, or Google can bring, and are banking on the unique perspective of outside players to shake up the game.
Executives on the inside are bracing for impact, too. In a recent survey by Damo Consulting, stakeholders cited the “rise of non-traditional players,” including Apple, Google, and Amazon, as the factor that will most impact the competitive environment in 2018.
Consolidation among technology providers, the growing influence of major EHR vendors like Epic and Cerner, and avid pursuit of greater market share among other vendors will also drive competition over the next year, producing a “change or die” atmosphere that will reward agility and flexibility.
But neither of those traits are historically strong core competencies for many healthcare organizations.
The industry has indeed made some progress with implementing the analytics tools and strategies that have become so common in all other facets of daily life, but much of the care continuum remains unable to get over its biggest cultural, technical, and governance hang-ups.
Stringent privacy and security regulations (and the misinterpretation thereof), coupled with patchwork legacy infrastructure, the stress of regulatory oversight and changing reimbursements, data siloes, and the fundamentally cautious nature of an environment in which a momentary lapse can mean the difference between life and death, have left healthcare lagging behind its peers in finance, retail, and manufacturing.
And even though executives are keenly aware that they need better analytics to meet their long-term goals, the daunting expenses of overhauling health IT infrastructure and securing talent to create meaningful big data analytics programs can be cause for hesitation in a time of razor-thin profit margins and the ever-present risk of financial insolvency.
Organizations are increasingly tackling these challenges by taking refuge in scale: merger and acquisition activity is at an all-time high, says a recent brief by Kaufman Hall.
In 2017, the number of hospital and health system mergers increased by 13 percent over the previous year.
Billion-dollar deals becoming increasingly common as larger systems combine forces. The aggregated revenue of transacted organizations has doubled since 2015, totaling $63.2 billion in the past year.
“Providers have been repositioning over the past decade and trying to grow, diversify, and fill strategic gaps. The recent uptick in the scale of partnerships is quite staggering," observed Anu Singh, Managing Director of Kaufman Hall.
"The size, magnitude, and complexity of these deals has reached a new level. It's telling us that providers are reacting and responding to industry transformation by creating wider and deeper enterprises that can thrive in the face of disruption because they include physician alignment, broader base and type of care sites, and a full care continuum – all with access, relevance, and convenience for the consumer."
But will bigger organizations be any better at the data analytics and reporting required to support holistic, consumer-driven healthcare?
Is a jolt of urgency form Amazon and its compatriots exactly what providers and payers need to accelerate their investment in the data-driven tools that will be critical for success?
The advantage of being on the outside looking in
Like most complex problems, the conundrum of healthcare’s data woes looks deceptively simple from the outside.
If every free blog service and social media site offers detailed user profiles, engagement tips and trend analytics, why can’t healthcare providers use similar tools to plot the course of an individual’s health?
And if internet users can all share information through email, streaming services, and by downloading documents, data sets, and pictures from websites, why can’t healthcare organizations just put everything in the cloud to make data exchange and access a cinch?
Anyone who has ever worked in healthcare – or interacted with the system as a patient or caregiver – knows that it can’t possibly be that easy. If it was, then well-intentioned providers who are deeply frustrated with their existing limitations would have done it already.
The nation’s health IT infrastructure has grown organically over many years, preceding the consumer-friendly modern internet in many cases. The HITECH Act was signed just two years after the first iPhone was released, and the first ONC Certified EHR Technology was approved a mere year after that.
In 2010, when the EHR Incentive Programs started to spur on a massive wave of adoption by offering cash in exchange for going digital, eligible hospitals and clinicians were choosing from what were essentially computerized billing tools designed to mimic the experience of using paper charts.
Capturing data in an electronic format and reporting on basic measures seemed like a big enough challenge, and there was little notion of how the average provider might someday use the data produced by these systems for large-scale population health management in support of risk-based reimbursements.
Over the past eight years, the business imperatives have just started to support health data interoperability, predictive analytics, and patient risk stratification, but the tools required to succeed with these tasks have arguably lagged behind.
In a recent survey by Health Catalyst, close to 20 percent of respondents said their return on investment after the EHR Incentive Programs has been “terrible.” Another 42 percent said their EHRs have produced “poor” results in the intervening years.
EHR satisfaction rates remain dismal as providers try to use their technology to complete highly complex patient management tasks and meet increased documentation requirements while being exposed to too much data without enough intelligent filters.
Many unhappy providers and their data analytics teams would argue that the health IT sector has not been able to leave its pre-internet infrastructure origins behind – and even if it could, most healthcare organizations would not have the money to rip out and replace all the legacy systems that they have collected over an uneven decade of technical development.
None of this is news to most health IT stakeholders. It is a painful everyday reality to physicians, nurses, patients, IT staff, and others.
But it does beg the question of why Amazon, Google, Apple, and others without a traditional footprint in healthcare think that it will be easy – or at least that it will be lucrative within a reasonable timeframe – to muscle in on an industry that has so very many challenges yet to overcome.
Big bucks are waiting for those with big data skills
Altruism aside, there are billions of reasons why healthcare is an attractive market for consumer-focused players.
The United States spends $3.3 trillion per year on direct and indirect healthcare expenses, such as prescription drugs, inpatient and outpatient services, long-term care, and durable medical equipment.
The nation’s stated goal is to reduce that number as much as possible while still delivering high-quality care, and both the federal government and the private sector have turned to technology to help them achieve their aim.
By 2020, they’re likely to spend more than $104 billion per year on healthcare IT tools in order to do it.
That market has already been very kind to the small group of EHR vendors that have become household names, and perhaps even kinder to start-ups and innovators seeing their changes of snagging millions in venture capital funding increase year over year.
Yet the opportunities for accruing revenue are likely to be even greater for companies that can meld the traditional role of the health IT vendor with other aspects of care delivery and management, and scoop up profits from both the delivery side and the technology side of the equation.
Optum is a prime example of a company taking this strategy. In addition to being a leader in data analytics and population health management tools, its recent $4.9 billion acquisition of DaVita Medical Group makes it the proud owner of a network of 300 primary care and specialty clinics that serve around 1.7 million patients.
And as a subsidiary of insurance giant UnitedHealth Group, a close relationships with the payer world means Optum may be able to create a relatively closed system of technology, payment, and care delivery that can use big data analytics to reduce spending on care costs and technology acquisitions while keeping insurance premium revenue in the family.
CVS Health is taking a similar approach to bringing healthcare’s verticals closer together. Its $69 billion purchase of Aetna, coupled with expansion of its MinuteClinic retail health outlets and close technology partnerships with Epic Systems, positions it as a one-stop shop for basic care, pharmacy access, and a growing range of population health management services.
CVS Health and Optum are not the first entities to try to combine care delivery and insurance to achieve the scale required to manage patients more holistically.
Provider-sponsored insurance plans have been around for many years, and surged in popularity around the beginning of the decade as health systems first started to feel the urgency around scale to support the emerging discipline of population health.
Thirty-seven of these provider-sponsored health plans formed since 2010, according to the Robert Wood Johnson Foundation, but only four had achieved profitability in 2015.
Low membership rates, overwhelming competition from more consumer-savvy commercial plans, and an inability to weather the challenges of taking on complete financial risk for patients have scuppered many of these initiatives.
The lesson may be that trying to achieve scale without data-driven insights to support effective, proactive population health management and consumer behavior profiling is a futile mission.
Optum and CVS Health are among those taking precautions to avoid those pitfalls. Both have positioned themselves as data-first companies.
Before Optum announced its purchase of DaVita, it absorbed The Advisory Board’s population health, data analytics, and healthcare consulting assets for $1.3 billion.
CVS Health has explicitly stated that Aetna’s big data assets were a primary motivator for bringing the two entities together.
“With the analytics of Aetna and CVS Health's human touch, we will create a health care platform built around individuals,” said CVS Health President and Chief Executive Officer Larry J. Merlo.
But if creating seamless healthcare platforms tailored to the needs and challenges of individuals is the goal of these types of all-in-one healthcare companies, it is entirely possible that highly experienced “lifestyle vendors” like Amazon and Apple will be able to get there first.
Non-traditional players offer coveted consumer experiences
The breadth and depth of the data assets held by the tech giant trifecta of Google, Apple, and Amazon are staggering. Purchasing patterns, location data, internet search histories, communication preferences, and media consumption habits are just the beginning.
At the moment, Google has been more active on the research and development side, seeking to apply artificial intelligence to genomic data for diagnostics, develop innovative medical devices, and support healthcare organizations in the cloud.
But its ubiquitously popular search engine now features trustworthy sources for health information when patients query for common concerns, backed by the Mayo Clinic, and Android is vastly more popular than iOS as a smartphone operating system, giving Google a healthcare consumer base ripe for the taking.
Amazon has been taking a more aggressive approach to making itself a direct consumer resource.
Its 2017 purchase of Whole Foods could give it insight into what individuals like to eat, how they shop, and if they are making healthy choices.
A pilot of an almost-instant grocery delivery service could ensure that individuals without transportation can access fresh foods easily and that customers watching their blood sugar aren’t tempted to deviate down the snack aisle.
Its formidable consumer recommendation engine, trained on the purchases of millions of customers and backed by artificial intelligence, could be applied just as easily to health behaviors as what movie to watch next or which gadget to buy.
The popularity of Alexa as a virtual assistant not only helps Amazon collect data on the home environment, but gives it access to patients around the clock, opening up untold opportunities for tailored engagement around chronic diseases or health maintenance.
Alexa as support for electronic health records is already becoming a reality. By the end of 2018, Epic Systems plans to make EHRs more user-friendly by turning Alexa and other ambient computing devices, including Google Home, into documentation assistants.
Amazon as an insurer is also on the horizon thanks to its joint announcement with JP Morgan Chase and Berkshire Hathaway, not to mention rumors that it is looking into putting a hand into the pharmaceutical industry with the potential goal of manufacturing its own cost-effective generic drugs.
Apple also has a growing presence in the patient-turned-consumer environment.
The Apple Watch has become a popular fitness tracking and mHealth accessory for a certain demographic, and iPhones and iPads have become integral to communication and data access for both providers and patients.
Perhaps its biggest move to date into the world of healthcare data is the dedicated Health Records app, which will allow patients to view aggregated data from multiple participating organizations.
The FHIR-based application hopes to solve the challenges of health data interoperability and patient data access by putting integrated records onto a familiar platform that millions of consumers already keep in their pockets.
“We are thrilled to see Apple taking the lead in this space by enabling access for consumers to their medical information on their iPhones,” said Darren Dworkin, CIO at Cedars-Sinai Medical Center, one of the first wave of organizations participating in the project.
“Apple is uniquely positioned to help scale adoption because they have both a secure and trusted platform and have adopted the latest industry open standards at a time when the industry is well positioned to respond.”
Convenience, and the brand recognition to support it, is the ultimate weapon when it comes to attracting tech-reliant consumers. These companies have made it their mission to turn streamlined, seamless, culturally aspirational experiences into their main selling point.
Opening a retail clinic chain in Whole Foods where consumers could pay for care through their Amazon insurance with their Prime accounts would be a gutsy move for Amazon, but it could happen. Delivering prescription drugs from the Amazon pharmacy along with groceries to a patient’s home could be next.
The majority of traditional healthcare payers and providers simply do not have the data savvy, at present, to compete with that kind of simple, intuitive, and tightly-packaged offering.
Patient portals are often barely usable and limited in functionality. Records sharing is still largely a manual process for many organizations, complete with per-page charges for photocopies.
Healthcare happens at the mercy of overcrowded provider calendars and limited operating hours, with “yearly” physicals scheduled three months out.
Meanwhile, consumers can tap an app to order a ride, a meal, or even a date. They bank and shop from their phones, plan their lives, talk with their friends, and get their news – and all of these functions are customized to their individual preferences.
It is little wonder that frustrated consumers are looking for more of that convenience from their healthcare. And it is increasingly apparent that scale, as an end unto itself, is not going to cut it.
Non-traditional entrants into healthcare and new entities formed by mergers aren’t generating so much excitement because they have more employees, operate on an international stage, or simply have more cash to throw around in splashy acquisitions.
Apple, Amazon, Google, and others succeed because they don’t just collect data from nearly all facets of an individual’s life and use that data to develop profiles on consumers.
They take the next step of delivering actionable recommendations, whether those suggestions are around the best route to work, how to optimize an exercise routine, or how to dress for the weather.
Most of the healthcare industry is still struggling with step one of that process: collecting meaningful, standardized, and trustworthy data from multiple sources.
Achieving scale through provider mergers and acquisitions may help widen the potentially available data pool and give delivery networks more control over where and how their patients seek care.
But without the right health IT tools and processes in place to develop interoperability and analyze data effectively, even the biggest conglomerated systems will fall short of what these tech giants and innovative, data-heavy entities like Optum and CVS Health will likely be able to achieve.
If healthcare organizations are going to thrive in a world where consumerism and convenience are growing competitive differentiators, they will need to focus on developing the skills and infrastructure required to turn data into action.
Without making big data analytics a mission-critical priority over the next few years, traditional providers may find themselves turning into legacy providers as a new category of healthcare powerhouses take over a vast consumer base yearning for positive change.