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On tap for 2019: advances in health systems’ business models By Katie Kuehner-Hebert

There’s a great deal happening in 2019 to advance the business models of health systems—from ever-expanding ways to increase access to care, to better predictive analytics via the use of IoT, artificial intelligence and machine learning, to whole new transformational ventures being spawned from the recent mega-mergers.

While medical and clinical advances have historically taken center stage in the health care area, innovation in the business models of health systems, including improvements in the “customer experience,” have been delegated to “the kids’ table”—until now, says Sam Glick, a partner in the health and life sciences practice at Oliver Wyman.

“Now they’ve gotten an equal seat at the table—we’re at the point that innovation in business models cannot be a side activity,” Glick said in a recent Welltok webinar, “6 Health Predictions for 2019 and Beyond.

“We’re creating a new front door in health care and 2019 is going to be a time of reckoning for this,” he says.

Mergers and partnerships

Nontraditional players such as Amazon’s partnership with Berkshire Hathaway and JP Morgan Chase are set “to make waves” in 2019, according to a S&P Global Ratings report detailed in Becker’s Hospital Review. But so will the combination of traditional players, including Cigna-Express Scripts and CVS Health-Aetna.

“The creation of these healthcare verticals, which wield increased negotiating leverage on healthcare products and services pricing, will have significant implications for the industry,” S&P writes.

Retail giants and technology firms are now trying their hand at reducing costs and improving efficiency within the health insurance market, according to Capgemini’s report, “Top 10 Trends in Health Insurance 2019.”

“These firms possess a vast repository of customer data, existing brand recognition and abundant capital that reduces their barriers to entry into the market,” Capgemini writes. “Technology firms are also providing value-added services and acting as enablers for other parties in the healthcare ecosystem.”

Out of the eight or so major consequential deals announced last year, one or two of those will likely significantly reshape the industry, Oliver Wyman’s Glick says.

“There’s going to be a lot of experimentation that may or may not work, but that’s pretty exciting,” he says. “If you’re looking to D.C. for impact, you’re holding your breath—the real impact is going to come from real players and now we’re going to see what they make of it.”

Increased emphasis on value-based care

As these mega-deals shake out and as cost pressures mount across the rest of the industry, value-based care will gain even more traction in 2019, according to S&P.

“This increasing shift to a pricing model that is more dependent on quality and outcomes will be a major disruption to the health care industry, likely pressure sales growth and margins, and create new winners and losers,” S&P writes.

According to Glick, the quality of value-based care will depend not only on the quality of claims data and electronic health records within the health care sector, but also from “really rich consumer data sets” collected from outside sources such as wearables and other IoT tools, as well a from Facebook, Apple, Google, Reddit, Fitbit, Amazon, Uber, You Tube and others.

However, as consumer data privacy laws continue to overshadow HIPAA compliance, health systems will need to secure the permission of patients to access and leverage outside data to better tailor care especially for them, Glick says.

“If you demonstrate the value to consumers, they would be willing to share data if they thought it would result in better health care experiences, convenience and access value to them,” he says.

Accomplishing this is increasing top of mind within health systems. Indeed, leveraging patient data to manage health and drive individual, provider and payer decisions is the number one top critical challenge for health systems, according to HealthCare Executive Group’s Top 10 critical challenges, posted by HIT Consultant.

Tip for employers from PWC: Consider offering a value plan option with a limited network focusing on quality and customer satisfaction along with pricing transparency tools to demonstrate savings and value.

More holistic treatment of both physical and mental health

The second top critical challenge for health systems is improving members’ overall medical, social, financial, and environmental well-being, according to the HealthCare Executive Group.

Parity between care of physical and mental health is critical, as depression has become the leading cause of disability for people between the ages of 15 and 44, Glick says, citing a 2015 study by the Institute for Health Metric and Evaluation.

“As consumers start thinking more holistically, the industry as a whole is moving into this new thinking,” he says. “It’s going to take innovation in business models, but overall I believe the industry can do tremendous things next year.”

Leveraging artificial Intelligence and machine learning to achieve increased operational effectiveness

Leveraging artificial intelligence and machine learning to improve predictive analytics is enhancing health systems across the entire enterprise, from back-office operations to customer-facing activities, according to CIO Review.

“The quality and accuracy of the AI model solely depends upon the quality and volume of data used to train it,” CIO writes. “As with heavily regulated industries, concerns over digitization, sharing, and security of confidential and personal data are a challenge.”

"Any growth in the application of AI needs to come from within the medical groups and institutions and done in collaboration with the insurance providers, and also relevant government entities.” —CIO

With AI and ML, health systems can more accurately diagnosis and better predict the correct care, as well as streamline internal processes, according to Capgemini’s report, “Top 10 Trends in Health Insurance 2019.”

Improving both the front and back side of the house is paramount to health systems. Indeed, improving operational effectiveness is the eighth top critical challenge for health systems, according to the HealthCare Executive Group. For the group’s members, that means implementing lean quality programs, process efficiency (with new core business models), robotics automation, revenue cycle management, the real-time/near-time point of sales transactions, etc.

Enhanced customer experience and increased access to care

Creating a truly “digital healthcare organization” is the fifth top critical challenge for health systems, according to the HealthCare Executive Group.

Such an organization is defined by HSAs, portals, patient literacy, cost transparency, digital payments, CRM, wearables, and other patient-generated data, health monitoring, and omnichannel access/distribution.

Chatbots, voice assistants and mobile apps are increasingly being used to enable patients to access care anytime and from anywhere, according to Capgemini’s report.

“Today’s increasingly tech-savvy customers expect the same type of digital tools and experience from their insurers that they receive from industries such as online retail,” Capgemini writes. “User-guided tools in healthcare include digitally-driven mobile apps or web portals that provide support for all aspects of a customer’s healthcare journey. Insurers derive multifold benefits such as reduction in healthcare costs, lowering of service costs as well as improved customer experience and brand presence through digital transformation and by providing user-guided tools to members.”

And then there’s the exploding world of telemedicine, increasingly gaining in popularity, according to PwC’s report, “Behind the numbers 2019.”

“Increasing access to healthcare is expected to decrease costs in the future, but right now, we are experiencing increased utilization and employers must balance access to care and unnecessary demand,” PwC writes. “It is hard to determine if the utilization of non-traditional care is directly related to increased access or if consumers are choosing these non-traditional options instead of higher-cost options such as a visit to the ER. Regardless of the reasons, utilization is up and will affect trend for the coming year.”

Still, there is great promise in the use of telemedicine, now being transformed even more by data exchange platforms, according to MobiDev’s 8 Technology Trends in Healthcare to Watch in 2019-2020.

According to MobiDev, between 20 and 30 billion IoMT devices are expected to be deployed by 2020.

“For example, hospitals have been able to reduce readmission rates by providing real-time monitoring of patients outside the office,” MobiDev writes. “Thanks to the advent of wearable devices, it’s normal for remote monitoring systems to now be included in post-discharge plans for patients.”

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