The Forces and Themes Transforming Healthcare in 2018

Across the healthcare industry, 2017 was shaped by a number of macro forces including a new administration in D.C., the ongoing charge towards value-based care, new technological capabilities, and the continued battle against rising healthcare costs – combining to impact the way healthcare constituents, including consumers, position themselves for the future. While traces of uncertainty still loom, it is clear that we enter 2018 with a great deal of excitement as the healthcare industry has reached a transformative inflection point.  Reflecting upon the past twelve months, we believe there are a handful of themes certain to remain front and center heading into the New Year:

Finding Clarity in Value-Based Care 
Discussions around alternative payment and delivery models have taken place for the better part of the decade, as industry executives debate the “tectonic shift” from legacy Fee-for-Service to Value-Based-Care (VBC).  While the nature of these conversations hasn’t changed, the meaning of them has.  Despite new and evolving VBC programs, it’s clear that the common underlying theme of tying reimbursement to cost and quality has on-going support.  Executives are no longer speculating on when or if, as they are focused on determining the best path forward in response to this new normal.

At the heart of it, provider adoption requires a differentiated approach as payment drivers fundamentally differ from Fee-for-Service, rendering legacy workflows, capabilities, and processes insufficient.  Health systems will require a sophisticated blend of tools and capabilities across analytics, care delivery (inside and outside their walls), and patient engagement.  The manner in which each health system undertakes this initiative will differ.  Some providers will attempt to develop tools in-house, while others will partner with point-solution vendors or VBC enablers, all with the goal of improving quality and lowering costs.  As quality measures and incentive payments continue to materialize in 2018, the playbook of successful providers will become the gold standard for others to adopt in the years to come.

The Future is all About Total Consumer Health
We’ve talked a lot about the effect of consumerism on healthcare in past articles and blogs. It’s not exactly breaking news that today’s consumer is in greater control given the proliferation of resources providing optionality for care access, treatment, management, and payment.  Consumer expectations are driving meaningful change across the system, and healthcare constituents have been adapting their business models to evolve with this paradigm shift every step of the way.

Payers and providers alike have made considerable M&A and organic investments developing capabilities to enhance consumer engagement. Recognizing that a more engaged consumer can directly improve health outcomes, market momentum is placing greater value on the ability to connect disparate parts of the healthcare system in order to create a more meaningful member / patient experience. This has translated to a growing investor appetite for companies with innovative technology platforms that maximize the efficiency of the member communications process. We are eager to see how these compelling tailwinds influence consumer engagement activities going forward.

Healthcare is Getting Smarter
The more data the system generates, the stronger the need for smart analytical tools to provide meaningful and actionable insights. This year demonstrated exciting partnerships between man and machine, groundbreaking insights through the use of artificial intelligence (AI), and a new model for health information exchanges.

Genetics is a prime example of this contemporary leap. It wasn’t too long ago that the practice of genetics was limited for the use of academic medical centers and research labs. Through machine learning, the ability to extract and analyze our genetic data has become faster, easier, and a fraction of what it used to cost – prompting its use in becoming far more widespread and transforming the way we understand disease and what treatments make the most sense. Couple this knowledge with AI and we can glean totally new insights to more efficiently and cost effectively deploy resources to enhance patient outcomes. Further, all of this new information can now be securely stored and distributed through a blockchain powered health information exchange. Blockchain has gained tremendous momentum within healthcare as the new standard for a secure environment to amplify and support the integration of data across a range of uses and constituents. Needless to say, the way the system operates today will change profoundly over the next decade. 

Healthcare is Finally Becoming a True “System”
The broader healthcare market is at an inflection point, where the challenges presented have created a wealth of opportunity for those that can create solutions that redefine the industry as we know it.  For many payers and providers, the focus is on how to stay relevant in today’s dynamic environment while working to better align objectives and internal processes that allow an organization to behave and act more like a system.  Undoubtedly, achieving this holistic alignment will be accelerated through the continued innovation that third-party “enablers” provide, greasing the wheels for payers and providers.  Further advancement will be characterized by the transformative consolidation we witnessed towards the end of 2017 as the pending integration amongst industry giants erased segment boundaries (i.e. CVS / Aetna; Humana / Kindred at Home) and others sought out bold moves to extend adjacent capabilities (i.e. Express Scripts / eviCore; Optum / DaVita Medical Group).  We believe that this wave of strategic consolidation is just the beginning.

Beyond healthcare consolidation sits a large subset of retail, technology, and consumer-based companies looking for a way to break into the healthcare marketplace and further disrupt the traditional rules in which the market operates.  These innovative companies realize the opportunity is too large to ignore and they have a history of disrupting the status quo. 

This upcoming year will be a time of great opportunity for innovative companies to capitalize on the need for real solutions that exist for payers, providers, and constituents alike to deliver high-quality and cost effective care to the growing consumer.  We look forward to continuing the dialogue and seeing how these evolutionary changes unfold in 2018 – Happy New Year!