Editor's Note: Below, Oliver Wyman’s Josh Michelson and Graegar Smith explain the greater market implications of health's emerging “new front door”. Since publication of this piece, notable pharma announcements have materialized, namely Walgreens Boots Alliance’s potential acquisition of AmerisourceBergen, an Amazon-Berkshire Hathaway-JPMorgan deal, and a 2017 Walgreens-MDLIVE collaboration. (For more on our 2018 pharma predictions, see our updated infographic.)
For decades, the main front door to the healthcare system has been a provider-centric blend of primary care, specialty care, and the ER. All bricks and mortar, almost always on the provider’s schedule, and a cold first encounter. In the past few years, providers, retailers, consumer technology organizations, and even payers have been investing in new forms of access and care – with an eye towards offering modalities that are approachable, always available, easy to navigate, lower cost, and transparently priced. Here are some of the new entrances – the new front doors – consumers are using to cross the threshold into the healthcare system today:
- Next-generation retail care. There has been a steady climb of retail clinics over the past decade with the likes of Walgreens and CVS Health leading the charge (nearly 1900 clinics nationally, up from ~300 in 2007 and ~900 in 2008). But retailers appear to view the organic build of clinics as the starting line. CVS made a splash with the announcement that it would buy Target’s pharmacy and clinic business – and rebrand approximately 80 clinic locations previously operated by Target as part of its plan to operate 1,500 clinics by 2017. Even payers, like GuideWell in Florida, have opened up freestanding retail centers and clinics.
- Retail setting as a health hub. In addition to the Walgreens partnership with MDLIVE, Rite Aid is collaborating with providers through their Health Alliance to extend care and bring in coaching and other medication therapy management services – all on the provider’s platform. And HealthSpot, a start-up organization, has introduced a kiosk model in retail settings – completely changing the ‘visit to fill’ paradigm through a virtual encounter and a set of diagnostic tools.
- Virtual convenient care. Companies like Teladoc, MDLive, and AmericanWell are at the forefront of telehealth innovations. More often than not these earlier forays into the medium have been proprietary networks of physicians. Increasingly, however, we are seeing telehealth companies integrate with a provider’s own network of doctors so the virtual visits can leverage existing high trust relationships. One company leading this charge is Carena, which has partnered with the likes of OSF HealthCare in Peoria, IL, INTEGRIS Health in Oklahoma City, OK, and UW Medicine in Seattle, WA, to extend their clinician footprint in local or expansion markets via smartphone, tablet, or computer.
- Advanced telehealth. Broadband companies are taking telehealth even a step further. For example, Cox Communications, one of the largest broadband and cable providers in the U.S. (and an investor in HealthSpot), recently formed a strategic alliance with the Cleveland Clinic. Called Vivre Health, their shared ambition is to bring healthcare to the home digitally – using the same technology that is transforming consumption of information and web services.
- Low cost, on-demand primary care. The retail and e-visit setting can be an ideal venue for treating lower acuity episodes, but questions persist about whether individuals with chronic conditions or complex issues warrant higher levels of care. Enter an organization like Walmart. The giant retailer currently has 17 primary care clinics in three states with $40 visits for customers and $4 visits for associates – leveraging learnings from their $4 drug program to make primary care more affordable – potentially at a national scale. Startups like Zest Health and ZocDoc are also helping create ‘spot markets’ by marrying supply with demand for services locally – helping direct patients to same day primary appointments and in doing so reduce system inefficiency.
Over time, we envision a model where ‘new front doors’ are available for unique population and consumer segments – with the power to reshape the traditional PPO network. For example, healthier consumers could be happy relying mostly on a network that includes on-demand access to medical services via telehealth, in-person access via a clinic or kiosk in a pharmacy, and a wrap-around social engagement platform that rewards them for making healthy choices.
In contrast, sicker consumers could rely more heavily on in-person services – an in-office, patient-centered expanded care team, supported by 24/7 remote monitoring and a call center that proactively reaches out if there are issues. In whatever form, embracing the ‘new front door’ is a no-regrets play:
- Strategic value. It can be accretive in a traditional, fee-for-service environment – growing brand recognition and reach, improving market share, reducing system leakage, and creating consumer stickiness. A ‘new front door’ can take on greater significance as the healthcare market moves toward value – creating access to more attributable lives, improving network coverage and adequacy, reducing total cost of care, and improving consumer engagement.
- Shifting the compete and collaborate lens. In the past few years, providers have doubled-down and expanded their primary care and ambulatory networks (pre- and post-acute), and many have invested in urgent care outlets. This has improved access, but not necessarily the consumer experience. Providers need to realize these are ‘sunk cost’ investments and evaluate the emerging landscape with fresh perspective. Partnerships with retailers, consumer technology companies, and the like can actually elevate line of sight into the consumer’s daily lives, enhance the engagement model, and improve overall profitability (in a full risk model).
- As much the how as the what. Having the right mix of assets is, however, just one component. The other is having the ‘connective tissue’ that brings the assets together into a complete system, seamless to the consumer and with a superior, ‘magnetic’ experience. This is a huge challenge for most – partly because there are so many point solutions today, creating fragmentation in the eyes of the consumer – but also a huge opportunity for differentiation and competitive advantage. To be most effective, providers need to move away from an individual service line mindset and, rather, optimize around all the consumers’ touch points with healthcare – acute and ambulatory, in-person and virtual, in sickness and in health.
Lower acuity convenient care is a natural starting point for the new front door. Yet we see core elements of primary, ambulatory, and secondary and tertiary care as well as diagnostic services being affected by similar dynamics over a three-five year horizon, begging the question for providers and other healthcare organizations of whether and how to open their own new front doors to health.