The 2016 Wharton Health Care Business Conference, titled “The Innovation Game: The Race Between Entrants + Incumbents”, drew 500+ healthcare leaders and business students to Philly Feb 18-19 to explore the challenges faced by early-stage entrants and incumbents alike in the race to achieve innovation at scale. Among the six panels, our own Terry Stone, Oliver Wyman’s Managing Partner for Health & Life Sciences, moderated a discussion on payer-provider convergence with senior leaders from Remedy Partners, Mount Sinai Health System, Cigna Healthcare, Clover Health, and Oak Street Health. Attendee Lynn Wang, a first-year MBA candidate at Harvard Business School with experience managing a primary care clinic and launching tech ventures, shares her takeaways from those panelists and others below, followed by some additional highlights:
1. It’s all about primary care.
Primary care currently only receives 5% of total Medicare spending, but directly influences 85% of it. To reduce total healthcare cost, we must invest upstream to minimize downstream expense. Important measures include preventing ER visits, reducing acute episodes for high-risk patients and hospital readmission, improving transitional care management, and targeting high-value referrals. While the provider with the most clout today is the thoracic surgeon, Aledade CEO Farzad Mostashari believes that power needs to shift to the family medicine doctor. Oak Street Health Chief Medical Officer Griffin Myers says we need to glorify the role of primary care physicians and behavioral health specialists.
2. We are still extremely early in the transition from volume to value.
The sum of all patients served by primary care entrants such as Iora Health, Qliance, Oak Street Health, One Medical, etc. is still less than 10% of all patients served by an incumbent such as Mount Sinai Health System. The challenge for all legacy players will be to “turn an armada into an air force,” says Mount Sinai's Chief Population Health Officer Niyum Gandhi. While Medicare pushes for “50–90 by 2018” (50% alternative payment models and 90% linked to quality), Cigna is currently at 39–52. Lynn Garbee, Cigna's Senior Director for Value Based Reimbursement and Collaborative Care, thinks the transition will be gradual. Today’s fee-for-service world will take on upside-only risk sharing, then both upside and downside risk sharing, then episode-based payments with capitation. Former Centers for Medicare & Medicaid Services Administrator Mark McClellan says despite the current proliferation of experimentation in healthcare, no one knows what the provider landscape or payment models will actually look like when the transition is complete.
3. True integrated care requires structural integration.
The future of healthcare will be team-based. Clover Health CEO Vivek Garipalli believes patients need a “quarterback” to take full accountability for their health. Passing relevant data within teams requires significant progress in interoperability. For hospitals, integrated care requires structural change. Mount Sinai's Gandhi explains that when hospital volumes decrease, unit price will have to go up to compensate. The only alternative is to take structure out of the system, as Mount Sinai did when it removed 1,000 beds recently. There is overcapacity today, and Aledade's Mostashari echoes that hospitals of the future will have to pick one of 3 options: living with less revenue, building a monopoly, or going out of business.
4. Patient engagement is grounded in deep empathy.
It’s not about pulling consumers in to engage with healthcare, but pushing healthcare into the context of their lives. Legacy players continue to struggle with engagement: the average payer patient portal was used just 1.6 times by each member last year. Brian Dolan, Chief Strategy and Partner Integration Officer for Rally Health, cites two prerequisites for effective patient engagement: trust and value received. He also encourages innovators to think about incorporating tools for engagement into the three critical touch points that every healthcare consumer experiences: 1) receiving the health plan ID card 2) searching for a provider when in need of care and 3) living healthier lives everyday.
5. Closing the loop between analytics and action requires workflow integration.
Despite the abundance of analytics tools in healthcare, many do not provide insights on fundamentals. Marie Dunn, Director of Analytics at Health Catalyst, says solutions are still lacking for even the most basic questions, such as “Who are my high-risk, high cost patients?” and “How much is the cost?” To have an actual impact on quality of care, tools must have good usability and workflow integration, which is especially challenging as integration usually means compatibility with a wide set of EMRs.