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Drive Innovation January 20, 2022

Three Healthcare Trends to Watch

Overheard at the J.P. Morgan Healthcare Conference

There was no shortage of hot topics being discussed at this year’s J.P. Morgan Healthcare Conference. Everything from data analytics and artificial intelligence to restructuring care delivery models was on the table at the event, which was held virtually again due to the COVID-19 pandemic. We homed in on three key trends that are worth keeping on eye on in 2022 and beyond.

Taking on Risk

For as much chaos as the pandemic has caused over the past two years, it also heightened calls for the industry to accelerate the move to value-based models. Several presenters detailed their plans to push forward:

  • CVS Health intends to move into risk-based primary care. “We will further build out our primary care offerings to guide consumers across the entire care continuum to the sites and the providers that meet their needs whether that be comprehensive or episodic care in the home, virtually or in the community,” CEO Karen Lynch said. “And we believe our approach will be different will shift the model to be centered on the patient with a multidisciplinary care team that all works together, it also will represent a shift for us to risk-based primary care versus the traditional models of fee for service primary care.” Primary care will also be what drives CVS’ acquisition strategy, Lynch said, adding, “it is really about how we expand into primary care. So that is our kind of number one goal.” She noted that the company plans to expand its home health capabilities for populations with complex health conditions.
  • Executives from Intermountain Healthcare reinforced something that CEO Dr. Marc Harrison discussed on an Oliver Wyman podcast last year: There is no going back to the normal way of doing business. The integrated health system is accelerating its drive to not only expand geographically, but go deeper into value-based arrangements, Chief Financial Officer Bert Zimmerli noted during his presentation at the conference. The Salt Lake City-based system recently acquired HealthCare Partners Nevada; Saltzer Health, a physician group in Idaho; and Classic Air Medical. It announced plans in September to merge with Colorado-based SCL Health. Harrison said the system is moving beyond revenue goals to “change the way healthcare is delivered so that it’s value oriented, people can afford it and people can understand it,” Fierce Healthcare reported. And the system is pointed in that direction — premium and capitation revenue was 39% of total revenue in 2016 and 55% of revenue came from fee-for-service care. That flipped in 2020 when premium and capitation accounted for 48% of total revenue and patient services was 45%.
  • The pivot to value-based arrangements is also gaining among tech-driven organizations. Teladoc is exploring expanding its use of these contracts, according to Healthcare Dive, with the company eventually taking on full risk of some patient populations. And in an interview during Fierce Healthcare’s post-J.P. Morgan event, Verily CEO Vivian Lee, MD, referenced the tech giants work with insurers and providers, including the Mayo Clinic, to use analytics and artificial intelligence to support value-based care.

Not every organization is ready to move that aggressively. As Modern Healthcare reported, 97% of Ascension’s revenue comes from fee-for-service and it is expected to stay above 90% for at least three years. Chief Financial Officer Liz Foshage pointed to the government’s slow adoption of “meaningful risk-based payment methodologies” as the primary reason for Ascension staying rooted in fee for service.

Missing Medicare Advantage Targets

There’s a lot of optimism surrounding Medicare Advantage among insurers and federal policymakers. Nationwide, the number of Medicare Advantage plans available to seniors jumped 8% between 2022 and 2021, according to a recent Kaiser Family Foundation analysis, noting that the 3,834 plans is the largest number of plans in more than a decade.

But presentations at the J.P. Morgan conference tempered some of the enthusiasm around MA, with insurers reporting mixed results on enrollment expectations. During his presentation and interview with J.P. Morgan’s Lisa Christine Gill, Cigna Corp. Chairman and CEO David Cordani said that the company will enroll fewer beneficiaries in MA plans, but he was quick to point out that MA represents 5% of the company’s overall revenue. Insurtech company Alignment Healthcare also adjusted its enrollment numbers for 2022, down to 16% growth from a projected 20%. And while Humana, in a filing with the Securities and Exchange Commission a week before the conference, trimmed down its MA enrollment estimates, President and CEO Bruce Broussard said he remained bullish on MA, saying it is “where the healthcare industry is going,” Modern Healthcare reported.

Meanwhile, Clover Health and Centene executives expected positive trends in their Medicare Advantage numbers.

Focused Pharma

Echoing Harrison’s remarks of breaking with the past, leaders in the life sciences space hope to capitalize on advances made over the past couple of years.

“The future has been accelerated by several years,” Geoffrey van Maltzahn, Co-founder and CEO of Tessera Therapeutics, said during Fierce’s post-J.P. Morgan event, noting that pre-pandemic there were questions about how and if mRNA technology was viable. “There were whispers that this would never work.”

The focus now is to push beyond vaccines, including combining mRNA with our ever-expanding understanding of genomics to develop new medicines, he added.

While there wasn’t a ton of M&A activity at this year’s conference, several deals announced in the life sciences space confirmed commentary from Oliver Wyman’s Akshay Agarwal, MD, and Tobias Handschuh: big pharma companies will use targeted investments and deals to build up specific therapeutics. That includes licensing arrangements, such as Bayer and Mammoth Biosciences coming together around in vivo gene-editing therapies. Pfizer and Acuitas Therapeutics announced a development and option agreement for up to 10 targets for vaccine or therapeutic development. And as this MM+M article points out, GlaxoSmithKline is setting its sites on licensing deals, too.

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