What is the growth/decline in the Health Care Industry?

It can be hard to distinguish the signal from the noise surrounding the healthcare industry these days. And the decibels will only rise in 2015, especially as the U.S. Supreme Court is set to weigh in on a critical facet of the Affordable Care Act and 2016 presidential contenders are beginning to offer their healthcare prescriptions.

Among the dim and uncertainty, however, some clarity can be found. Indeed, the immediate future for the healthcare sector can be summed up by these trends, which Strategy& and PwC have dubbed the New Health Economy:

• Consumers will increasingly play a decision-making role in their healthcare coverage and treatments.
• The federal government will further solidify its position as healthcare market maker.
• Insurance reimbursements will become stingier.
• Employers will look for ways to remain paternalistic by exploring new care and funding models such as bundles.

Despite a shaky start, the new insurance marketplace is having an impact; a total of 6.7 million people had enrolled through the federal and state exchanges as of November 2014, and insurers are planning to offer more products in more states.

Of course, if the U.S. Supreme Court rules in favor of the plaintiffs in King v. Burwell and outlaws federal subsidies for people living in states without their own insurance exchanges, the ACA’s insurance market will have been dealt a heavy blow. But it would not be fatal — many states are already developing workarounds to continue subsidizing coverage.

“Healthcare strategy 2015 — Back to the basics: 12 key thoughts,” by Scott Becker, Becker’s Hospital Review, Jan. 6, 2015 offers basic management recommendations for controlling costs.

These include:

• Understanding the “cash cows.” For instance, “two successful community hospitals excel in orthopedics (a southern hospital) and neurosurgery (a Midwestern hospital). The leadership team knows the exact revenues and margins these specialties and practices meant to the hospitals. Each consistently doubles down to protect those revenues.”
• Leadership should “devote a certain percentage of resources, maybe 25 percent, to new initiatives and areas that can become tomorrow’s stars.” The three core questions to ask are: “What is the system going to be great in, where does it make its money and who is its customer?”
• “There is no single strategy.” Health care systems need to apply and test new ideas. Becker cites one hospital that is focusing major resources “around better use of its electronic medical records and better development of systems to deliver after-care notes to patients.”

“Kaiser, Providence, Ascension leaders share cost-cutting strategies,” by Leslie Small, FierceHealthFinance, March 27, 2015
Kaiser Permanente is moving from individual scheduling systems to an organization-wide system. It is also trying to “reduce employee overtime by 5 percent as well as look at other ways it can reduce workforce-related overhead.”

• Providence Health & Services “seeks to consolidate its IT, supply chain and finances in order to reduce administrative costs.”
• Ascension has started a “value-creation office to cut costs, information governance to set standards for the normalization of data across the organization and a shared-service division to “manage all the back-office stuff.” It has also “pulled all of its physicians into its clinical holdings organization with one set of leadership and one revenue cycle system.”

Deloitte University Press, article, discusses how the Internet of Things can help with costs:

• For instance, “Given that digitally collected patient-generated data are more reliable than the self-reported alternative, IoT applications can be critical to improving and personalizing health care, even encouraging behavior changes before they result in illness.”
• “Not only can IoT technologies help organizations improve health management, the personalization of care and improved patient engagement through IoT technology will make health organizations more competitive and attract more customers in an ever more consumer-driven market.”

What are the challenges/struggles the industry faces:

Riding a wave of policy turmoil, consumer empowerment, and tightening margins, payors and providers have no choice but to go bold.

As a health plan or hospital executive, you may have had a conversation with your team recently in which you were told that they have nothing left to cut. Respectfully disagree. In our experience, aligning resources with strategic priorities and applying modern industrial engineering techniques, such as standardizing processes as well as the flow of patients through the facility, can reduce health plan administrative costs by as much as 25 percent.

You may be told by your team that there are no costs left to cut. Respectfully disagree.

The “find savings” conversation is most contentious in hospitals, where quality and safety are often given as the reasons to just leave things alone. Another frequently heard excuse is, “We don’t want to stop doing x while the “payors” are still reimbursing it.” In our experience, it is possible to improve quality, safety, access, patient experience, and engagement of physicians and staff while cutting costs. Most of the leading health systems in the country are setting ambitious targets and rightfully embarking on a ruthless search for unnecessary complexity, fragmentation, and waste. By closely matching supply to demand and getting faculty, doctors, staff, and facilities to perform at the top of their potential, these systems are realizing benefits no matter what payment model they choose. In short, a campaign for operational effectiveness and efficiency is no longer optional — it is table stakes.

Healthcare Categories:

Medical specialties and practice categories:
Acute care
Allergy & Immunology
Andrology
Anesthesia
Audiology
Cardiovascular Disease (Cardiology)
Clinical Neurophysiology
Critical Care Medicine
Dentistry
Dental Public Health
• Endodontics
• Oral and Maxillofacial Pathology
• Oral and Maxillofacial Radiology
• Oral and Maxillofacial Surgery
• Orthodontics and Dentofacial Orthopedics
• Pediatric Dentistry
• Periodontics
• Prosthodontics
Dermatology
Emergency Medicine
Endocrinology and Metabolism
ENT (see also Otorhinolaryngology)
Epidemiology
Family Practice
Gastroenterology
General Practice
Geriatric Medicine
Gynecology
Gynecologic Oncology
Hematology
Immunology
Infectious Diseases
Internal Medicine
Internists
Medical Genetics and Genomics
Medical Toxicology
Microbiology
Neonatology/Perinatology
Nephrology and Hypertension
Neuromuscular Medicine (subset of neurology and physical medicine)
Neurology
Neurological Surgery
Obstetrics and Gynecology
Oncology
Ophthalmology
Orthopedic Surgery
• Adult Reconstructive Orthopedics
• Foot & Ankle Orthopedics
• Hand Surgery
• Musculoskeletal Oncology
• Orthopedic Sports Medicine
• Orthopedic Surgery of the Spine
• Orthopedic Trauma
• Pediatric Orthopedics
Otorhinolaryngology (Ear, Nose & Throat)
Palliative Medicine
Parasitology
Pathology
• Blood Banking/Transfusion Medicine
• Clinical Informatics
• Cytopathology
• Dermatopathology
• Neuropathology
• Pale pathology
• Pathology – Chemical
• Pathology – Forensic
• Pathology – Hematology
• Pathology – Medical Microbiology
• Pathology – Molecular Genetic
• Pathology – Pediatric
Pediatrics
Physical Medicine and Rehabilitation
• Spinal Cord Injury Medicine
Plastic and Reconstructive Surgery
Podiatric Medicine (Podiatry)
Preventative Medicine
Primatology
Psychiatry
Pulmonary Disease
Radiology, Diagnostic
Radiology, Nuclear
Radiation Oncology
Reproductive Endocrinology
Rheumatology
Sports Medicine
Surgery
• Bariatric
• Cardiac
• Cardiothoracic
• Colon and rectal
• Craniofacial (maxillofacial)
• General
• Hand
• Gynecologic
• Neurosurgery
• Thoracic
• Transplant
• Trauma
• Urological
• Vascular

Clinics
• Acute/urgent care clinics
• Ambulatory clinics
• Community health clinics or centers (low income)
• Free clinics
• Hospital outpatient clinics
• Nicotine dependence clinics
• Mental health and substance abuse clinics
• Nurse-led clinics
• Pain management clinics (chronic pain, long-term pain, injury recovery, etc.)
• Physical therapy clinics
• Rehabilitation clinics
• Retail, walk-in, or convenient care clinics
• Rural clinics
• Sleep clinics
• Specialty clinics (see medical categories above)
• Urgent care clinics
• Walk-in clinics (including urgent care centers, retail clinics and even many free clinics or community health clinics)
• Weight loss clinics

Medical diagnostic centers
• Diagnostic imaging centers
• Diabetes diagnostic centers
• Outpatient diagnostic centers

Public health
• Prevention and wellness
• TB testing centers

American College of Radiology accreditation modalities
• Breast MRI
• Breast ultrasound
• CT
• Mammography
• MRI
• Nuclear Medicine and PET
• Radiation Oncology
• Stereotactic Breast Biopsy
• Ultrasound

Other:
• Ambulatory surgery centers (outpatient surgery centers, same day surgery centers, or surgicenters)
• Bariatric centers (for obesity treatment – Mayo Clinic has one)
• Pharmacogenomics/pharmacogenetics (drug-gene testing) – Mayo Clinic has a center
• Hospital ships
• Nurse-managed health centers
• Medical laboratories
• Military health facilities
• Transplant centers, all organs
• Telemedicine, telehealth, remote patient monitoring, or distance medicine
• Home health care
• Remote patient monitoring
• Telehomecare

Physicians’ practices
• See medical categories above
• Family
• General
• Primary care
• Women’s health
• Physicians’ assistants

Emergency services
• Ambulances
• Emergency medical technician (EMT) services
• Paramedics

Specialty hospitals
• See medical categories above
• Physician owned specialty hospitals
• Women’s Health
• Cardiovascular Surgery and Health
• Orthopedic Surgery and Health
• General Surgery
• Military health facilities

Pharmacies
• Community pharmacies
• Hospital pharmacies
• Infusion or home infusion pharmacies
• Retail pharmacies
• Specialty pharmacies (also called infusion pharmacies)

Psychiatry
• Addiction psychiatry

Practice models
• Primary care
• Group practice
• Employed Physician Practices
• Solo practice (usually internists)

Care facilities
• Adult daycare
• Long term acute care facilities
• Long term care/elderly and disabled services
• Nursing care facilities
• Assisted living facilities
• Respite care (short-term facility)
• Transitional care (coordination and continuity of health care during a movement from one healthcare setting to either another or to home)

Hospice care
• Nonprofits
• For profit chains
• Home hospice care providers
• Palliative medicine

Complementary and alternative medicine
• Acupuncture
• Chiropractic
• Energy therapies
• Herbal medicine
• Magnetic field therapy
• Reiki
• Therapeutic touch
• Ayurvedic medicine
• Chinese herbal remedies
• Naturopathy
• Homeopathy

Veterinary medicine

Top Health Industry Trends to Watch for 2015 includes the following insights.

• Do-it-yourself healthcare and mobile applications: technology, convenience, and cost-consciousness all play into this issue. Technology companies are building mobile health tracking devices as well as online applications. Hospitals and private health care professionals will need to incorporate this type of patient input into their diagnostic and patient health management tools.
• With so much more patient data online, privacy and data protection is a major issue. Patients want convenience, so finding “the right balance between privacy and convenience will be challenging.”
• 20% of all healthcare costs in the U.S. are spent on the “costliest 1% of all patients.” These include aging baby boomers and the chronically ill and will be the focus of industry attempts to rein in costs.
• PwC sees a “growing conflict between drug access and affordability” that “will create fresh pressure for data that show these expensive medications work better than others and are worth the premium.”
• There is a growing movement to make clinical trial results public, through regulations and the OpenFDA initiative, which was launched last November.
• The entire industry is dealing with the influx of newly-insured patients under the ACA and must develop ways of meeting their needs while containing costs.
• State regulations are expanding the ways in which physician extenders (nurses, physician assistants, pharmacists, etc.) can treat patients. Physicians are becoming more comfortable with this model, which is expected to grow substantially over the next five years, but not all are on board. They will all have to come to terms with the model.
• In order to stay competitive, industry players are partnering on “innovative products and services.” HRI analyzed Fortune 50 companies and “found that 40% – or 20 out of 50 – pursued new healthcare partnerships in 2014.” In another survey, 58% of consumers said “they would be more likely to choose a healthcare company that partnered with others to improve services.”

Deloitte, in its 2015 Health Care Providers Industry Outlook, comes to similar conclusions, in slightly different language. Deloitte sees the critical issues for providers in 2015 as: containing health care costs and proving value, moving to value-based care, adapting to and absorbing the new patients enrolled in the ACA, scaling up services, responding to a changing regulatory environment, and managing risks such as privacy and security.

• The U.S. health care system is moving from “volume- to value-based care,” in order to “control/reduce costs, improve outcomes, and obtain more value for money spent.” Physicians are most impacted by this trend and are moving from private practice to “an employed model” and acquisition by health systems.
• Consumers are driving many market changes, with more access to data and increased cost concerns.
• Consolidation will continue and partnerships will grow, both long- and short-term.

A more recent post from PwC, “Medical Cost Trend: Behind the Numbers 2016,” expects spending growth in the U.S. health economy to slow in 2016, but still grow faster than overall inflation. As the summary says, affordable healthcare “remains out-of-reach for many consumers.” “Amino Harnesses Health Industry Data for Consumers,” New York Times, Oct. 15, 2015.

• This digital health post from the New York Times discusses the growing number of online consumer applications of health care spending data. Experts cite demographic trends and a more health-conscious population, but say the largest driver is the trend to low premiums with high deductibles fueled in part by the Affordable Care Act. Now, “people are shopping more aggressively for health care because they are paying more of the bill themselves.”
• The main example used in the article is Amino, a San Francisco start-up that has collected very detailed data on billings and payments for “nearly every practicing doctor in America and the treatment of more than 188 million people” that it will make available to consumers in applications.

“Health Care Industry Rethinks Leadership, Delivery of Care,” US News, Aug. 5, 2015.

• The Affordable Care Act has placed “a new emphasis on payment reform, prevention and population health.”
• Demand for entrepreneurial leaders is increasing due to “new competitive pressures, along with a shift from fee-for-service medicine system based on providing high-quality care at lower cost.” Hospitals and private practice physicians alike are competing with retail outlets like CVS that provide convenient care and keep the consumer costs down.
• An April 2014 report from PwC’s Health Research Institute reinforces this view. The survey found that consumers would switch from “traditional care venues” to “more affordable and convenient alternatives. Nearly one in two respondents said they would choose new options for more than a dozen common medical procedures, such as using an at-home kit to diagnose strep throat or having chemotherapy administered at home.

Another page on PwC’s HRI site tracks health technology and innovation. It addresses digital technologies, including wearables and innovations to bring the patient closer to care in time and distance. A few case studies are included.

Accenture Consulting briefly describes healthcare IT trends in Top 5 eHealth Trends. I’ve combined them below:
• Wearable devices and personalized healthcare options
• Online systems that pull together health monitoring data from a variety of sources