2016 (really 2024) Healthcare Predictions
It’s time to make 2016 predictions. Here are some good lists from Fast Company and Fortune. Fortune’s #3 prediction, that end of life care will grab headlines, is long overdue — it may have hit it’s inflection point last October with the release of Atul Gawande’s Being Mortal:Medicine and What Matters in the End (more on that in another post).
My experience running the HSA business at Optum taught me to take my projections for when something will “hit” (i.e.: hockey stick) and add five years. Healthcare is a slow moving beast due to the purchasing cycles and complex decision making process.
With that in mind, here are two predictions for the healthcare industry for 2024. These are seedling stage ideas that may get some funding (or have some) and early adopters, but will not become mainstream for 8–10 years.
Prediction #1: introduction of no-network health insurance
Network discounts are the keystone for health plans. By their very nature, network discounts abhor price transparency. For price transparency and consumerism to realize it’s full potential, an insurance plan will have to post all prices for their provider network.
A simple solution that facilitates price transparency which could effectively eliminate the insurance network, would be to mark prices to the published Medicare rates with a markup, such as Medicare + 30%. For a practical matter, any provider can bill the insurance plan and be reimbursed as “out of network”.
For consumers, the benefit is simple: see any provider willing to accept the Medicare +30% the insurance plan will reimburse, the balance is the consumer responsibility.
At the moment, there are significant obstacles to this type of plan, not the least which include network density requirements and balanced billing restrictions. Nevertheless, some enterprising startups can get creative and start small and locally to achieve a true consumer friendly health plan.
Prediction #2: providers will hire risk managers for patient attribution
As providers take on risk through value based payment contracts, inevitably, they will need to manage their patient risk profiles. This began with care coordinators using hot spotting techniques to manage their high risk patients through timely interventions and new reimbursements for chronic care management (CCM).
Other industries that manage risk, such as auto-insurance and home mortgages, realize unacceptable risk (i.e.: patients) will be detrimental to long term sustainability of the business.
In home mortgages, risk is managed and distributed through securitization (mortgage backed securities) which, in turn, led to the 2008 financial crisis. If you haven’t seen The Big Short (or read the book), go or read. It’s the most important story to come out in years.
In auto-insurance, companies have the ability to price for risk or deny coverage.
Thanks to Obamacare, providers and insurance companies are prohibited from denying coverage for preexisting conditions. However, risk mitigation techniques are not limited to denial of coverage.
In healthcare, risk is not the same as being sick or having a diagnosed condition. Just as mortgage owners are at risk for an adverse event (default), patients are various levels of risk for an adverse event. For example, Type 2 diabetics are at risk for amputations, however, not all Type 2 diabetics are at the same risk.
Providers will examine their patient risk profiles and begin to do what all risk-bearing entities have before them: manage risk. A new role will emerge as risk managers will be in the marketing and finance department.
In addition to using risk profiles to manage their patients, providers will use risk profiles to choose their patients.
Provider risk managers will user predictive analytics for classic marketing purposes: customer segmentation. The customer segments that are deemed acceptable risk will receive a large portion of the marketing budget. Those segments deemed too risky will not be marketed to and “encouraged” to see another providers.
This will all be done in an effort to select the patients attributed to them in a value based payment model.
Similar to end of life care, I predict you’ll see media coverage in these concepts at the inception stage, maybe at Health 2.0 or Health Datapalooza. Maybe someone will discuss them over a cocktail next week at the JP Morgan healthcare conference in San Francisco.
Wherever it happens, it will take time. It takes years to move the healthcare beast.