Key risk factors including low capital expenditures, more capacity in a 10-mile radius and for-profit versus nonprofit status, the Morgan Stanley report said.
A big shout out to Dr. Don MCanne for his Quote of the Day post Friday for today’s topic, and a belated shout out to him for his post last Tuesday about the gains from the ACA being reversed. See my post, ACA Gains Reversing.
This time, Don alerts us to the impact the new health economy disruptors will have and what it might mean for the push towards single payer health care.
Last month, the PwC Health Research Institute (HRI) released a report analyzing the new health economy landscape as more and more companies pursue acquisitions of companies in the insurance, pharmacy benefit management, health care services and retail spaces.
In the last six months, the report states, there has been an explosion of unusual deals between companies such as CVS Health buying Aetna, Cigna buying Express Scripts, UnitedHealth’s Optum buying DaVita Medical Group (Kidney disease and dialysis), Albertsons agreeing to merge with Rite Aid, as well as the much highly publicized partnership between Amazon, JP Morgan, and Berkshire Hathaway.
Naturally, these aren’t the only deals that have occurred. Last year, 67 deals occurred in the US health services market, including payers and providers, the report adds.
The value of these deals increased 146% over those in 2016. The US health care industry, the report states, is undergoing seismic changes generated by a collision of forces: the shift from volume to value, rising consumerism, and the decentralization of care.
The HRI identified four new archetypes of companies engaged in this new health care economy:
• Vertical integrators — CVS & Aetna, Optum & DaVita, Cigna & Express Scripts
• Employer activists — February 2016, 20 US companies form Health Transformation Alliance (HTA) and developed tools to help its members cut employee healthcare costs. In January, Amazon, JP Morgan and Berkshire Hathaway partnered to lower costs and improve employee satisfaction
• Technology invaders — Amazon selling over-the-counter medical products, offering discounted access to Prime service, Apple’s newest operating system allows users to access parts of their EHRs on their phones
• Health retailers — CVS, Walgreens, Walmart, Albertsons and others using their network of store locations, consumer insights, national and global supply chains, and national (and sometimes global) branding to attract consumers looking for affordable, convenient care and goods
The HRI report recommends that all healthcare companies should make the following moves:
• Invest in customer experience
• Plan for a broader workforce
• Focus on price
This is how Don McCanne commented on this report. He wrote that Arnold Relman, like Dwight Eisenhower did about the military-industrial complex, warned us about the medical-industrial complex, but did not realize how intense the disruption would be in health care that the HRI report discusses.
According to Don, we are about to see a takeover by the disruptors who “have a leg up on many established health players in understanding consumers and tailoring experiences for them.”
The disruptors are “positioned to address price through greater scale, ownership of middlemen and a wider grip on the US health system value chain.”
If you don’t believe Don, then read what Jamie Dimon, the CEO of JP Morgan said, “To attack these issues, we will be using top management, big data, virtual technology, better customer engagement and the improved creation of customer choice (high deductibles have barely worked). This effort is just beginning.”
This is exactly what the Waitzkin et al. book describes when explaining the methods used by the medical-industrial complex to control and direct the American health care system for power and profit of the members of the complex.
Dr. McCanne observes that it is almost as if the physicians, nurses and other health care professionals and the hospitals and clinics in which they provide their services have become a peripheral, albeit necessary, appendage to their wellness-industrial complex that is displacing our traditional health care delivery system and its more recent iteration of the medical-industrial complex.
In other words, the physicians and nurses and other professionals have become proletarianized, and the hospitals and clinics merely the places where the medical-industrial complex derives its power and profit from.
Dr. McCanne posits the following questions as to what the health care system would look like once the transformation is well along:
• Once the silos of the health care system are flattened, how will health care be financed?
• Will there still be networks?
• Cost sharing barriers such as high deductibles?
• Will it be possible to fund this expansive model of the wellness-industrial complex through anything remotely resembling an insurance product, especially when the insurers are being amalgamated into what was formerly the health care delivery system?
• And now that the plutocracy is in control, how could we ever remove the passive investors that extract humongous rents through the wellness-industrial complex?
• And what about the patients? Did we forget about them?
It is obvious from his comments that this new health economy is going to be more problematic for providing universal health care to all Americans and will only make things worse. His Rx is to begin now to move to a single payer, Medicare for All program, and not worry about what has passed.
Smart diagnosis and prescription.
An article here from Healthcare IT News.com discusses how a CVS partner, Epic Systems, will benefit from the merger between CVS and Aetna.
The article reports that this signals a new era in analytics, interoperability, and population health.
According to Healthcare IT News.com, CVS is the biggest pharmacy chain in the U.S. by a number of locations and prescription revenue, Aetna is the nation’s third-largest insurance company. Epic Systems, which was not a party to the merger, but has been a CVS partner since 2015, is the largest electronic health record vendor.
The deal, according to the article, stands to have a transformative impact on how healthcare is delivered in this country. Data, and lots of it, given that CVS has 9,700 retail locations and more than 1,100 walk-in clinics nationwide, was clearly a huge driver for the deal.
Epic’s vice president of population health, Alan Hutchinson, said that by using Epic’s Care Everywhere and Share Everywhere interoperability tools, CVA and Aetna could provide the rest of the community with information and insights to improve care.
“What’s really interesting about working directly with payers, providers, and patients is the ‘gray space’ – the opportunity that exists between traditional sites of care and all of the other organizations that are involved in the patient’s healthcare experience,” Hutchison said.
David Anderson, a research associate at Duke University Margolis Center, said in a recent blog post, “I can think of using the CVS retail data as a population health monitoring service, I can think of using the over the counter sales data tied to individuals to fuel predictive models for future opioid issues, or arthritis flares, or pulmonary hospital admissions or one hundred other things,”
He went onto say, “So from my former point of view as an insurance data geek, this merger offers an incredibly rich vein of data that can be mined and minted.”
The fundamental aim of the merger, is the management of chronic diseases through patient engagement, telehealth, and remote monitoring.
Aetna CEO Mark Bertolini said, “I think you have to think of it as keeping people away from the medical-industrial complex by offering better services in the home by meeting social determinants of health, which are big drivers of healthcare expenditures today, much bigger than people understand.”
Larry Merlo, CEO of CVS Health said the arrangement will enable the combined company to deliver services that many hospitals currently do not.
In an article yesterday in Business Insider, the recently blocked merger between Aetna and Humana is the reason given for Aetna’s sudden decision to leave the ACA exchanges.
Contradictory statements from Aetna in response to this decision, as to their ability to profit from the merger or not profiting from the exchanges, does not hide the fact that the bottom line is this:
The laws of Capitalism are incompatible with the goals of providing health care to everyone, even with all the fancy commercials and advertisements from the insurance companies that they are there for you.
They are not there for you, unless you are a top executive of the company, or a stockholder or shareholder, or investor. As the article states, this merger would have led to a consolidation of the health care industry to only three mega companies.
Do you want to wait until there is only one, a la the 1970’s movie, “Rollerball”, where corporations have dominated whole industries and replaced nations, or do you want to provide health care to all, no matter what their ability to pay, or if it makes a profit for some greedy bastards?
The choice is up to you.
Here is the link to the entire BI article:
Staying on the topic of single payer, this time discussing its impact on workers’ comp, David De Paolo wrote an article today that describes Colorado’s Amendment 69 as a disruption of the status quo, and he points out that the tech industry has disrupted business models and industries for several decades and that the work comp industry needs to be disrupted as well.
He goes on to say that ColoradoCare (Amendment 69) is a debate and idea that is long overdue. The arguments against the idea, De Paolo writes, of a single payer system strikes him as simply entrenched interests seeking to protect their turf and business models.
Earlier this week, Workers’ Comp Insider published an article, “It’s A Colorado Rocky Mountain Low” that opposed the approval by Colorado voters this November of the amendment, using the reasons David cites in his piece, and some of the usual misleading distortions that only confuse voters on substantive issues such as this.
Readers will recall my previous two posts, the first, “Colorado Gets Real on Workers’ Comp and Health Care” which introduced the Amendment and the push to bring the two silos of workers’ comp and health care together, and the second, “Colorado “Single Payer” in Health Care Industry’s Sights” which described the health care industry’s attempts to derail the amendment’s approval.
The issue of combining the two silos was brought up by yours truly in an earlier post, “Betting the Farm“, and as I wrote then, not an original idea of mine. Yet, by reading David’s post, and the one by LynchRyan, you get the feeling that the only reason not to combined the two is greed and protection of vested interests.
Yet, in the business world, mergers happen all the time. And while it is true that some are not approved by the Justice Department or other government agencies, most mergers do take place.
The argument about issues like return to work being the purview of insurance companies under work comp is specious at best, because if we consider two patients, both of whom injure the same body part and require the same surgery to repair that injury, one must be put in a return to work program because he is covered for his injury under work comp; the other does not because his injury is not work-related, but did cause him to miss time from work. Does that make sense? Doesn’t the second patient also need to get back to work?
It is not logical to divide injured individuals by who picks up the check. It is more logical to treat all injuries the same, and to treat all medical issues the same, no matter if they are work-related or not. Getting cancer from occupational exposure to carcinogenic chemicals is no different than getting cancer from smoking, or being genetically predisposed as in breast cancer, or other types of cancer. They both are going to be seen by an oncologist, maybe even the same one if they live in the same area.
So keeping workers’ comp and health care separate and unequal, like education and social accommodations once did to African-Americans, is not only stupid, it is wrong. ColoradoCare is one way this can be accomplished, and as David points out, “Nobody really knows how all of this will play out.”
Maybe it is time we find out.
I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.
Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.
I am also looking for a partner who shares my vision of global health care for injured workers.
I am also willing to work with any health care provider, medical tourism facilitator or facility to help you take advantage of a market segment treating workers injured on the job. Workers’ compensation is going through dramatic changes, and may one day be folded into general health care. Injured workers needing surgery for compensable injuries will need to seek alternatives that provide quality medical care at lower cost to their employers. Caribbean and Latin America region preferred.
Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: firstname.lastname@example.org.
Will accept invitations to speak or attend conferences.
Transforming Workers’ Comp Blog is now viewed all over the world in over 250 countries and political entities. I have published nearly 300 articles, many of them re-published in newsletters and other blogs.
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In three weeks, members of the medical tourism industry will gather in Puerto Vallarta, Mexico to attend the 6th Mexico Medical Tourism Congress.
You may recall that I was invited and attended the Congress last year, and was invited again this year. However, due to personal and financial reasons, I am not attending this year.
I am however, posting my PowerPoint presentation below for your viewing, with narration by yours truly. I hope you find it interesting and informative.
Challenges Facing Workers’ Comp (PowerPoint)
While Maria’s article focuses on hospitals and general health care, it would be prudent for the workers’ comp industry to pay attention to what she has to say, as her expertise in the areas of health care, hospital development, healthcare marketing and branding, concierge medicine and medical tourism has taken Maria around the world several times (lucky her – “I never get to go anywhere”).
There is one item Maria raises in her article that should be of vital interest to workers’ comp.
According to Maria, the process to launch private health plans is fraught with complexity and extreme financial risk. She goes on to add that it involves, at a minimum, obtaining a state license and meeting (and maintaining) capital reserve requirements adequate to cover IBNR (incurred but not reported) claims lags.
Those of us who have been in the claims arena of work comp know a little something about IBNR claims, and what that can do to both a carrier’s loss picture and an insured’s frequency and severity, which affects their experience mod.
If hospitals do choose to launch such plans, they will move closer to being insurance companies that happen to provide medical care, rather than just providing medical care as a hospital.
Maria’s recommendation is that they sink their money into something better that will float.