2018 Healthcare Industry Outlook Report

By Dennis Boone

Cost, Quality Concerns Driving Powerful Innovations

Seated: Greg Sweat, Blue KC (Chairman, host and sponsor); Corrine Everson, Research Medical Center, HCA Midwest Health. (Standing, left to right), Jason Spacek, BlueKC; John Staton, Olathe Health; Matt Tritz, Lockton Companies; Jill Watson, Centrus Health; Chad Moore, Blue KC; Jonathan Krass, CBIZ; Michelle Sweeney, Ingram’s.

All across the health-care spectrum, innovation is being brought to bear on long-standing problems facing providers, insurers and patients alike. From the emerging promise of Big Data to new delivery models, tools promoting cost transparency for consumers, advances in telemedicine, gene-based therapies and specialty drugs, the biggest single sector in the U.S. economy is brimming with change. Many aspects of that change were at the forefront of discussion April 4 when a select group of health-care executives gathered for Ingram’s 2018 Healthcare and Insurance Industry Outlook assembly. Assembly sponsor Blue Cross Blue Shield of Kansas City hosted the event at its new Spira Care facility in Olathe, established in collaboration with Shawnee Mission Health. With Blue KC’s medical director, Greg Sweat, leading the conversation, the assembly covered barriers to more efficient, lower-cost care, solutions moving into place to address them, and potential impact for consumers as well as employers. 

The Big Picture

The varying perspectives of those at the table—insurers, brokers, providers—reflected just how complex the nation’s health-care system is. And how challenging true reform will be, since “fixing” any one silo won’t in itself be a cure for the multiple issues roiling that sector.

From the provider’s side, “many of these systems have developed over decades,” said John Staton, senior vice president of Olathe Health, and they would take some time to unravel. He pointed to costs for new technologies and pharmaceuticals, competitive considerations and health-care access as some of the thorniest challenges now driving costs. But right now, he said, “we know that transition is underway, but we’re living in both worlds; it’s very difficult.

In addition, he said, costs will continue to be driven by the aging Baby Boomers. Much has been written about how 10,000 of them a day are reaching retirement age, but at the same time, 10,000 of them a day are also passing the age of 72. But whether it’s aging Boomers or behavioral health issues, he said, “some of the models that are out there right now, as we shift more risk to the provider, that’s obviously a challenge on our side of things. Over time, we should be able to do that, but right now, that’s pretty difficult.”

“When we talk to clients, it’s really about controlling costs,” said Chad Moore, vice president of strategic partnership and network operations for Blue KC. And a big part of that, he said, is the pharmacy-drug piece. “The pharmaceuticals that have come to market recently are pretty amazing; they do some pretty miraculous things when it comes to gene therapy, getting down to the molecule to try to re-engineer that molecule, it’s fascinating stuff. But it is very, very expensive.”

Dysfunction in the overall system, said Matt Tritz of Lockton Companies, comes from an entrenched series of incentives that don’t align between silos. “We’re trying to reduce the cost, improve the quality, improve the patient experience, and trying to align those things in a manner that keeps everybody happy and delivers the care more efficiently is a huge challenge.”

HCA Midwest Health’s Corrine Everson identified another long-term challenge in the provider space: retaining a qualified work force capable of meeting the needs of a patient population that is getting grayer every day. “We can’t deliver quality of care that’s convenient and that provides a great patient experience if we don’t have the best workers,” she said. In response, HCA is “investing a lot in its school for nursing as well as graduate medical programs for physicians.” The good news, she said, is that younger populations recognize that health care is “a very good field with great salaries, great benefits,” and young workers are turning out for it. In fact, she said, 60 percent  of our employees are under the age of 35, so it’s actually a very eager work force.”

For Jonathan Krass of CBIZ, the critical challenge lies with helping employers offer a competitive health-care benefits program for their employees in a way that “takes care of the employees and the families while complying with government regulations and it doesn’t cost them an arm and a leg. To help them be competitive but not stick it to their employees when they get their paychecks.”

Jill Watson, director of Centrus Health, is squarely in the battle to improve patient care and quality of service. Centrus brings together more than 1,600 physicians—independent as well as employees of physician groups from large regional medical centers—to share data and embrace performance standards for care. Centrus, she said, is currently focused on next-generation payment models as it transitions from present practice. “We have one foot and a couple of toes in fee-for-service,” she said, “and the rest in new methodologies.”

Michelle Sweeney of Ingram’s wondered about the potential impact of large companies from fields outside health care stepping into that space. Recent headlines there include the early-stage talks that Walmart is reportedly pursuing as part of a purchase of the insurance giant Humana, or the joint venture in the works between Warren Buffet’s Berkshire Hathaway, Amazon and JPMorgan Chase to addressing rising costs of pharmaceuticals.

All of this and more, said Jason Spacek, Blue KC’s chief innovation officer, constitutes something of a health-care Frankenstein’s monster for consumers. Despite the best intentions of top minds in health care, he said, “as we’ve tried to get ahead of curbing costs, we’ve done all these things to the poor consumer, whether it’s all these different network permutations or plan designs or deduct co-pays, when you talk to people they don’t fully understand,” he said. “How do we start to combat what we’ve created?”

Greg Sweat, summarizing those disparate points, offered a tidy synthesis of how health care’s challenge comes together to hammer consumers through misaligned incentives: “Purchaser incentives are not the same as what the providers’ are. As you try to realign those, I think there are unique challenges, especially with cost.” A glaring example of that, he noted: “The average price of a wholesale specialty drug exceeds the median income of a family, which is about $60,000. That’s an unsustainable model.” 

The Role of Innovation 

All at the table recognized the power of data to help address many of the current challenges. As an industry,
health care has a long way to go to realize that promise, they conceded.

But, as Corrine Everson noted, the sector is beginning to crack that nut. More and better data, effectively gathered and shared within HCA’s hospitals, she said, “has definitely helped hospitals’ emergency services have better access to the frequent-flyer patients who are seeing or using ERs frequently, for reasons that are not most beneficial to the system or to the patient.” That data can help providers track patients who are making ER visits that could be handled more cost-effectively, as with urgent-care clinics.

Chad Moore cited the work that Blue KC is doing with Watson’s Centrus Health to create clinically integrated networks with patient information shared by providers. The assembly’s term for organizations like those aligned with Centrus, who are at the fore of innovation, is a  “coalition of the willing,” a group that he says is in large part defined by its provider members. 

Jill Watson, queried for specifics on how data are moving the needle on care, and said that, “depending on the population, we can analyze past claims to identify opportunities, particularly with utilization.” Being able to tell how often a patient is seeing a physician—or more than one physician—knowing whether medications are being taken on schedule and refilled on time, or having a record of therapy sessions are all vital components that can help a doctor shape the most appropriate, cost-effective treatment plan for a patient.

Tools like those, said Corrine Everson, can make a difference, but “CEOs need help getting their employees to see primary-care physicians. Preventive care is the real key here.”

Still, noted John Staton, the differences between employers, across varying business sectors, present a problem. “There are a lot of inconsistencies in what employers are looking for,” he said. A school district, for example, will have certain needs for the health-coverage it provides its employees, but that can differ significantly from the needs of a large private-sector employer like Garmin.

Matt Tritz didn’t have to look far to find an example of innovation taking place at Lockton. The needs of one particular corporate client compelled the brokerage to create a staff position with a registered nurse. What the company learned from that experience has morphed into a staff of nine nurses at the Omaha office he said. In that way, a company specializing in insur-ance and benefit programs extended its reach in the health-care space by adding a provider component.

“We’re by no means a care provider, but we can provide concierge-type service, one-on-one individualized coaching,” he said, because health-care needs vary from client to client. “We’ve got the ability to scale and do some different things as long as we’ve got willing participants that want to try things and try to collaborate together,” he said.

Across a number of traditional health-care functions, “demarcation is kind of gone,” Greg Sweat observed. And yet, with that kind of change, it is “a great time” to be in health care today, he said.

Dealing With Data

Turning the conversation to technology-related issues, Greg Sweat laid it right out there: “We’re completely challenged by data,” he said. “We don’t share it well. Regulations exist that don’t let us share it well. Our inability to share data, whether it be quality or price, or incentives, it’s a real challenge for us.”

The challenges with data are wide-ranging, and complex. For one, more than half the nation’s health-care information systems are products of Cerner here and Wisconsin-based Epic. But competition between the two, as well as with other IT companies seeking to protect proprietary systems, means they don’t play well with one another. As Jill Watson observed, ever since the emergence of health IT systems, “data equals power,” and that’s not readily shared by some of the stakeholders.

On a deeper data level, much of the most meaningful data derived from a patient visit—more critical, perhaps, than height, weight or blood pressure readings—can be embedded in physician or nurses notes. Turning those into consistent, measurable data points is a huge challenge, even if the system interoperability elements could be resolved. 

Resolving those issues will eat a lot of dollars.

“We think about the costs of the health-care system in terms of the medical aspects or the pharmaceutical piece,” said Chad Moore, “but we don’t think as much about the cost of the data side. We need standard formatting, but we’re a long way from that.”

Another challenge to information sharing, Greg Sweat pointed out, was regulatory, generally grounded in patient privacy. 

“Everyone,” said Jason Spacek, “is doing their own thing trying to solve problems in their own ways, and I think we have to start learning how to come together, as opposed to all of the fragmentation that we see, which shows up in data and all kinds of other areas where we’re not sharing enough on behalf of the member to try to give them the best possible care.”

The challenges health-care sees with data today, he said, are only going to get worse as Big Data gets even bigger, thanks to wearable tech that can provide micro-granular detail on a user’s biometrics and activities. “How are we going to bring that non-electronic health record data into the process?” Jason Spacek asked.

Behavioral Health

What drives health-care costs in the United States? It’s not simply demographics, high-dollar diagnostic equipment or compensation levels. A big chunk involves the choices we make as Americans. Some of those are conscious decisions we make as part of our lifestyle choices. But many of them are the consequences of mental-health issues. By some estimates, mental-health issues alone will account for more than $200 billion in medical spending this year.

It’s an issue that has immense local impact. As John Staton noted in Olathe, “historically, the way it works is 70 percent of the 911 calls are health-related. What happens, the big red fire truck goes out to a health call. That’s a poor utilization of resources. They get transported to ER, which is a poor utilization of resources.”

The choice for police responding to such calls is usually limited to jail or the hospital, “and neither of those is good for someone with a mental-health issue,” he said. So Olathe Health has worked with the city’s public-safety departments to create a program that adds a mental-health professional to the first-responder mix. For patients, he said, “a lot of times, it’s just getting them set up with the right resources outside of emergency care.” That saves resources on the city side for the response, and it also gets the people directed to the proper resources for their health-care needs, he said.  

Jason Spacek pointed to the new model with Spira Care, which includes behavioral-health specialists who can
immediately see someone coming to the clinic with other health concerns. “That was another key  opportunity to
start to see behavioral health as part of the primary care experience,” he said. Citing a statistic that more than half of the people who need behavioral-health services aren’t receiving them, he nonetheless noted the demand for it at the Spira Care site in Olathe. “I think one-fifth of our visits are behavioral in nature, so adding that in as a point of primary care is important to people,” he said.

Corrine Everson concurred. “Our ERs are constantly holding behavioral health patients,” she said, and on any given day, “we might have 10-15 being held because there’s no place for them to go. So the more our broker friends can build that into the models so that patients do have access to behavioral health care as primary care, it’s so much better. We also operate almost 200 in-patient psychiatric beds that are always full.”

The same concerns with adding behavioral-health management applies to lifestyle choices being made, including, Sweat noted, “eating ice cream every day at 9 o’clock at night.”

Or, as Matt Tritz said, with smoking. “Most people are willing, and know what they should do to quit,” he said. “What they need is more reinforcement or encouragement.”

Another significant piece of what’s happening in behavioral health is the current epidemic in opioid abuse. Lack of shared information makes it impossible for physicians to know whether a patient receiving one prescription from that office is physician-shopping for another doctor who will also prescribe pain-killers.

Unfortunately, said Corrine Everson, there is a limit on how much the providers can do to affect the behavioral component. “There are many factors we can’t change with behavior,” she said, as often as three cases in 10, and usually because of underlying medical conditions.

And yet it is an issue that confronts employers, who may have to deal with workers hooked on painkillers. “But from an employer’s perspective, when you’re looking at what’s driving costs, opioids are not on that list,” said Matt Tritz.

And then there are the behaviors that are ingrained for decades in people who don’t understand the true costs of their own care, or how the way they access the health-care system thwarts efforts to control costs.

Jill Watson put a finger on that potential cost-saver. 

“If a patient calls in and says I need to be seen for a bladder infection tomorrow,” she said, “I want and I hope these schedulers say ‘You don’t need to, let me talk you through that.’  Get that patient on the phone with a nurse—a doctor doesn’t need to get involved. There are triage protocols involved with that, and hopefully that would drive the cost down.”