Aetna, Cigna, Wellpoint Recreating Their Business Models

Major U.S. health insurers, including Aetna Inc., Humana Inc. and WellPoint Inc., are retooling to become more than just health plans, in the wake of the federal health-care overhaul that is changing the rules for the industry’s core business.

Diversification plans, touted in meetings with investors this year, include stepped up acquisitions and partnerships that will allow the companies to employ doctors directly, deliver health-information technologies, and participate in new hospital-doctor groups known as accountable-care organizations.

Wall Street Journal; May 12, 2011

Does this make sense? Absolutely!

Is Hospital-Physician Integration Sustainable?

Reprinted courtesy of MCOL.

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Perspectives on a Selected Key Topic |     April 2011/May 2011     |   Volume Three Issue Two


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Will a material number of hospitals and their core medical staffs, that are relatively independent, evolve into highly integrated delivery systems during this decade, and why?

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William J DeMarco MA, CMC
Demarco1
President and CEO, Pendulum HealthCare Development Corporation

The great momentum brought about by government and private payers demand for more accountability is unstoppable. Rapid consolidation of hospitals and consolidation of physicians by physician groups, hospitals and now insurers will shift referral patterns and consumer preference. 1 out of 4 hospitals will fall short of providing value and close or be absorbed within 10 years.

Physicians will be offered higher prices to sell out to insurers and investors who value the short supply of PCPs and will try to control care demand by retooling the care system building ASC and small scale short stay hospital.

True clinical integration will follow for the survivors. The ability to prospectively develop clinical budgets and bundles of services will connect regional tertiary and quaternary care facilities to local hospitals so integration can be regionalized across larger populations and payer segments.

Once these delivery systems realize they need a product recognizable to individual consumers they will seek alliance with select insurers or create their own insurance company thereby achieving the true definition of integration which is to integrate financing and delivery of care.

This offers the shared savings with themselves and stabilizes patient flow and overhead to achieve value to purchasers and users of care.

We think these opportunities will be at a tipping point on a market by market basis over the next 5 years and will be a national definition of success within 8 years. We believe this will happen because already the bond rating companies are looking at physician alignment and payer alignment as factors in establishing credit worthiness of hospitals for expansion and mergers.

Benjamin Isgur
Isgur2
Director, PricewaterhouseCoopers LLP’s Health Research Institute

Integration is certainly on the rise. The notion of independent physicians may be a myth because so-called independent physicians are becoming increasingly financially tethered to hospitals. In fact fifty-six percent of physicians PwC surveyed want to more closely align with a hospital in order to increase their income. The new health reform law focuses on population health and adopts a Medicare compensation model that penalizes poor quality and rewards cost savings and electronic information sharing. Some commercial payers are also pushing this business model.

Lesson for Healthcare: Disrupt Your Own Business Model Before Someone Does it TO YOU

Healthcare needs positive role models for innovation…and we have a real-time mentor in Netflix.

If you have a Netflix subscription, you probably identify with the company as providing a convenient DVD rental service — order on the web, the DVD arrives by mail, send it back in the handy pre-paid envelope when you’re done.

Today’s ReadWriteWeb describes Netflix’ latest letter to shareholders and explains how the company is preparing for the demise of DVDs:

Could Facebook Be Your Platform for Care Coordination?

My guess is you’ve probably never asked yourself this question. A quick preview:

  1. Technical barriers aren’t the limiting factors to Facebook becoming a care coordination platform.
  2. Facebook’s company DNA won’t play well in health care.
  3. Could Facebook become the care coordination platform of the future? If not Facebook, then what?

1) Technical barriers aren’t the limiting factors to Facebook as a care coordination platform.

Can you imagine Facebook as a care coordination platform? I don’t think it’s much of a stretch. Facebook already has 650 million people on its network with a myriad of tools that allow for one-to-one or group interactions.

What would it take to make Facebook a viable care coordination platform?

  • More servers to handle the volume — not a problem
  • Specialized applications suited for health care conditions — not a problem
  • Privacy settings that made people comfortable — more on this later
  • A mechanism to identify and connect the members of YOUR care team — really tough, BUT this is NOT a technological problem, but a health system one

Suppose you are a 55–year-old woman who is a brittle diabetic. Your care team might include a family physician, an endocrinologist, a registered dietitian, a diabetic nurse, a ophthalmologist, a podiatrist, a psychologist, and others. Ideally you’d have one care plan that coordinates the care among members of the team, including you.

What’s the reality of today’s health care non-system?

  • There is no formal designation of “your team.”
  • There is no mechanism to designate one “plan” that coordinates the plays among your team members.
  • It’s possible that multiple quarterbacks are calling the plays for your care.
  • It’s possible that members of your team have no knowledge THAT you are being treated by others and HOW you are being treated by others.

Care coordination today is in the stone ages — there is no system for care coordination.

Supplying a modern Facebook-type technology platform doesn’t change this. The major limiting factors in Facebook’s becoming a care coordination platform aren’t technological.

Let’s look a bit deeper.

Table of contents for the series--Social Networks and Care Coordination

  1. Could Facebook Be Your Platform for Care Coordination?
  2. Could Google+ Be Your Platform for Care Coordination?
  3. Google+ Shines the Light on the Value of Data Portability

Doctors Love iPads. What Does it Mean? What Does it Mean?

After attending the largest annual health IT conference of the year — HIMSS 11 –  John Moore reported that “nearly every EHR vendor has an iPad App for the EHR [electronic health record], or will be releasing such this year.”

Doctors love iPads…not surprising? But, how might you explain this?

There are at least two different possibilities:

  • Coincidence Theory
  • Conspiracy Theory

The Coincidence Theory

So doctors want to access EHR software through the iPad…what’s the big deal?

Apple has built a great new hardware platform with the iPad. There’s nothing else like it in the marketplace.  While other companies are building competing tablets, Apple’s has been the only viable option in the market for over a year.

Will ACO IT Models Be Walled Gardens or Open Platforms?

Will ACO (accountable care organization) IT models be walled gardens or open platforms?  i.e., will ACO IT platforms focus on exchanging information within the provider network of the ACO, or will they also be able to exchange information with providers outside the ACO network? (If the question still isn’t clear, click here for a further explanation.).

Walled Gardens vs. the Open Web: A Central Debate in Tech Finally Coming to Healthcare

The September issue of Wired magazine and an article in last Sunday’s New York Times illustrate a central debate in technology circles. The debate is not new — it’s being going on for two decades — but it has newfound vibrancy. The essence of the debate is about competing tech/business models: walled gardens vs. the open world wide web (web).

 Webdead

vs.

 

Weblive

The debate is highly controversial and nuanced. There are “experts” on both sides.

My point today is not to take sides (although I’ll admit my canine partiality to the open web), but rather:

  • to point out that the debate is occurring 
  • to explain what the discussions are about
  • to suggest that competition between walled gardens vs. the open web is creating healthy competition and providing consumers with great choices (e.g., Apple iPhone as a walled garden vs. Google Android OS as a more open approach)
  • to point out that health care has not had much to say in this debate…until very recently.

A while back I started writing a series “Healthcare Crosses the Chasm to the Network Economy” . This essay continues that series.

Six First-Take Reactions to Surescripts Network Expansion

Yesterday Surescripts announced their new Clinical Interoperability Services:

  • Extended Network Connectivity – As a network of networks, Surescripts will support and enable the exchange of all types of clinical messages between EHRs, HIEs and health systems that, today, are not connected with each other.
  • Net2Net Connect – Allows health systems and technology vendors that already support clinical information sharing within their network to connect to Surescripts in order to receive and send clinical information outside their network (December 2010).
  • Message Stream – Secure messaging tools for health systems and technology vendors to enable their physicians to electronically exchange clinical information (December 2010).
  • Clinical Message Portal – Simple connectivity tools intended for providers that, today, do not have an EHR system to send and receive clinical messages. (January 2011).

Many others have recapped the new Surescripts network, so I’ll simply point you to a few of these resources:

Here are my 6 first-take reactions.

Care Coordination Metrics: One Can of Worms that NEEDS to be Opened

Can

“Track who is on a care team — and share info with the patient.”

That’s just one of the summary recommendations coming from expert testimony given in a recent public hearing on how to improve care coordination through the use of health information technology. The Meaningful Use workgroup and Quality Measures workgroups are now wrestling with how to translate this recommendation into meaningful use criteria for HITECH Stages 2 and 3.

Seems like a good idea — simple, straightforward — perhaps even obvious. The EHR (electronic health record) could be a great tool for keeping care team members in the loop and on the same page about a patient’s care.

But then I thought about this for a few minutes, and the complexities started dawning. This seemingly simple recommendation — “Track who is on a care team and share info with the patient” — is the proverbial can of worms.

Verizon Abandoning Walled Garden Network & Business Model: Implications for Healthcare

Wha…?  why are we talking about Verizon…isn’t is a healthcare blog?

When a major, multinational company does a complete turnaround on its operating and business model, it’s worth noting and examining the reasons behind the switch.

Wireless Week reported on a presentation made at the CTIA conference this week by Verizon COO, Lowell McAdam:

In a nod to the future, McAdam also said Verizon Wireless will scratch its “walled garden” approach because “in a 4G world, we need to turn that guarded model inside out.” The operator will transform its business model, he said, because it realizes that innovation in applications and use will come from outside the company.  Verizon will open its network, applications and location technologies to outside developers…[emphasis added].

Ars Technica reported further on McAdam’s commentary: 

I think collaboration and openness will be the operating platform for the future if we’re to bring the full promise of what 4G LTE brings. That’s really the new paradigm, the new model for operating in the entire wireless industry.

“Now I know that some of you in the audience are saying, ‘C’mon Lowell, you guys are the poster child for walled garden.’ What I’d say is that for the first 25 years that garden approach of closed systems served the industry pretty well. But in a 4G I think we need to turn that garden model inside out.”

How big a deal is this? Here’s an imaginary comparable statement that might be made by Judy Faulkner, CEO of Epic: