Will Apple’s Strategic Beachhead Be Doctors, Not Patients?

telescope

Last week Apple held a huge media event to announce forthcoming products, including the iPhone 6, 6+ and Apple Watch.  Many of us in the healthcare world had been sitting on the edge our seats, hopefully awaiting news detailing Apple’s broader strategy in entering healthcare.  We were disappointed — no mention of Apple HealthKit, no doctors on the main stage, only a few teasers about how the Watch might be used in fitness and health monitoring.

Apple is a consumer technology company, and it’s natural to think that their efforts in healthcare will be aimed directly at patients.  However, I’ve been pondering whether that’s looking at Apple’s opportunity through the wrong end of the telescope.

Are physicians — 85% of whom own an iPhone — a much more natural and powerful strategic beachhead for Apple to focus on?

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.

Tire Kickers Need Not Apply: 8 First Impressions of the Medicare ACO Rule

On March 31, CMS released the long-awaited “Medicare Shared Savings Program: Accountable Care Organizations” document (ACO Rule). Read the details here (strong suggestion: unless you’re working on your PhD in ACOs, start with the fact sheets).

There are many surprises. Here are eight first impressions on this 429 page tome:

  1. The bar has been set high…very high.  Tire kickers need not apply.
  2. Don’t expect to see many or any small ACOs.
  3. Patients will be confused by ACOs.
  4. Concerns over maintaining competition and avoiding antitrust are being taken seriously.
  5. CMS scores points for coordinating the ACO Rule across Federal agencies.
  6. CMS loses points for micromanagement and a controlling mindset.
  7. Possible losers — hospitals, ACO vendors.
  8. Possible winners — physicians, health plans.

The details follow.

The New ACO Rule is Here…The New ACO Rule is Here…and more!

429 p. Proposed ACO Rule

ACO Fact sheet from HHS

Medicare Fact Sheet: What Providers Need to Know

HHS press release

Don Berwick’s article on ACOs in the NEJM

ACO Quality Performance Standards Summary

FTC/DOJ Joint Antitrust Statement on ACOs

TheHill article “Leaked memo reveals Dem strategy for defending healthcare reg”

The leaked memo

Health Plan Strategy Options in Two Sentences

 
“If you’re a health plan, you either become a care delivery system or an information services company,” said David Brailer, a former George W. Bush administration health official who now leads an investment firm. “The traditional business is dead.”
 
Read more at Kaiser Health News.
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The Crucial Distinction Between “Accountable Care” and ACOs

AccountablecareWhile in Philadelphia earlier this week, my colleague Dr. David Nace presented me with a print copy of McKesson Relay Health’s newest whitepaper — Providing Accountability: Accountable Care Concepts for Providers.  I felt honored as he handed it to me and confided that it was one of only six copies in print.  I took time to read it carefully on the long flight home.

The whitepaper is a great overview of accountable care and ACOs (Accountable Care Organizations). It’s a quick and easily digestible read.

However, there is one key point articulated in the paper that I’d like to emphasize here:

accountable care is not synonymous with ACOs.

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.

10 Reasons Why an Open IT Platform Strategy is the Right Long-Term Choice for an ACO

  1. Many Physicians and Clinical Service Providers Will Not Be In Your ACO Contracting Network.
  2. Expect Significant Patient Leakage (Migration) Out of Your ACO Network
  3. Expect Patient Demands for Sharing Records.
  4. Minimize Anti-Trust Concerns.
  5. Expect Continuing Government Pressure for Broad Data Exchange.

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:

Is HITECH Working? #4: While most attention has been focused on demand side incentives (will doctors and hospitals buy EHRs?), the supply (vendor) side of HIT is already transforming.

by Vince Kuraitis JD, MBA and David C. Kibbe MD, MBA

Most of the press coverage and attention to HITECH has been to the “buy” side of the market:  The central question here has been: “Will doctors and hospitals buy and use EHR technology?”

Meanwhile — and much more quietly — the sell (vendor) side of the EHR market is already dramatically different than it was a year ago. We observe change occurring at at least three levels:

  1. HITECH as Policy Change
  2. HITECH as Mindset Change
  3. HITECH as Technology/Business Model Change