Written by Molly Gamble | January 28, 2013, Becker’s Hospital Review
In the past few years, there has been a heightened focus on collaborative ties between hospitals and other providers. Hospitals have attuned their strategies to include various affiliations, clinical relationships and other community-based partnerships. But to become and remain a multidimensional and cost-effective center for health, hospitals should be mindful of relationships with entities that fall outside of the provider category, as well.
Here, Joe Albian, partner in PwC’s Health Industries Advisory practice, shares insight on a few players that are likely to leave large impressions in the healthcare industry and hospitals’ strategies in the year ahead.
1. Employers driving more value. Employers face some hefty decisions around healthcare benefits in the year ahead, especially due to the financial effects of the Patient Protection and Affordable Care Act’s mandates.
A range of the reform law’s provisions have strengthened access to coverage for people without employer-sponsored health plans, meaning employers are beginning to treat state insurance exchanges as possible safety-net coverage and are no longer treating it as something that is core to their business strategy. According to a PwC report, a recent third-party survey found only 23 percent of employers are very confident their organization will offer healthcare benefits a decade from now — a significant drop from 73 percent in 2007.
Mr. Albian says employers’ participation in accountable care organizations and other models may pick up traction in the years ahead. Employers have an incentive to save resources and manage employee health in a way that minimizes costs but drives quality outcomes. “I think this is still going to be an area where employers can add an awful lot to the dialogue that they haven’t [up until] this point,” says to Mr. Albian. “With major provider organizations, [employers] can influence ACOs significantly.”
For instance, employers may find more sophisticated ways to utilize a provider’s clinical data from an ACO and make that information more valuable to their bottom line and employees’ behavior, acting as partners with providers to enhance employees’ productivity. “I think employers have the opportunity to drive something that is much more engaging,” says Mr. Albian.
2. The rise of the healthcare consumer. Hospitals and health systems are feeling the pinch as nearly one-third of the federal government’s Value-Based Purchasing Program connects to consumer experience and satisfaction. The program ties 30 percent of Medicare reimbursement performance on certain metrics from the Hospital Consumer Assessment of Healthcare Providers and Systems scores. The remaining 70 percent will be tied to performance in 12 core measures, such as pneumonia, heart attack and heart-failure care. In fiscal year 2013, the program will distribute an estimated $850 million to hospitals.
But the federal program is one small wave in a larger sea change, in which hospitals adopt more retail-like behaviors and drive a deeper understanding of their patients’ behavior and preferences. In short, value-based purchasing is only a sign of what’s to come, according to Mr. Albian.
“Traditional surveying mechanisms, while good, are not going to be traditional retail models going forward,” says Mr. Albian. “I think our hospitals will need to think differently in how to engage consumers. They should play a much deeper role in how value is viewed — not simply by a [post-visit] survey.”
Hospitals’ need for a more sophisticated consumer understanding presents a large opportunity for organizations, but it also demands significant investment and experience, according to Mr. Albian. For instance, few hospitals employ chief experience officers as part of their senior-level management teams, and Mr. Albian expects that to change in the coming years. Chief experience officers work to ensure patients are satisfied with their experience and provide coaching to hospital staff on patient-provider communication.
Consumers’ expectations for convenient healthcare won’t waver any time soon, either. In the year ahead, providers can expect to see continued growth in consumers’ use of retail clinics for minor ailments or routine services, such as flu shots. Patient preference for clinics located in pharmacies, grocery stores or even their workplaces has steadily grown in the past four years, according to a recent study. Twenty-seven percent of adults indicated they visited a retail clinic in the past two years compared with 7 percent of adults in 2008.
3. More innovative connections with other sectors. Two other players are expected to play growing roles in hospitals’ and health systems’ strategies in the year ahead: pharmaceutical companies and mobile health devices.
Mr. Albian says there are “massive opportunities” for new business models between hospitals and the pharmaceutical industry, especially in light of ACOs. Up until this point, most ACO conversations have revolved around providers and payors. Health information technology and analytics are more embedded in most ACOs than pharma.
Moving forward, more providers may analyze how a pharmaceutical organization’s services fit within the framework of a certain disease management program, evidence-based medicine and reducing total costs of care. Pharmaceutical costs represent a hefty portion of spending that providers can further drive down through these partnerships.
For example, a pharmaceutical organization may be able to design clinical protocol for patients with certain conditions, or coordinate care between hospital visits and visits to retail clinics in pharmacy settings. Recently, Walgreen Co. became the first national pharmacy chain to receive CMS-approval for participation in a Medicare Shared Savings ACO, in which the pharmacy chain will work with physician groups in New Jersey, Texas and Florida.
Another consumer demand that providers have not yet met is that of mobile health, or accessing electronic health records through personal devices. “Consumers want access to mobile information, and providers aren’t yet ready for it,” says Mr. Albian.
The use of personal devices internally is also anticipated to make a dent financially, as one PwC study found that supporting employees’ mobile devices can cost companies 33 percent more. Additionally, only about 46 percent of providers have a strategy regulating the use of mobile devices, according to PwC data.
Conclusion
Although they are not providers, employers, consumers, pharmaceutical companies and mobile health technology are becoming more top-of-mind for hospitals and strategists. As hospitals and health systems move forward in their third year under the PPACA, it will be interesting to watch how and what innovative relationships with these players take shape. There has already been some activity in each of the three sectors discussed, and a “huge amount of opportunity” remains, according to Mr. Albian.
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