Over the course of the next few weeks, I’ll present four high-level trends that follow the broad directional shifts driving healthcare in 2017 and beyond. These overarching trends are creating turmoil and uncertainty, new problems across all sectors of the industry, and opportunities for new solutions to help address uncertainty and new problems. Here’s the 2017 healthcare trend #1.
Walgreens, payors, life sciences, subscription medicine and the rise of the patient as consumer
“Businesses are no longer the sole creator of a brand; it is co-created by consumers through shared experiences and defined by the results of online searches and conversations.” - Brian Solis
One of the major shifts that has come to healthcare is the patient is at the center of the ecosystem. This has come about for a few reasons, namely due to societal and cultural shifts driving changing expectations but also because patients are feeling the burden of the costs of care more and more. Shifts in technology are underlying some of these shifts as well and certainly are enabling models of care where patients have more ownership.
The reasons for the change are less important than the impact of the change on the industry and patients/consumers. Healthcare, a multi-trillion dollar industry, is experiencing a paradigm shift and the main user, the end user, is now the patient/consumer. This means the consumer is the new target and the choke point to massive aspects of the most massive industry in the world. Look no further than the myriad of initiatives from all the major sectors trying to “win” the consumer.
- Life sciences companies are transforming themselves from makers of therapeutics to care management platforms that are complemented by therapeutics. This is an incredible change but one that is being taken because, like direct-to-consumer products, life sciences companies need to have a direct relationship with the end-user to effectively market and retain them as lifetime customers with very targeted marketing and promotion. Life sciences companies are well resourced and motivated to make this change, and will be spending more than any other segment to win the end user and deliver care management platforms.
- Retail pharmacies, most specifically Walgreens and CVS, have been expanding their care delivery services, becoming more than simple drug dispensaries. Retail pharmacies now offer both chronic and acute care, preventative medicine (vaccines most specifically), and even telemedicine. Pharmacies are well placed, having 10s of 1000s of physical locations across the country, to be a larger and larger part of the way consumer access the healthcare system. Walgreens is even rolling out Epic as its EHR; despite being a strange choice for a retail clinic, Epic helps Walgreens integrate data to and from other Epic customers.
- Payors, the largest ones in particular – United, Cambia, Blues, etc. – are expanding the tools they offer members to be more than simple data access and payment tools. Large insurance companies are building and testing apps for specific conditions and cohorts of members, wanting to flip the perception of payors in consumers’ minds to more than payment tools managed by their employers. Oscar is a good example of a payor that doesn’t act like a traditional payor.
- Subscription medicine is here to stay, whether you call it direct primary care (DPC) or concierge. Concierge and DPC, interestingly, are the providers’ response to this trend. Subscription medicine is about a direct relationship between providers and patients, without messy payors and administrative overhead between them. And subscription medicine is going to grow by leaps and bounds over the next 10 years. Consumers will seek to get back the personal side of medicine, something that is increasingly getting lost, and providers will seek the same direct, personal connections without the mess of working with payors. In terms of models of care, subscription medicine is the best example of aligned incentives.
There are a few things to note about the examples above. First, noticeably absent from the list are hospitals and health systems. It’s not that health systems don’t see these changes and growing threats, it’s that they are just too slow, and too poorly setup, to change. And, with the growth of consumer-based initiatives by all of the above, the erosion of the relationship between provider and patient is only accelerating the displacement of providers and the validity of the argument against MDs as PCPs and providers; it’s a vicious cycle and providers are the major losers.
The second thing to note is that this is a winner take all situation. Consumers, the group notorious for downloading then never using health apps, will not use multiple care management platforms from their drug company, insurance company, and local pharmacy. They prefer to use one platform for everything, just as they now use the one app from their bank or an aggregator like Mint instead of using multiple apps from each specific financial institution they interact with. There’s a lot of money for the winner. This is high stakes.
So where does that leave health systems? From the list above, almost everything is focused on chronic care. Health systems, and MDs as providers, will continue to own high acuity care and the exceptional specialization that is now required for that care. The real risk is that whichever segment wins the consumer will control, either through human providers or AI-assisted clinical decision support, when patients are sent to providers and which providers they are sent to for high acuity care.
This shift offers huge opportunities for care management technologies with the right partners. Some sectors and companies will build everything in-house while others will look to buy products and platforms. The companies that succeed will offer ready-to-implement systems with a mix of technology and services. In order for any of the above groups to succeed, the focus on consumers and end users has to be a super strategic initiative, not just about buying an app or platform but a complete suite of solutions and aligning the business at the highest level to accomplish the goals.
Next week, for the second part of this series, I’ll share “Trump and Putting the Genie Back in the Bottle;” a look at another huge influence on healthcare in 2017 and beyond. Be sure to follow this series by subscribing to our blog updates below. Also, make sure to catch [part three](https://datica.com/blog/2017-healthcare-trends-part-three-the-rise-and-fall-of-the-ehr/, and part four of the series.