Volume 17
What are the biggest challenges in healthcare? I’ll tackle that question this week in Paris when I speak at the École Supérieure de Commerce de Paris, one of Europe’s top business schools. In addition to addressing this question, I’ll discuss strategies and opportunities for businesses to improve health equity around the globe. As you’ll read at the end of this newsletter, we believe enhancing health equity should be an important part of any company’s ESG mission. There are so many ways the private sector can close gaps in outcomes and access, and we’re excited to explore that angle in Paris and in future newsletters.
You can also find more on the topic of health equity, and all the challenges facing healthcare, in upcoming articles in our “Insights” section to our ABIG Health website. Finally, I will announce new members of the ABIG team next month! Keep an eye on your inboxes as we continue to expand our firm and content in order to provide a unique, personalized approach for our clients.
But first, some BREAKING NEWS: The White House announced this week that it will bring the Covid-19 public health emergency to an end on May 11. This will mean big changes to how and what the federal government funds for the COVID-19 response (free vaccines, tests, and medications, for example) and may end certain regulatory flexibilities afforded over the past three years. I will have more on this topic in an upcoming newsletter.
Now here’s this week’s Top 10 things you need to know in healthcare.
#1: If ChatGPT can pass the medical licensing exam, can it lessen the burden on physicians?
OpenAI’s ChatGPT passed the U.S. Medical Licensing Exam this year. Drawing information from content on the internet as of December 2021, the AI bot uses a “big language model with algorithms that are trained to determine the likelihood of a particular series of words in accordance with the context of the words that precede it.” Since it was released in November 2022, people have used ChatGPT to write a variety of different pieces, from love poems to high school history papers to blog posts.
So what’s the big deal? Physicians have begun to use ChatGPT to trial the bot’s effectiveness. While not used in practice… yet… physicians have found the tool could help with everything from creating a differential diagnosis to medical decision-making to creating the narrative portion of patient records. If accurate, AI could be leveraged to reduce documentation burdens and reduce errors in patient encounters. However, AI and ChatGPT are in early innings and while the technology holds significant promise, it's unlikely to act as a substitute for clinicians.
#2: Is AI Healthcare’s Financial Savior?
A new investigation from McKinsey & Co. and Harvard scientists has indicated artificial intelligence has the potential to save the United States up to $360 billion annually if it is used more extensively in the healthcare sector. However, the consultants and researchers also noted a culture shift is needed in order to unlock these savings. That’s because AI adoption has been restricted due to different types of data being used, worries about data breaches, differences in financial incentives (who pays for the service - hospitals or providers) and a lack of trust by patients and doctors.
So What’s The Big Deal: Two issues may converge that could push health systems and healthcare more broadly to accept AI: workforce burnout and costs. Clinicians often attribute burnout (and, by extension, attrition) to documentation and “administrative burdens,” so AI may reduce this problem (see the ChatGPT discussion above). For hospitals also facing rising costs due to workforce shortages and premium labor costs, AI will fill some of the gaps now being filled by clinicians and premium labor pools. AI also will likely be embraced more in the near future and will have non-financial advantages, such as improved healthcare quality, more availability of care, and increased satisfaction from both patients and doctors.
#3: Digital Health Companies Are Shifting Strategies
For the past several years, businesses looking to attract talent in a competitive job market have embraced digital health solutions. However, with the cost of health insurance premiums increasing, employers are now cutting back on digital health options, forcing digital health companies to adjust and concentrate on integration and cost efficiency.
So What’s The Big Deal? Digital health companies (and their virtual health offerings) will need to consider how to deliver value to employees and potentially take on greater risk when negotiating new contracts. Instead of per-member-per-month contracting with variable use, employers are identifying (and demanding) alternatives. This shift in digital health contracts is likely part of a broader shift in pricing, as the country moves to cost savings and a value-focused ethos in healthcare.
#4 Amazon Expands Their Generic Prescription Drug Business
Amazon recently introduced a new drug subscription program in the United States called RxPass that will be exclusively available for Prime members. For a flat fee of $5 per month, users can have eligible medications delivered to their door. Those who sign up for RxPass will be able to access Amazon Pharmacy, the online pharmacy that debuted in 2020 and is also only available to Prime members.
So What’s The Big Deal: Amazon is moving fast into the healthcare space with multiple healthcare offerings. Like CVS and Walgreens, Amazon continues to build on their healthcare service offerings. As we discussed in last week’s newsletter, retailers are making big plays to control key parts of a patient's healthcare journey. From PCP office visits to home and virtual health to prescription drugs, the more healthcare levers a company controls, the more revenues they can collect while reducing costs. These moves allow companies like CVS, Walgreens, and Amazon to participate and potentially succeed in value-based care payment models (like Medicare Advantage and ACO plans) with the added benefit of driving customers to their other retail offerings. Key questions remain: Will this translate to an improved experience for patients and providers? Will patient outcomes and costs improve? Will we see more consolidation in the industry? The first two questions are less clear. Time will tell. The last question is most assuredly, yes. Watch this space.
#5: Dollar General Pilots Mobile Clinics
Dollar General is branching out into healthcare, which could be seen as a potential challenge to drugstores and other retailers. The company has begun testing mobile health clinics in Tennessee. These facilities offer basic and preventive care as well as urgent care and laboratory testing services.
So What’s the Big Deal? Although it does not have the same experience in the medical sector as CVS and Walgreens does, Dollar General covers a wide range of rural districts of the United States. In fact, 75% of the U.S. population has a Dollar General store within a 5-mile radius! By making preventative care easier to access, Dollar General could improve outcomes in underserved communities.
#6: CVS Launches Mental Health Support for Aetna Members
As we have discussed previously, CVS Health has rolled out a virtual care platform called Virtual Primary Care that is mainly for primary care and mental health services. This 24/7 on-demand service is currently available to all Aetna commercial members who have an eligible self-insured or fully-insured health plan. Patients can quickly secure a primary care appointment with the provider of their choosing, and they can get help with common ailments and diseases. Additionally, CVS is broadening their virtual mental health services by making them accessible to enrollees who are 18 and older. These services include access to clinicians like licensed therapists and psychiatrists.
So What’s the Big Deal? Two Things:
CVS (Aetna) like other retail payer-providers are recognizing the value of integrated, low-cost services. They believe keeping their beneficiaries within the virtual walls of CVS clinics, pharmacies, and home health entities reduces costs, improves outcomes, and access.
Mental healthcare has been a constant access and affordability challenge in the United States. Integrating mental health services with primary care services improves access, affordability, and coordination of care. And, hopefully, outcomes for patients.
#7: Hospitals (Including HCA) Continue Down a Rocky Road in 2023
The stock price of HCA Healthcare dropped by up to 2.4% at the start of trading on Friday, January 27 after the company predicted a decrease in their annual profits for this year. This assessment is attributed to inflation and the continued ripple effect of the ongoing COVID-19 crisis. Hospitals also have been dealing with a number of issues, including fewer patients, staffing issues, and labor strikes.
So What’s The Big Deal? Two things:
Payers are broadening financial incentives to keep patients out of the hospitals. A robust ambulatory/outpatient strategy and strong payer relationships “leaning in” to value-based care payment arrangements and contracts are needed for future success.
Expenses continue to be disproportionally high. According to a Moody’s report, hospitals have continued to face, and will continue to face, labor challenges and supply chain woes in the first few quarters of 2023. While hospitals may not be able to control reimbursements and patient volumes, they do need to control labor and supply expenses. Hospitals will need great workforce and workflow optimization paired with targeted investments to improve operational efficiencies.
#8: What Happens After Telehealth Payment Parity Ends?
During a declared public health emergency (PHE), the Centers for Medicare and Medicaid Services can offer reimbursement to providers for telehealth visits at the same rate as an in-person visit. Originally, telehealth flexibilities were extended for 151 days, then extended for two additional years after the end of the public health emergency. If the COVID-19 PHE ends in may, healthcare providers should anticipate telehealth waivers will be available through the end of 2024. However, reimbursement rates will last only until 2023. After that, remuneration could go back to pre-pandemic levels. More details are likely to be disclosed when CMS releases their yearly physician fee schedule.
So What’s The Big Deal? During the peak of the COVID-19 pandemic, numerous medical centers and healthcare organizations leaned on telehealth. Executives made investments in the technology and backing for telehealth as the amount of people utilizing virtual care increased. The latest omnibus law took care of a great deal of regulatory and legislative problems regarding telehealth, but was quiet on the issue of remuneration. This uncertainty will impact future investment, and will make it less likely patients and providers access the tool.
#9: Humana Expands Clinics in Texas
Humana has announced it will introduce its CenterWell clinics in the Dallas-Fort Worth area, with the goal of opening 10 locations this year. The first two will be available this February. The insurer is looking to greatly increase the reach of CenterWell Senior Primary Care in the coming years, with the aim of having between 30 and 50 new centers each year up until 2025.
So What’s The Big Deal? The trend continues as payers link arms with providers to expand their influence to help coordinate care and control costs. However, local provider groups and clinics should pay close attention to this trend. As payers begin to control the provider space and push patients to their own clinics, independent physicians could see patients move and see a decline in their volumes. Will Humana and other payers siphon off patients from independent clinicians pushing them into their clinics? The answer is likely yes. Aetna (via CVS, see #6) is preferentially shifting their patients to their MinuteClinics and their platforms. Humana and others will likely start to do the same.
#10: Health Equity: A New Requirement
The Biden administration has made health equity a major priority in its regulatory policies. In the upcoming year, a new payment model will be implemented that not only collects data to identify social risk factors, but also introduces solutions to tackle such problems. Healthcare providers who have been actively working toward equity have praised the decision to move away from data collection and toward action. An example of this movement is the ACO REACH payment model, which offers capitated payments to physicians for meeting financial and quality goals. As of early 2023, participants in this model also will have to supply the Center for Medicare and Medicaid Innovation with an equity plan, a requirement that has never been seen before in value-based care.
So What’s the Big Deal? As the country slowly but steadily moves to value-based care, health equity initiatives are gaining in importance. Not only is there a growing recognition that health equity is a moral imperative, but that providers and payers also must meet certain metrics (star ratings) to be successful in new payment models. For providers to succeed in the models, understanding the drivers and causes of health inequity will be a critical component to improving outcomes at lower costs for populations with the greatest needs.
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