I had the pleasure of attending the AcademyHealth’s Health Datapalooza conference in Washington, DC on March 27-28. Health Datapalooza is the gathering place for people and organizations creating knowledge from data and pioneering innovations that drive health policy and practice.
Hundreds of attendees gathered to talk about data issues as the driver for the healthcare revolution. I heard from top visionaries in the field who explored key questions and promising innovations driven by health data. Here are key themes that emerged at the event, with my key takeaways on where opportunities exist for the industry.
- Whether the patient, as the owner and consumer of personal health data, is at the center of a revolution in healthcare – or is that emphasis misplaced, and should it instead be focused on physicians?
- Vertical integration and its ability to drive productivity gains, leveraging a full understanding of health data from acute care settings to the home
- Data and its power to unlock solutions in population health management, in an area like vaccination
The key to healthcare system disruption – patients or physicians?
Senator Ron Wyden of Oregon believes the key to driving a revolution in healthcare is for patients to become empowered healthcare consumers—a common refrain at Datapalooza—by having access to the full range of data that healthcare companies and the government collect.
However, as companies gather more health data, the information becomes more difficult to manage and understand, particularly for consumers. Consumers want a user-friendly system to help them access better and more affordable care. Senator Wyden described a three-part plan to combat a lack of information reaching consumers:
- Develop one place where every patient can access information on costs of medication, services, or procedures.
- Provide consumers with a new approach to comparing providers with respect to both quality and cost of care.
- Foster transparency between pharmacies and physicians so patients have more immediate access to medication costs.
In contrast, Peter Orszag, Head of North American M&A, Vice Chairman of Investment Banking, Lazard, and former director of the Office of Management and Budget, claims that in order to truly influence the healthcare system, the focus should be on influencing physicians. The top 25 percent of Medicare users account for 85 percent of the spending. These are the sickest users, and for whom is the most difficult to make ‘economical’ decisions about healthcare, Orszag said. Focusing on 75 percent of the Medicare beneficiaries as empowered ‘consumers’ only creates efficiencies on 15 percent of the spending. Therefore, it makes more sense to focus on physicians to more efficiently deliver care.
Technological developments and political attention on healthcare will drive changes in the incentive structure in healthcare systems. Physicians will continue to have large decision-making power in acute care settings. However, patients will continue to have more autonomy in non-acute settings. Healthcare companies across the value chain will need to increasingly emphasize the importance of uncovering the patient or physician journey, their preferences, and adapt their models accordingly in diverse care settings.
Vertical integration is changing the structure of healthcare
The popular understanding is that healthcare costs continue to rise consistently. However, Orszag pointed out that there has been substantial cost deceleration in recent years. But, unlike many other industries, productivity growth in healthcare has stagnated.
One of the solutions is vertical integration, a controversial trend occurring rapidly across the sector. Think health insurers and pharmacy benefit managers, like Cigna and Express Scripts, Aetna and CVS. Or hospital systems buying up independent physician practices across the country. Orszag praised vertical integration as a way to align what were previously opposing incentives to bring cost reductions and productivity gains to the sector. These combined entities now have the ability to integrate data from multiple points in the value chain. They can leverage newfound bargaining power with, for example, pharmaceutical companies, Orszag said. They will quickly figure out how to determine whether a drug treatment regimen or device is working. This will change the relationship between these entities and pharmaceutical and medtech companies.
Pharmaceutical and medtech companies have traditionally played an influential role in a fragmented system with multiple, independent nodes in the value chain. But as other interests in the value chain have vertically integrated, the power of pharma and medtech firms will diminish unless they evolve as well. We wrote about the race between pharmaceutical companies and tech companies to be the healthcare companies of the future. One of the ways that pharma firms are trying to capitalize on the integration trend (and provide more value in the eyes of payers and governments) is by forming innovative partnerships to broaden their value from providing only a drug or device. Our next section explores just this sort of possibility.
Data and population health management
Sessions at the conference focused on leveraging health data and digital health to improve vaccination coverage rates and equal access. Many developing countries—and even local governments in developed markets, particularly where certain segments of the population oppose vaccination–encounter data challenges regarding immunization management. Maintaining accuracy as coverage increases, monitoring equity among migrants and other high-risk groups, and measuring performance over a lifetime all contribute to the challenge facing governments.
This is an area ripe for a traditional pharmaceutical company that provides vaccines to get involved in population health management. They also see opportunities in health data solutions around vaccination. Companies should see this as an opportunity to provide value-added services to governments around the sale of vaccines. They can do this by leveraging geospatial-based technologies, geopositioning, predictive analytics, and other technological solutions.