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Digital Transformation and Payors – What to Expect by 2020

By: | Tags: | Comments: 0 | June 1st, 2016

We have spent a great deal on the PWeR News blog discussing how the digital transformation is affecting our nation with a clear focus on healthcare. Thousands of words were written on how the digital age can change the quantity, quality and cost of healthcare. We have written extensively on how little technology has actually transformed healthcare, particularly at the medical office, the MSO or the ACO and the consumer. For the most part, I have bypassed the hospitals, as they are their own animal, and the data they collect is mostly, if not always, when patients are in a critical state. (This would exclude real integrated systems that have one data set; the Cleveland and Mayo Clinics come to mind, and there are dozens more.)

The other major segment of healthcare is the payors. The payors include actual indemnity insurance companies, managed care companies, integrated payors, employer sponsored (ERISA) plans and the 800-pound gorilla Medicare and Medicaid. These are all different and many are decades behind in technology. I know many very well, and some I don’t want to know. I am willing to bet that some government systems are still running on mainframes installed by EDS (Electronic Data Systems Corporation) funded in 1962, now or maybe not, part of Hewlett Packard, they keep changing their structure. If memory serves, EDS for the most part under Ross Perot billed key systems for Medicare.

The ones we find interesting are actually insurance companies that are part of the Medicare Advantage (MA) program – those we know personally well, respect and I think bring huge value to the consumer and control cost. They do this by managing in a proactive way the care, the coordination of care, and the payment of care, all optimized to provide quality, best outcome and control cost.

Recently, we read a report by McKinsey & Company (MKC) that reminded me of the third leg of what I think will be the future of healthcare. Yes, to me it is all customer centric with the care giver (MD, DO, etc.) in control; however, there is a third player in my world – the payors. The payors have mostly avoided the technology resolution, especially in the MA program.

Commercial and employer based plans are trying, and I see it as part of our company plan with the largest of those in Florida. However, for those very close to the MA program, that growth seems very slow. That could be to defend the over-65 population that has not historically been “connected” and comfortable using computers; however, two things are changing. One is the baby-boomers have entered their late 60s – the oldest boomer today is 69. The honorable, Hilary Clinton and businessman, Donald J. Trump are two examples of the oldest boomers who are very comfortable with smart phones, emails, computers and even Twitter. I think that the MA payors are ready to get digital with Medicare members. The other reason is even my 77-year-old mother (please don’t tell her I outed her age) has an iPad, a smart phone, and an active Facebook profile. I believe that today is the perfect time to connect the consumer, the provider (including MSO/ACO) and the payor in one continuous health information system.

The MKC report notes:

To derive maximum benefit from digital, payors should learn to view it not as a thing but as a way of working—that is, as a way of thinking about and running their businesses. Digital can have a significant positive impact on payor economics, primarily through four levers: Stronger connectivity. Digital gives payors new ways to engage with all stakeholders. For example, it can be used to improve the consumer experience by simplifying the buying process and making it easier for consumers to select the right product. In addition, it can provide tools to help steer consumers to the lowest-cost high-quality provider, thereby optimizing the care setting for their needs and enabling them to better manage their health. In today’s world, any payor that wants to connect with consumers must include social media and online channels as a core part of its strategy. In addition, payors must accept that the expectations of today’s consumers are increasingly being set by their experiences in other sectors. 

However, digital also enables payors to engage more effectively with providers. For example, payors can give the providers more sophisticated, digitally enabled tools to manage the population health of their patient panel, as well as clearer methods for gauging the quality of care delivery. Digital also enables better collaboration and data sharing with providers, which supports more effective care coordination. 

As you can see, the MKC report is quite positive and I think there is immense potential here. An environment where consumers, providers and payors are connected will save everyone time, money and heartache. I have already talked about how much money we spend in “administering” healthcare. When you allocate entire cost of documenting, generating, processing, contesting, and paying and then again document a payment to a provider, the lowest estimate I have seen is 25% of all cost. The loss of time and care is completely incalculable. This environment will change workflow and aggravation that exists at every single point of care today.

This interconnected heath system will allow for quicker decisions, better analytics, and I think it will become mandatory in the new value-based reimbursement model we are hurtling in to. Additionally, it will also allow us to take advantage of the aggregated data in analytics and population health.

We have recently finished a series of blogs discussing the use of wearables that are collecting data with nowhere to make that data “actionable.” The MKC reports one example dealing with payors:

For example, it can help payors envision new approaches to care delivery that have the potential to hold down costs (e.g., wearables that monitor the health status of patients with chronic conditions, telemedicine “virtual visits” that reduce the need for in-person physician consultations). Digital can also make healthcare more accessible by giving patients easy access to their medical history and help them locate nearby clinicians, specialists, and facilities.

The MKC report estimates in one part that cost could be reduced in administrative cost by $25 billion (USD). We believe that in a $3.7 billion (USD) industry, technology is the biggest contributor to better care in the developed world today, and that this transformation has only just begun. We can save hundreds of billions of dollars if we can connect the consumers, providers and payors – this is going to happen, no doubt about it. If we then add both remote monitoring and telemedicine, and better control of medication cost, the cost savings are potentially so big that I can’t even type out those numbers.

The cost and care transparency will encourage consumers to seek providers and payors that have the best outcomes, lowest prices, and best tools for ease of care that real Accountable Care Organizations should deliver. In the end, the consumers will be the true beneficiaries of the digitization of payors; however, the value is also going to go to the providers that will eliminate millions of man hours seeking prior approval, submissions of bills, and delays in getting paid. The reality is that the payor, relative to the provider, is a David and Goliath situation. Maybe that is why digital health investments increased by over 400% from 2011 to 2015. Many of those companies are looking to connect to payors, the issue is that you have to understand how the payor thinks and processes information. Payors by nature have petabytes of data, but it is all claims data; providers are quickly assembling their own clinical data. What is missing is the unification of clinical, consumer, and claims data. Our goal is to one day connect our PWeR system to a payor. First, we will be do this by taking a data dump (static) by consumer and processing it to mix with the claims data. When we talk to insurance executives, their eyes light up at the possibility! We believe that will be possible before the end of 2018 and could be the first to do that in Florida, if not the country.

It is well overdue to end the silos first created by paper, then by closed data systems with providers, and the last hurdle being the payors. Once the first payor sees the value of a truly integrated approach, you will see a drive like wildfire to connect the consumer to the provider, the payor to the provider, and back to the consumer. We WILL have a totally connected system. We think that this connection will happen outside of an integrated system if not in 2018, then surely by 2020.

– Noel J. Guillama, President

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