Chief executives leading health systems, independent medical groups and health plans are at something of a digital crossroads.
“Primary care today is evolving significantly. We’re in this flux where we’re seeing many new digital and technology tools coming to help primary care physicians. But it’s also in an evolution because the payment mechanisms are very mixed and the payment mechanisms drive a lot about how the primary care model works,” said Warner Thomas, President & CEO, Ochsner Health. “If you’re in a value-based or a capitated environment, that evolves to a much different primary care environment than if you’re in a fee-for-service model.”
At the 2022 Health Evolution Summit, Thomas participated in the Main Stage discussion Future Fortunes: The Competitive Landscape for Primary Care Five Years Out. Facilitated by Julie Yoo, General Partner, Andreessen Horowitz, the discussion also included Bruce Broussard, President & CEO, Humana and Richard Merkin, MD, Founder, President & CEO, Heritage Provider Network.
The CEOs shared their perspectives about which categories of startups are poised to bring the most disruption to health care, what they would each like from the others, when value-based models will reach commercial populations and the pressing need to disrupt themselves.
Winners and losers in the innovation ecosystem
Noting that Andreessen Horowitz receives numerous pitches from gaming companies that are considering how to become a digital front door to health care, Yoo asked each of the executives which companies or categories of startups are creating truly novel approaches.
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Broussard said that Humana sees a few categories. One is the innovators working with the existing infrastructure and bringing that to a new level by helping providers adapt to alternative payment models, for example. Then there are the big tech companies, such as Microsoft and Amazon, deploying contemporary tools into health care and introducing new infrastructure layers, such as natural language processing. And then there are startups taking unique applications and putting them to work in particular areas, such as analytics to drive consumer engagement for people with particular conditions. The final area Broussard highlighted is device development and the innovators building smaller devices that are integrated with a platform to improve interventions and return on investment.
“The maze of innovation is exciting for health care in general. There will be winners and losers. There will be a lot of money made as a result of the competition and there will be companies competing today that won’t have that competitive advantage in the future,” Broussard said. “Who will win? Our society. The people in our society will win because the direction toward continuing to improve outcomes is really positive.”
Likening the ecosystem of health care startups to more mature markets such as the automobile industry, Merkin noted that over time fewer and fewer companies survive. “There might be a winner-take-all,” Merkin said. “Maybe there will be one or two companies that are so disruptive the others cannot move quickly enough to change and the disruptors will dominate just like Uber with taxis, Airbnb with hotels and Amazon with, well, everything.”
Thomas said that there will be lessons to learn from all of the innovators, winners and losers alike. At this point, he added, the incumbents have an advantage in the competitive landscape over primary care startups but they can also put themselves at a disadvantage by failing to recognize that they need to change because new models will disrupt them.
“If incumbents are willing to evolve and change and integrate technology and build new models, they could be successful,” Thomas said. “But that will depend on whether they really embrace that change because low-acuity primary care is not a great experience generally and there are going to be better ways it can be done. We all have to embrace that. And if you’re not, you probably will lose because primary care is going to be done very differently.”
Thomas cautioned that incumbents that do not adapt and create better working environments for clinicians will also face workforce challenges because employees will instead want to work for whichever organization offers the best opportunity and experience.
Advice the CEOs would give each other across industry boundaries
Given the existing friction between health systems, independent medical groups and health plans on multiple fronts, Yoo asked the CEOs what advice they would share with each other based on their own approach to primary care, including what opportunities are being left on the table.
Merkin cut to the chase: “Better communication between the health plans and medical groups. More transparency — and I don’t mean necessarily financial transparency — about the goals we can be working toward together.” He continued that with so many duplicative services, providers can improve and in many cases health plans are well-suited to help. “Working collaboratively is what I would suggest, not just to you, but for all health plans.”
Following that, Broussard suggested that CEOs need to participate in taking friction out of the health care system. “The lack of information flow is something we as an industry have to continue to work on to remove that friction,” Broussard said.
Thomas agreed that health care organizations should improve information sharing practices.
“If we actually put our heads together and share data in a more robust fashion, with a focus on taking better care of patients, we could come up with better solutions together. Then we could do even more together,” Thomas said.
When will value-based care move into commercial markets?
Questions about value-based care were among the most pressing at this year’s Summit. While value-based models have succeeded in Medicare Advantage programs, a participant asked the CEOs when they anticipate it will be more common in the private sector.
As Heritage Provider Network operates in rural, suburban and urban geographies, Merkin shared that there’s a need for different solutions in varying patient populations. “You can’t manage an urban Medicaid population the same way you’re treating a commercial suburban population,” Merkin added.
From Humana’s perspective, Broussard said he sees a continued push toward commercial entities transitioning from volume to vale.
“Value-based care has to overcome some pain points,” Broussard said. “It’s probably going to take a decade or so to get to it because there is a lot that needs to happen. Providers have to change. Employers have to change. You have to get the person who is choosing a health system to change. But there is a lot of momentum.”
Time to master internal disruption
Exactly where to start preparing for the changing competitive landscape will likely be determined by an organization’s risk-tolerance and sophistication — and the experts urged other CEOs to shape a point of view about the future of primary care.
Doing so will free the enterprise up to be more innovative and treat patients the most appropriate way, whether that means fee-for-service, value-based care or emerging alternative payment models.
Ultimately, that will require CEOs to learn how to lead internal disruption because there are multitudes of innovators working to shake up the competitive landscape in primary care whether within an established organization or a garage somewhere.
“We have to learn to disrupt ourselves,” Merkin said. “If you don’t disrupt yourself somebody else will.”
