The search for value is a massive, multifaceted treasure hunt. Multiple stakeholders are participating, including patients as consumers, employers as purchasers, and hospitals, health systems, and medical groups as providers.
F. Randy Vogenberg
Complicating the task for everyone involved is all the uncertainty surrounding the ACA, including the end of the individual mandate, the vagaries of Medicaid expansion, and continued legal challenges that could take the law off the books. Change—and anticipation that there will be more of it—has caused market movement among key stakeholders. Roles have been altered, relationships rearranged. For example, some traditional insurers have shifted from holding the economic risk of its membership to simply being a plan administrator.
One response to the unsettled health care landscape has been vertical integration—namely, CVS Health’s merger with Aetna and Cigna’s merger with Express Scripts. As in other sectors of the U.S. economy, change usually means mergers and acquisitions. If the ground is moving, you look for ways to stay on your feet. It remains to be seen whether vertical integration becomes the dominant combination in American health care.
Meanwhile, consumerism—the inclination and ability to shop for health care—is becoming a force to be reckoned with. It’s already an important factor in some high-cost product areas where patients as consumers become responsible for more of the out-of-pocket cost for their care. For some stakeholders, this means moving out of a current role into a different one. For example, the lack of transparency in drug pricing and rebates has affected manufacturers, health plans, and PBMs, as consumers and purchasers of care seek more “buying” information about drugs or tests so they can make smarter purchasing decisions.
A potential beneficiary of current and potential changes can be the providers who lost much of their market power of care to others in the supply chain related to managed health care. As third-party economic market power wanes, decision making can shift back to providers. Examples of such shifts locally can be seen within managed care markets around the country where more collaborative relationships are formed and power sharing is aligned to economic, political, legal—or all three—environments.
Public- and private-sector health care stakeholders continue to explore collaborations that can manifest in various ways. For example, purchasers may enter into a direct-services contract with a provider entity that will also determine the product formulary (drug, device, and diagnostics). Third-party administrators will process claims and provide other support around care management integration when needed for the purchaser. Such collaboration or teamwork across stakeholder sectors is similar to the cross-sector relationship seen in patient-centered medical homes, oncology medical homes, and ACOs.
Alignment between purchasers and care providers has long been a goal, although it was mainly stuck in the aspirational phase. Now, that’s changing. One difference is the increasing strength of consumerism that encourages alignment, as seen in other sectors of the U.S. economy. That has revealed just how far health care lags behind in the logical alignment of stakeholders. For example, higher-priced specialty drugs require multiple stakeholders to align around the optimal therapy clinically as well as economically. That requires a less-than-optimal clinical choice that is economically affordable to the patient and, in some cases, for the purchaser.
Clearly there is market interest and movement around change in health care. Change is happening on multiple fronts and at a faster pace than ever before. Stakeholders that ignore or minimize it will do so at their peril. To be clear, addressing organizational change or purpose internally as well as external positioning today is the more likely path to success. To wait for clarity to take action is likely to mean taking no action at all and a higher risk for failure.