Bold Move: CVS’ Acquisition of Aetna – 5 Takeaways for Delivery Chain and Health IT

CVS StorefrontOver the weekend, CVS announced its intent to acquire Aetna for $69 billion. If approved, it would represent one of the largest M&A deals this decade, and the largest in the healthcare industry. The combined entity will have revenue of more than $220 billion and an EBITDA of $18.5 billion. This vertical integration, if they can pull it off, could significantly accelerate the drive to consumer-centric care.

With so much at stake, Chilmark Research offers this analysis of how the CVS-Aetna merger would impact various touch-points of healthcare delivery and payment. Our key assessments:

  • Near-term: direct combination of CVS Caremark’s PBM service with Aetna will be attractive to self-insured employers as some “service” costs will be eliminated.
  • Express Scripts, the last national, independent PBM will likely benefit as payers previously aligned with CVS Caremark, see them now as a competitive threat.
  • Longer-term: Aetna members will be incentivized to visit CVS Minute Clinics, which will disrupt traditional primary care practices.
  • Aetna’s aggressive development of high performance networks will be further accelerated with addition of CVS’s Transform Care Program.
  • Epic’s Healthy Planet PHM platform will likely become the core IT nerve center for care processes and provider-payer-pharmacy convergence enablement.

As an IT analyst firm, we have little interest in what this deal may portend in the pharmaceutical benefits management (PBM) space (see here or here for that coverage). We are far more interested in its impact on the healthcare delivery chain (HCDC), what it means for the convergence trend we highlighted at our recent conference, as well as the supporting IT infrastructure that will enable the HCDC.

 

HCDC Impact: Community Care Hubs

With more than 1,100 MinuteClinics, and a target of 1,500 locations, CVS is leading the move to consumer-centric, retail health in the U.S. The combined entity will have massive consumer reach and could pose a significant threat to basic primary care practices as incentives will likely be used to encourage Aetna members to use CVS Minute Clinic services. This has the potential to drive near-term disruption, and it’s consistent with Aetna Chairman and CEO Mark Bertolini’s desire to move care into the home and community, closer to the consumer.

Through the Transform Care program, CVS hopes to drive better outcomes through coordinated disease state management — an area where payers such as Aetna have clear incentives to get members to participate. The program started with diabetes and plans to address four more disease states in the next 24 months: Asthma, hypertension, hypercholesterolemia, and depression.

Through the Transform Care program, CVS hopes to drive better outcomes through coordinated disease state management…However, transitioning CVS’s retail stores into community health hubs is fraught with execution challenges and will require significant capital expenditure.

Beyond its MinuteClinics, CVS has 9,600 pharmacies across the country. As most consumers interact with their pharmacists far more frequently then their doctor, having the ability to leverage pharmacists as part of an extended care team for Aetna’s members could be quite powerful. In addition to assisting with chronic disease management, exposing such information as an Aetna member’s care gaps to a pharmacist to encourage follow-up or even schedule an appointment can improve critical metrics under value-based care programs such as CMS’s Medicare Shared Savings Program.

It is also important to note that Aetna has aggressively been building high-performance networks in partnership with providers. Currently, Aetna has established numerous Accountable Care Organizations (ACOs) with providers across the country as well as five joint ventures, with notable providers Allina Health, Banner Health, Inova Health, Sutter Health, and Texas Health Resources.

Critical to the success of these partnerships in value-based care models is minimizing leakage (patients going out-of-network to receive care). Often, these out-of-network visits are simply done out of convenience. Aetna now has the opportunity to leverage MinuteClinics as part of its high-performance value based networks (ACOs & JVs) incentivizing members – no co-pay if member goes to CVS MinuteClinic versus say a $50 co-pay if member goes to an out-of-network provider. This will be attractive to large self-insured employers and their employees.

However, transitioning CVS’s retail stores into community health hubs is fraught with execution challenges and will require significant capital expenditure. Leaders of CVS and Aetna said “pilot” and “test and learn” throughout a joint conference call following the announcement. This may give Walgreens, Walmart, and other players an opportunity to pivot while a merged CVS-Aetna takes time to plan and execute.

 

Health IT Impact: Integrated Service Offerings

CVS is actively deploying the Epic EHR across all MinuteClinic locations (including those in recently acquired Target pharmacy locations). This provides the IT infrastructure to broaden the scope of services provided to the consumer including facilitating hand-offs/referrals, with local IDNs (CVS has more than 40 clinical affiliations across the country).

In addition to using the Epic EHR across all MinuteClinics, CVS announced in October that it was also partnering with Epic to leverage the Epic population health platform, Healthy Planet. We expect that Healthy Planet will become the core platform bridging many of the core provider-payer activities that are associated with value based models of care across the HCDC.

A combined CVS-Aetna would be well positioned to improve predictive analytics, given the addition of clinical, pharmacy, and consumer data to claims data… Here, the impact will be greatest in consumer engagement, potentially managed through the CVS Health Engagement Engine.

A combined CVS-Aetna would be well positioned to improve predictive analytics, given the addition of clinical, pharmacy, and consumer data to claims data, and to recommend CVS’s wellness or disease management programs to the most appropriate members. Here, the impact will be greatest in consumer engagement, potentially managed through the CVS Health Engagement Engine. (See Figure 1.)

CVS Health Engagement Engine Overview

Figure 1. CVS Health Engagement Engine Overview. Source: CVS Health

 

Over the years, Aetna has acquired and subsequently offered a wide breadth of software solutions and professional services focused on member engagement and provider enablement. These include ActiveHealth, Health Data Management Systems, Medicity, and iTriage. None of these have been a huge success for Aetna, and some will likely be spun off in due time.

Where many payers and providers struggle with engagement, CVS owns this touchpoint. About 30% of CVS customers use the retailer’s text messaging platform for prescription pickup and refill; plus, customers who pick up prescriptions on a monthly basis visit CVS more often than they see their PCP.

In addition, CVS has partnered with three telehealth companies (American Well, Doctor on Demand, and Teladoc) to offer customers another venue for receiving low-acuity care. Aetna is also Teladoc’s biggest client (along with a number of other insurers). This merger gives CVS an opportunity to create a new integrated services offering, since not a single health plan has a comprehensive virtual health strategy to manage care and customer engagement.

This integration of service offerings raises key questions, though.

  • Who will manages these low-acuity and/or holistic interventions: CVS pharmacists, Aetna care managers, or newly hired health coaches in a reporting structure TBD?
  • Will Aetna, in a sense, outsource member engagement to CVS? What will this mean for non-CVS customers who are covered by Aetna?
  • How will PCPs and HCOs react to this? Will providers cut their ties with an insurer that is interested in driving utilization to a retail health or telehealth provider?

Looking Ahead

Unlike the failed Humana-Aetna proposed merger, the CVS-Aetna merger is expected to be granted conditional approval. A merged CVS/Aetna creates a healthcare services behemoth, with combined revenue of more than $220B and EBITDA of $18.5B, rivaled only by UnitedHealth. (See Figure 2).

Figure 2. Projected Revenue Breakdowns by Operating Segment, CY2018. Source: Cowen and Company

A challenge to UnitedHealth? The deal sets up CVS to capitalize on its longer-term vision for a UnitedHealth-like model that vertically aligns the insurer, PBM, and retail businesses, helping to drive down costs and attract consumers into its bricks-and-mortar presence. OptumRx is comparable in size to Caremark. CVS plans to ramp up its investments in retail clinics, which is similar to UnitedHealth’s ramp up of its MedExpress business.

Execution risk is high. We share CVS-Aetna management’s views on the need for a more integrated and community-based healthcare approach and believe that CVS is a strategic asset with the ability to position itself as a unique player that can fill this void in the US healthcare system.

That said, the transformation that CVS’s retail footprint will have to undergo, not to mention the capital and effort required to restructure its 9,700-plus store footprint, poses meaningful operational risk to the combined entity, as well as drag that a broad renovation project will likely bring to CVS’s retail store performance over the next three years.

Competitors will wait and see. While UnitedHealth already operates an integrated health insurer/PBM model, the ability for CVS-Aetna to offer the direct consumer touchpoint via the retail pharmacy would be unique in the market. The only other play we may see of similar nature is a rumored Walmart acquisition of Humana, which would be similar in nature but targeted more toward Medicare Advantage members, where Humana has a strong presence.

Disruption from Amazon is unlikely. The real game-changer would be Amazon accelerating its entrance into the market with the purchase of an existing player such as Rite Aid or Express Scripts. However, Amazon’s potential entry into the pharmaceutical distribution and/or retail market has its own execution risks, thus near-term disruption unlikely.

Impact to primary care in question. CVS’s MinuteClinics offer a convenience and often a cost savings to the consumer that is unmatched by a primary care practice or local hospital ER. Yet the primary care practice often has the long-term, close, and personal relationship with a consumer/patient. It remains to be seen just how readily consumers will forgo relationships for convenience and whether or not incentives provided to Aetna members to use MinuteClinics will have a substantial impact on smaller primary care practices. The threat is certainly there – it’s the magnitude that remains in question.

The CVS retail pharmacy front-end will change substantially, eliminating some of the retail risk by moving toward healthcare services offerings such as vision, hearing, and wellness. The PBM will be a tool to help grow the enterprise, with PBM margin being less important than when it was part of CVS alone. In the end, CVS Health will be the place for Aetna members to go to get healthy and stay healthy, with the idea that the new model will attract members into the network due to cost, convenience and better outcomes. This is what a healthcare service company is idealistically supposed to do.

Stay up to the minute.

“Chilmark were one of the first industry watchers to recognize the importance of population health and are still one of the most sophisticated in their apprecition of what is going to be needed to transform health and care.”

-Former SVP of PHM at Cerner

Convergence and the Three Rules for Data Governance

Across the industry novel provider-payer collaborations have arisen – something we refer to as Convergence. The macro-factor driving this push to convergence is simple; the migration to newer value-based care (VBC) reimbursement models and the rise of consumerism in healthcare.

Convergence comes in many forms ranging from Accountable Care Organizations (ACOs) to provider-owned health plans (payvider) to payer-owned provider networks and the most interesting of all – deep strategic partnerships, including joint ventures (JV), that have arisen between a provider and payer. And we are only just getting started.

Anthem refers to their initial foray in convergence – Vivity Health, the seven-system provider network partnership with California Blue Cross as Convergence 1.0. One of their more recent partnerships with Aurora Health in Wisconsin is referred to as Convergence 2.0.

Aetna has also been an early proponent of convergence with its first JV, Innovation Health, which was established a few years back with Virginia’s Inova Health. Since then, Aetna has announced four additional JVs, (Allina, Banner, Sutter and Texas Health Resources). In each of these instances, Aetna is seeking to partner with a healthcare organization to provide a more seamless and complete healthcare service that will be highly attractive to self-insured employers and individuals buying insurance via an exchange. Aetna EVP, Gary Loveman, who is leading this effort, will be one of our keynote speakers at our Convergence conference next month.

Regardless of whether or not it is Convergence 1.0, 2.0, a deeply binding JV or some other form of convergence, core to the success of any of these strategies rests on the need to have a clear data sharing strategy. The deeper the level of convergence – moving from transactional processes to strategic – the greater the need for data transparency. If the convergence strategy is deep, the sharing of data must likewise be comprehensive to ensure that all parties are working from a “single version of the truth.”

Data sharing will be critical to support the applications and workflows that extend across the converged entity. The shared data asset will also be paramount for establishing mutually agreed to key performance indicators (KPIs) such as quality and costs of delivery care, care variability and administrative actions/burden, etc. These KPIs will help to optimize processes and drive alignment across the converged entity’s health service chain.

But this is where the true challenge to convergence arises.

Much of the data that may be necessary for success, is highly sensitive to one party or the other. If there is a lack of trust between partners a converged strategy will most likely fail. This gets to the core of any convergence strategy – mutual respect and trust is the starting point, followed by a strong desire or need to partner. That need to partner, to collaborate deeply must be shared by all parties.

But well meaning intent and a strong desire to share data in support of a convergence strategy is only the beginning of the process. The hardest step will be to define the rules of data usage requiring a strong, mutually agreed to data governance policy.

In our conversations with countless healthcare organizations, we find time and time again that data governance is one of the most oft overlooked aspects of their data curation and analytics strategy. Therefore, it is not too surprising for us to see the struggles that many an organization is facing today with governance that extends beyond their four walls to include a partner, who may at one time have been a competitor.

There are three simple rules to data governance in a converged strategy.

  1. Ensure parity between the two partnering organizations. If one has the upper hand, data sharing will likely be problematic compromising convergence goals and objectives.
  2. Define upfront what datasets will be required and for what purposes. In addition to what types of data and who is responsible for it, address issues such as latency, usage, quality and purposes for which data will be used.
  3. Place a skilled diplomat in charge of your data governance strategy. Governance tackles “soft issues” such as policies, people, privacy, security and trust, all key skills of one with strong diplomatic skills.

Be you a provider or payer, follow these rules to data governance will go a long way to establishing the trusted foundational framework for your own convergence efforts.

HIMSS’15 Pilgrimage: Impressions and Takeaways

CRinMoroccoAnother year, another HIMSS conference. While I often may gripe about this event; the seemingly endless parroting of buzzword(s) de jour, the countless press releases that really are much ado about nothing and highly questionable surveys and research results, that have little founding in reality, there is a silver lining to all of this…

HIMSS affords me the opportunity to meet with so many people I’ve come to know in this sector. Some are my mentors, others clients or partners and all have become friends. That friendship extends from a shared desire and dedication to improve healthcare delivery through the effective adoption and use of IT.

While HIMSS is utterly exhausting it is also incredibly invigorating – kind of a Yin/Yang thing.  I always return from the event with a ton of ideas as to where Chilmark can further assist this industry, because frankly, finding good objective research and insights in this sector sure seems tough to come by.

Key Takeaways:

The “Big Data” hype cools to a simmer. Thankfully, the number of companies quoting, referencing or inferring how they address big data has subsided. This sector needs to get the little data right before it can step-up in any meaningful way to big data.

PHM is a too vague a term. The challenge with population health management (PHM), as a term, is that it is so broad. This results in virtually any vendor laying claim to it – though they may only be solving a very small piece of the PHM puzzle. No vendor at HIMSS’15 has a solution that can fully enable a PHM strategy. Met with many a CIO who has come to same conclusion, but every CIO struggled with same problem: Where best to start and with who?

Everyone does Care Management. In his post prior to HIMSS, our analyst Matt predicted that care management/care coordination would be the new buzzword term de jour. He was spot on. Countless vendors had banners promoting their ability to address care management processes. Unfortunately for users, when one takes a deeper look at these care management apps, one typically finds a glorified spreadsheet. Surely we can do better than this!

Clinical analytics is cool, but financial and clinical analytics together insures long-term survival. Saw plenty of vendors promoting their latest analytic wares and virtually all the demos focused on clinical analytics. Only a few vendors have taken the next step and are co-mingling clinical and financial analytics – which will be absolutely critical for HCOs. Unfortunately, most of these solutions make it far too difficult to perform such a simple task as: At the patient level, identify the most costly patients, what is driving the high costs of care for these patient(s) (visits to specialists, procedures, labs, meds, etc.) in order to determine what may be done to reign in costs.

Notes & Observations

A couple of companies I spoke with, Arcadia and Health Catalyst, did talk about the co-mingling of clinical and financial data, but as mentioned previously, they were in the minority.

ICW was back after a five year hiatus from HIMSS. They’ve gone through a major restructuring to refocus their development efforts on HIE and care management. They’ve always had some pretty decent technology under the hood – their challenge has been channel(s) to market. Not easy for a company from abroad.

Humana announced Transcend Insights (combo of Certify Data Systems, Anvita and nliven), yet another payer-led solution suite. They’ll be challenged to compete with Aetna’s Healthagen and UHG’s Optum. Humana’s deep expertise in Medicare may be key differentiator.

Caradigm looks to be finally gaining some traction and their booth was very busy. They are beginning to get some wins for their Care Management suite, which they co-developed with Geisinger Health.

Orion Health has the most visionary architecture for CNM that I have witnessed to date. Now they have to execute on that vision.

RelayHealth now has both performance analytics (HBOC) and MedVentive under its wing. They will be combining RelayHealth’s data aggregation capabilities, these analytics solutions and hosting in Microsoft’s Azure Cloud. Going beta this summer at ten sites and G.A., by end of summer.

Apervita was one of the more interesting briefings, as they are a company trying to create a marketplace for analytic algorithms that an HCO can source and apply to their EDW. Recently landed Series A round – one to watch.

Aetna’s Healthagen is targeting self-insured employers as well. In North Carolina, the PHM program Healthagen rolled-out across the 680K state employees realized a savings to the state of some $450M over three years. Not sure how those savings were calculated, but a number even half that is impressive.

Kryptiq, which recently spun-out from Surescripts, is taking to market Care Manager, an app originally developed at Providence Health in Portland. Solution automates many of the tasks required for CCM reimbursement under Medicare.

The EHR bubble is over but big question is: Will bolt-on sales of PHM-enabling modules be enough to sustain this market? Cerner is seeing very good traction for its Healthe Registries product, but a contract sale of that product likely pales in comparison to a Millennium sale.

The EHR vendors with the biggest, most elaborate booths are also the ones that are struggling the most in today’s increasingly competitive market.

athena2

Athenahealth had by far some of the best marketing booth panels I’ve ever seen at HIMSS.

InterSystems is jumping into the patient portal business. We’ve never been fans of EHR-tethered portals and Intersystems’ move is welcomed.

Health Catalyst continues its momentum, both in raising funds and landing new clients. They are moving fast knowing that the likes of Epic, Cerner and other best of breed vendors are in pursuit.

Lumira, management buy-out of Wellogic from Alere, is building out a solution suite combining engagement, data exchange, biometrics and analytics. Lumira sees itself as a becoming an “Outcomes Company”. How that differs from a traditional MCO is hard to gauge right now.

Everyone wanted to know the implications of IBM’s big announcements at HIMSS. Certainly thought provoking, but IBM has a ways to go to convince the market, especially providers, of what value they can deliver.

The record winning CCD file that Medicity has seen fly over its network was 100MB – that’s HUGE! By way of comparison, one of our 100+pg market trends reports averages about 1.3MB. Is it any wonder that this industry struggles with interoperability.

Plenty of talk and wringing of hands over issue of interoperability, but saw nothing at HIMSS that gave me hope that this issue will be solved across the country in the next 12-18months. Think 3-5yrs at best.

Box had a small booth at HIMSS and unbeknownst to me, acquired a start-up that has a pretty slick DICOM image viewing and medical grade mark-up application that now resides on Box.

BluePrint Healthcare IT’s Care Navigator is a nicely packaged app for care coordination. Children’s Specialized Hospital in NJ have been able to derive some high value from its use in caring for its pediatrics patients.

Wrap-up

Of course, with 42K+ attendees, some 1.2K+ exhibitors there is no way any one person can take it all in. One needs a plan and a highly targeted one at that to be able to really get any value out of this event. As they say, practice makes perfect and this being my eighth or so HIMSS, I am getting a little more practiced at how to navigate this event. Never easy, always exhausting, at times depressing, but also never boring. See you in Las Vegas – the site of next year’s HIMSS.

Can Apple Keep the Doctor Away?

health“His treatment was fragmented rather than integrated. Each of his myriad maladies was being treated by different specialists – oncologists, pain specialists, nutritionists, hepatologists, and hematologists – but they were not being coordinated in a cohesive approach.”

Steve Jobs, by Walter Isaacson (p. 549)

As you’ve undoubtedly heard, Apple made a big splash last week by announcing “official” involvement in healthcare through a new app and accompanying SDK. In the past week much fanfare has been made and many speculations have been raised. As an industry that is built on the notion of looking forward, the obvious question right now is, “Will Apple Succeed?” An important precursor however is, “What is Apple trying to do?”

The announcement at WWDC was scant on details, comprising just three minutes of the broader two-hour session. More detail is available elsewhere, but the basics are that this fall, Apple will release an app called “Health” to track and store multiple health data, mostly from devices, of around 60 parameters upon release with iOS 8. The app will enable selective sharing of data, across other apps or with other individuals. The app’s release coincides with the pre-release of an SDK called “HealthKit”, designed to allow third party apps built with HealthKit to be able to have common data structures for data management, sharing, and privacy control. Two early partners were announced in Mayo Clinic and Epic, though details of those partnerships are still TBD.

So the vision here appears to be that patients and healthcare providers can use multiple apps written on Healthkit, all through a consumer-controlled, portable hub (that also makes calls!) to help fill the healthcare void when patients are away from a health facility.  Sound familiar? So much for “Think Different” – Apple is not trying out anything new here. Rather, they are betting that this particular formula of consumer-friendly hardware, new software, brand strength and market clout can result in a win. But they are also, finally, addressing a problem that has plagued health apps for years: an inability to aggregate data into one spot for a more complete view of one’s health.

Over the long term, the web-dominant approach to the above vision is slowly dying; the notion of sitting down at a computer to upload workouts or blood sugar readings into a website already seems antiquated compared to automated tracking on a device. So if mobile truly is the future, then Apple seems better positioned then others to capitalize on that trend, save Samsung.

With Samsung’s recent announcement of the SAMI platform, their S-Health app on the S4 and S5, and other recent activity in health IT, they too have arrived to the party. We will cover both tech titans’ varying approaches more deeply as part of the CAS as details around them emerge. For now, looking at ghosts of PHRs past as well as the current mHealth environment, we can point to several issues that will define the success or failure of Apple and their contemporaries.

Timing: Compared to predecessors, Apple has the benefit of timing on their side. Consumer-friendly hardware is now ubiquitous in the market (much of it Apple’s) and growing in sophistication. Healthcare software has decidedly shifted in a mobile-friendly direction, from a wellspring of APIs from major HIT vendors to emergence of standards like HL7’s FHIR. With the MU3 PGHD provision set to roll out this fall, the timing here could work out in Apple’s favor.

Wellness vs. Health: Many from Aetna to Microsoft have struggled trying to straddle the fence between wellness and medical care. We suspect Apple will be no different. Despite the umbrella of “health”, fitness tracking and condition management are two different marketplaces. Apple’s best bet for success may be to drive Wellness growth through B2C efforts, and drive clinical adoption through healthcare partnerships and clinical evangelists. For now, it is Apple’s best interest (and the broader industry’s collectively) to keep these lines blurred.

Quality and Curation:  With regards to adoption, the biggest healthcare complaint about mHealth is that there is too much going on. With over 43,000 apps available in some flavor of health, Healthkit adding more may not necessarily be better. It remains unclear what Apple’s involvement at this level will look like, but if they really want to get a foothold in the marketplace, they are best served by addressing this issue on some level.

Data: Apple is essentially the Epic of their industry: They’re big and well-fed and they don’t play well with their peers. Apple may take the same approach that Epic took before being regulated into interoperability by the ONC; they are big enough and far enough outside of healthcare that the NPRM for Stage 3 PGHD might not matter to them.

Closing Thoughts: Potential vs. Reality

At this early stage, questions can go on forever. Speculation aside, one thing we can safely say is that Apple is not all of a sudden a healthcare company. With this recent announcement they have simply provided some new tools to a broken industry, tools that appear to be arriving at the right place, at the right time.

Hopes seem to be higher within the healthcare industry and across the blogosphere that this is just a first step for Apple. With its beloved brand, vast resources, design-driven thinking, and technological expertise, many are rooting for Apple to be the one to rewrite the chapter on enterprise mHealth strategy. Realistically however, Apple’s goals here are likely more simple: to sell more phones, tap directly into a booming mHealth market (Remember, Apple keeps 30% of all app revenue), and grease the wheels of their widely rumored iWatch rollout.

Payers Refocus Efforts on ROI for Member Engagement

cvrWhat a difference a year has made to the payer market. In late 2012 Chilmark Research published the first version of our Payer Benchmark report — detailing how leading payers were beginning to adopt emerging consumer technologies. We found a market where significant experimentation was occurring, but little if any broad, member wide deployments and a market still trying to understand social media.

This week we are releasing the next iteration of this report – Benchmark Report 2013: Payer Adoption of Emerging Consumer Tech – Payers Continue their Pursuit of the Digital Consumer. Based on the research I conducted for this report, I find it simply amazing to see how this market has shifted over the course of a single year.

For one thing, the traditional health insurance business model continues to erode, as the Affordable Care Act (ACA) has capped medical loss ratios (MLRs) and has completely stripped payers of their ability to underwrite based on health risk.

Meanwhile, payer-provider realignment is ongoing. Hospitals are partnering directly with employers or launching health plans that might compete with payers in the employer market. Likewise, some payers are acquiring providers to more closely align financial interests with healthcare services delivered.  All this bodes well for rising interest in payer-provider-aligned population health management and patient engagement technologies.

In addition, the ACA/Obamacare has come to be seen as inevitable, and Health Insurance Exchanges (HIX) are forcing payers to seek out new places in the minds of consumers and within the broader healthcare ecosystem —  with an increasing focus on engaging and retaining consumers.

Outside of healthcare, the consumer tech space continues to defy our expectations.  It is easy to see how in the past year that emerging, low-cost activity tracking technologies have spread far beyond early adopters.

These and other macro forces are pushing payers toward the digital consumer in ever more multi-faceted ways.  For example, payers have drastically pulled back from their flurry of experimentation in 2012, and are now focusing their efforts into fewer, more precise areas where they foresee strong potential for ROI.

One change from 2012 is the pull-back in creating mobile app versions of member service portals, as have health & wellness app launches. (This makes sense: in general, very few payer-launched or payer-owned mobile apps have gained any kind of significant traction, with iTriage as a notable outlier, and they already had good traction prior to acquisition by Aetna).

iphone_app_launches

While payers may have pulled back from rapid experimentation along certain lines, this does not mean that they have given up on the digital consumer. To the contrary, we continue to see growing investment in payer-owned consumer platforms, biometric tracking initiatives, the next generation of social media, and more… all detailed in the report.

This report profiles an expanded set of payers as compared to the first edition, across commercial, Blues, and provider-aligned categories. These innovative payers are exploring the wild west of digital consumer engagement and learning as they go. The report describes their experimentation in detail, what initiatives are working and why, and where promising new territory might lie. Any organization that is looking to build-out a strategy that leverages consumer tech for member/patient engagement will find this report invaluable.

We hope our subscribers enjoy the read…as much as we enjoyed the research.

Breaking New Ground

Today is a great day for Chilmark Research and hopefully the world of healthcare IT.

At long last, the much anticipated Market Trends report Clinical Analytics for Population Health (CAPH) has been published. Coming in at slightly more than 100 pages with in-depth profiles on 14 vendors, it is our hope that this report will be instrumental in advancing the discussion of how analytics can be effectively used to drive strategic population health management initiatives.

Our research philosophy at Chilmark Research is relatively simple relying on three dominant criteria:

  • First, target sub-sectors of healthcare IT that have the potential to be truly transformative to the delivery of care.
    Clinical analytics certainly fits that criteria.
  • Second, look for areas where there is a significant amount of turmoil and rapid evolution that thereby make it exceedingly difficult for end users/adopters to make sense of.
    And I thought HIE market was a confusing mess, analytics even more so!
  • Third, is the market potentially large enough (will we be able to sell enough studies to recoup our investment) that it is worth our effort.
    We have been receiving a slew of inquiries from healthcare organizations of all sizes on state of clinical analytics, who is doing good work, who less so. 

If all the above are in alignment, we dig in and dig deep for ultimately we wish to produce a report that will lead to a better, more educated market.

As is the case in this particular report, Cora and I began first mapping out a strategy to address healthcare analytics last summer. Over the ensuing months we continued to refine our thoughts (well it was really Cora refining the thoughts and passing it by me and Rob). Ultimately, we narrowed down the research effort to focus on CAPH as this was the one sector of analytics that best met the criteria above. In the months following, Cora did a tremendous amount of research that has resulted in an excellent report that is on par with our well-respected research on the HIE market and may readily become the defining report on this subject area.

Like the HIE Market Trends Report that we first started publishing several years ago, the CAPH report creates a vendor neutral framework and vocabulary for the industry to adopt and use in their internal discussions and decisions. The report also provides a close look at a number of influential vendors in the market, sizing up their relative strengths and challenges. Lastly, we plan to update this report on an annual basis to insure that the market stays well-informed on the trajectory of the market, the advances taking place and ultimately insure that the market is well-educated on the topic prior to making critical, strategic purchasing decisions.

A big thanks to all organizations and individuals we interviewed over the last year who assisted in developing our thoughts and perspectives on the clinical analytics sector – we couldn’t have done it without your valued inputs.

ACO Here, ACO There, ACO, ACO Everywhere & Vendor Response

In less than two years we have gone from Accountable Care Organization (ACO) as a concept, to ACO as a new model of care delivery. With the January announcement that there were 106 more added to the Medicare ACO program, we now have 254 ACOs nationwide. David Muhlestein of Leavitt Partners has done some of his own research and puts the total number of ACO-like entities at over 400. And let’s not forget that commercial insurers are putting forth their own contracts with providers to set-up similar accountable delivery systems where there is some element of gain and risk sharing with providers.

Now it is one thing to say you have signed on to become an ACO and quite another to actually execute on the contract. Among the numerous challenges that an ACO model presents, is the need for more sophisticated IT systems that will support distributed care management across a diverse care team that extends from the primary care physician, to the specialists, to the care manager, the patient and others. EHRs today will simply not get you there.

Today, there is no such out of the box solution from any one vendor that will enable an ACO model. But there are several vendors positioning themselves to be that one stop shop to enable your ACO strategy.

Following are some vignettes of several vendors looking to enable an ACO strategy and what they have on offer. (Note: This is our proverbial toe-in-the-water as we’ll be doing a comprehensive report on this market later this year)

Aetna: A commercial payer, Aetna is looking for new high-growth revenue opportunities and has targeted healthcare IT. Shortly after acquiring leading HIE vendor Medicity, and soon after leading mHealth App iTriage the company announced its ACO-enablement suite that combines the two above with analytics/managed care solution Active Health.
Strengths: Strong HIE brand, good consumer/patient engagement tools
Weakness: Predictive analytics and care management tools are not as competitive

CareEvolution: A privately owned HIE targeting the private, enterprise market, the company has built its own analytics engine, Galileo. Galileo provides deep dive capabilities into clinical, operational and claims data contained within a given network of providers.
Strengths: State of art HIE solution, good analytics capabilities
Weaknesses: Consumer/patient engagement tools are almost non-existent, low recognition in market

Cerner: Cerner’s HealtheIntent is part of the company’s broader strategy to move beyond being an IT company to becoming a health company. Like most EHR companies, ability to move as fast as market requirements is a challenge.
Strengths: Leading EHR, strong brand, leading visionary among EHR companies, has a good HIE solution, has broad suite of consumer engagement tools
Weaknesses: Analytics is lagging, resources to respond quickly is a challenge, distributed care management tools still work in progress

Epic: Company has one objective, rule all and do so through a highly proprietary and closed model. With Epic Everywhere, their HIE solution for Epic sites, company is able to provide exchange across entities as long as they are using Epic. Recently signed deal with Surescripts to allow exchange with other EHRs. Epic’s MyChart is the leading patient portal in the market.
Strengths: Growing dominance in market, solution suite is tightly integrated from ambulatory to acute care settings, patient portal is widely adopted
Weaknesses: Epic continues to follow a dated model of highly controlled, closed system that while providing high integrity, will ultimately yield a lumbering dinosaur – think Wang circa 1983

RelayHealth: Part of McKesson, RelayHealth has always been a catchall for various acquisitions that McKesson could not find an appropriate home for. A major reorg occurred a couple of weeks ago that will reposition RelayHealth as McKesson’s ACO-enablement suite.
Strengths: Strong consumer/patient engagement tools, a leading HIE solution in the enterprise market and with the reorg, the addition of new assets including the recently acquired analytics solution, MedVentive
Weaknesses: Still does not have a good story to tell around distributed care management, how MedVentive will be folded in remains to be seen.

This is by no means an exhaustive list of those HIT companies looking to offer an ACO-enablement solution suite, but simply meant to provide some perspective on what is currently on offer in the market.

As we prepare to head to HIMSS a week from Saturday, on the top of our list of things we wish to learn more about is exactly how companies such as those listed above and others not listed are meeting the current and future needs of the 400+ ACOs across the country and more importantly, how they intend to become the leaders in this rapidly developing field.

Thanks to KramesStayWell.com for the image

At the Intersection of Obesity and HIT

We Americans are on a very terrifying path, health-wise, based on the latest obesity projections from RWJF.

Medical “innovations” around the obesity epidemic are unsettling, to say the least. Most recently, Dean Kamen (of Segway fame) filed a patent for a self-serve Stomach-Pumping Machine.

Disturbing medical devices aside, what does the obesity crisis mean to healthcare IT (HIT)?  Yes, increasing obesity rates means more metabolic syndrome, more intervention, more biometric data,more data stored in EHRs, more HIE to share that data, more clinical analytics and care coordination software, …

Does this sound interesting to you?  In my research I am more focused on how technological innovation can function as a solution to the obesity crisis. First let’s consider the payers — the large, innovative ones who continue to rally for behavior change.

Payer-Sponsored Wellness & Patient Engagement Soldier On

Payer-sponsored behavior change programs have never sustained results in the long term, but this doesn’t stop the early adopters from soldiering on.   For our 2012 Payer Benchmark Report, we profiled several large, innovative payers working to engage their members and the public through low-cost consumer technologies.

Some interesting new developments in this space include:

  • Aetna is looking to make running on a treadmill bearable. Its new ‘Passage’ app (storing data in CarePass), promises to make exercisers feel as if they are travelling within a city of their choosing.
  • Cigna has just released a ‘Healthy Living App Pack’, bundling the extremely popular FoodEducate app with 3 less-popular ones.  (Cigna didn’t develop FoodEducate, but licensed it from founder Hemi Weingarten).
  • Humana has begun offering the HumanaVitality rewards system to a group of Medicare Advantage members. Let’s hope that seniors will take more kindly to this program than to HumanaVille, Humana’s failed attempt at creating an online senior health education community.

Consumer Health Companies Need to Move Beyond Fanatics

If payer apps can’t motivate widespread weight loss, then maybe the consumer space can? Consumer companies are currently busy developing software and testing out motivational models on the fly.  This is not exactly the scientific method but it works for small agile environments…and is definitely something that large payers are less adept at.

There is a belief among many of the quantified-self set that just the act of presenting health data to the consumer affects behavior change.  I seriously doubt this, and believe that consumer health startups have played a miniscule role in affecting real behavior change.  So far, they have provided diet and exercise fanatics better tools to fuel their obsession.

In order to reach the ‘bottom of the pyramid’, must we then dole out dollars for weight loss? I recently spoke with Gregory Coleman, one of the founders of nExercise, which offers a gamified “rewards program” where users randomly accumulate points, similar to a lottery, which can be applied towards real world discounts.

(nExercise is also the driving force behind the recently formed FITco, or ‘Founders In Technology Combating Obesity’. FITco functions as a place for founders to form data sharing/interoperability partnerships, and aggregate marketing dollars).

Talking with Gregory, I found myself better understanding the challenges these consumer companies are up against as they seek to move beyond their core base.  In offering financial incentives, they must spark interest without destroying intrinsic motivation. Framing financial incentives in term of ‘rewards’ and ‘discounts’ helps, but the real goal is to wean users off of them.

Cash, Friends, and Coaching: A Pipe Dream?

Several academic studies have shown that a combination of financial incentives, social support, and coaching from a trusted ally, produced significant behavior change, at least in the short term.

I can imagine a day when I seamlessly upload exercise and diet related data into a CarePass-type platform, where:

  • my insurance carrier’s app notices that I have been working out, maintaining my BMI, and applies discounts to my premium.
  • my doctor’s app (motivated by value-based reimbursement), suggests that I keep my maximum heart rate below 160 BPM
  • I display achievement badges to my friends, and make my data available to health companies in order to receive discounts/free samples

Hmmm, what is that distant feeling of unease, the feeling like I am a pawn in someone else’s Grand Plan?  It might have something to do with the complete loss of privacy around my data.  However, if those premium discounts are steep enough, I can live with that.

Whether we get people sharing their health data or tempt them with financial incentives for weight loss, the systematic nature of the obesity problem remains a force to contend with. In the end it will be up to all of us to push back against the institutions that make us fat. Seeking out motivational consumer solutions is a low cost place to start.