2019 Predictions: M&A, Big Tech, and the Fate of ACOs

The Meaningful Use gravy train finally came to an end in 2018. As the strongest EHR vendors struggle to define new revenue streams, weaker ones faded from view through acquisitions or leveraged buy-out. Meanwhile, funding for ‘digital health’ start-ups continued to increase, though it likely hit the high water mark in 2018. And lest we forget, Amazon, Apple and Google continue their forays into the healthcare sector as the market is simply too big to ignore.

So what’s in store for 2019?

We brought together our analysts’ brain trust and came up with the following baker’s dozen of 2019 predictions. Over the near decade of making these annual predictions, our batting average has consistently been well above .500, so don’t ever say we didn’t give you an advanced warning on the following:  

 

Revenue cycle management M&A picks up; Optum acquires Conifer

Revenue cycle management M&A activity will continue to pick up with the most notable acquisition by Optum as it doubles down on its Optum 360 managed revenue cycle business and acquires Conifer Health Solutions from Tenet.

Alternative primary care clinics remain a side-show

Despite the hype and media attention around alternative primary care clinics (e.g. Oak Street Health, Chen Med, One Medical), the actual number of physical locations serving patients will remain paltry at less than ten percent of the number of retail health clinic locations. 

Humana finds a life partner with Walmart 

Walgreens will likely make the first move to acquire Humana in 2019, but Walmart will outbid Walgreens to win Humana over.

Regulatory approvals for artificial intelligence-based (AI) algorithms accelerate, tripling the number approved in 2019

The number of FDA approvals for algorithms in 2018 was impressive and shows no signs of abating. Additionally, 2020 will see a further tripling of regulatory approvals for AI.

Choose wisely: 2019 sees the first major shake-out of DTC telehealth vendors

Consumers’ use of telehealth will continue to see rapid growth and rising competition leading to significant consolidation among the plethora of vendors. By year-end, a major non-healthcare-specific consumer brand will join the mix, and the market will be down to five direct-to-consumer (DTC) nationwide brands.

Data science services see extraordinary growth, nearly doubling in 2019

By the end of 2019, every major healthcare analytics vendor will provide a cloud-hosted offering with optional data science and report development services.

In 2019, healthcare organizations (HCOs) adopt a cloud-first strategy

Cloud offerings have become far more robust, concurrent with HCOs’ struggles to recruit IT talent and control costs. Amazon’s AWS and Microsoft’s Azure will be clear winners while Google’s own cloud infrastructure services will remain a distant third in 2019.

New rules from ONC about data blocking have little effect because the business case does not change

Laws and regulations to-date have not compelled providers to freely share data with patients. ONC’s information blocking rule, which will be released before the end of 2018, will make it easier to transfer data to other organizations but will do little to open the data floodgates for patients, clinicians, and developers.

Big tech companies’ intentions in healthcare do little to disrupt the delivery of care

  1. Despite high-profile hires, the Amazon/Berkshire/JPM initiative will make no substantive progress.
  2. Amazon will focus only on the DTC supply chain, payer, and employer—staying away from anything substantive in the provider space.
  3. Apple’s Healthkit and sensor-laden smartwatch will remain sideshows in 2019 awaiting a more actively engaged healthcare consumer.
  4. Google [Deepmind] will never break out of clinical research and drug discovery.

Majority of MSSP ACOs stay and take on risk; hospital-led ACOs lead exits

Despite loud protests, the vast majority of provider-led MSSP ACOs will take on downside-risk as CMS shows flexibility in waivers. However, hospital-led ACOs, who continue to struggle with standing up a profitable MSSP ACO, will exit the program in 2019.

Closure of post-acute facilities shows no signs of slowing

Continued changes in post-acute care reimbursement, especially from CMS, combined with the migration to home-based services, puts further economic strain on these facilities. Nearly twenty percent of post-acute care facilities will shutter or merge in 2019.

2019 Health IT IPO market fails to materialize

The warning signs are there over the last couple of months that the stock market has become skittish. This will extend well into 2019 (if not lead to a mild recession). It will hardly be an ideal time to do an IPO, and those planned by Change Healthcare, Health Catalyst and others will wait another year.

Elon Musk reinvents healthcare

Elon Musk will have a nervous breakdown leading him to reinvent the healthcare system from his bed during his two-week recovery at Cedars-Sinai.

Stay up to the minute.

Did You Know?

A Digital Dose of Magic Medicine

snake oilCardiovascular disease is the leading cause of death in America. One out of four adults has two or more chronic diseases. One in three children is overweight or obese. Projections are that by 2050, one third of Americans will have diabetes. These are America’s proverbial ball and chain: lifestyle-driven afflictions that are driving our healthcare spending through the roof, but which can be treated early, mitigated, and in some cases prevented altogether.

Well, what if there was a platform that could help millions to become healthier by encouraging them to take charge of their own health? It could empower people to start living healthier lives through self-driven, day-to-day improvements. Imagine this platform had the following advantages:

  • A high profile, endorsed by celebrities and beloved by households
  • A captive audience that is eager to engage
  • A delivery medium that most of us have in our own homes
  • An information-driven approach to get people to change their lifestyles

The Internet has been abuzz about Apple Healthkit, and Samsung SAMI, and Google Fit.  But more on those in a minute – I was talking about Doctor Oz.

With a TV audience estimated to be nearly 4 million and growing, and a realm of influence that stretches across the web, print media, and television, The Dr. Oz show has made the eponymous physician into a one-man empire with outsize influence over the hearts and minds of middle America. But not all has been healthy in the land of Oz.

As many in our professional circles cheered and jeered, Senator Claire McCaskill called out Dr. Oz as somewhat of a charlatan in front of the country during a testimony on Capitol Hill a few weeks back. Sen. McCaskill is chairwoman of the Subcommittee on Consumer Protection, Product Safety and Insurance, and has taken offense to Dr. Oz’s repeated soft-selling of “magic” pills for weight loss. Across the Internet, opinions abound about the ethical and professional boundaries Oz has breached by pushing products that, as a trained physician, he must know don’t have any scientifically proven benefits.

To be fair, the show and the content are not otherwise awful.The website is fueled by content from Sharecare, the website/startup run by WebMD founder Jeff Arnold and branded by Oz since 2009. Sharecare is a legitimate health IT play – they even hosted a #bluebutton Twitter chat recently, though like Oz, they can overdo the marketing hype at times. And of course, Mehmet Oz himself is a respected cardiologist with appointments at Columbia University and New York Presbyterian Hospital.

The issue isn’t that Oz is a dud – in fact, it’s that he’s far from it, but he still behaves like one when he’s in front of the cameras, either selling the next miracle cure or getting grilled by a former prosecutor now Congresswoman. As health IT’s own celebrity Doc, Eric Topol puts it in a 2013 New Yorker profile:

“He is keenly intelligent and charismatic. Mehmet was always unique, but now he has morphed into a mega-brand…The problem is that he is eloquent and talented, and some of what he says clearly provides a service we need. But how are consumers to know what is real and what is magic? Because Mehmet offers both as if they were one. It all seems to be in the service of putting on a show. And, when you add it up, that seems like something other than medicine. It’s more like medutainment.”

Some have framed the issue in terms of opportunity cost. With such a valuable platform at his disposal, what might be the public health impact be if Dr. Oz was a stronger advocate for judicious diet, steady exercise, and a more balanced lifestyle rather than miracle pills?

The sad truth is, people probably wouldn’t watch his show. In fact, he probably wouldn’t even have a show in the first place. Oz’s style-over-substance delivery is shaped by his studio audience, not the other way around. He has become so popular because the people watching his show crave shortcuts and quick fixes the same way they crave fast food. To give credit where it’s due, Oz understands the American people better than most of us in healthcare. Now if only he would lead some meaningful patient engagement on our behalf.

As much as we complain about silos in health IT, ignoring what’s going on on daytime TV reinforces our separation from the broader challenges we face in healthcare. We keep ourselves busy dissecting new smartphone platforms like Healthkit and hyping up their allure within our white-collar circles, even as we lose sight of the real competitors. Taco Bell too has been innovating for the masses. Think of five people you know – are they more likely to make sure their labs and meds are up to date for their next doctor’s appointment, or buy a 99-cent Quesarito? Automating data entry on these new platforms might possibly get us past the wall that the PHR industry collided with a few short years ago. But no amount of app automation will let us swipe past our own human nature.

In our innovation-addled culture, it’s understandable when people get excited about unproven promises sold to us by corporate wizards, whether in the form of a “magical” diet pill or a “transformative” ride sharing service or a “revolutionary” smartphone app. Dr. Oz’s recent episode serves as a reminder that in healthcare, there are a different set of standards when it comes to the believing the unproven. As healthcare professionals, we too can be tempted to take a seat in the studio audience and add to the chorus of oohs and aahs about new technology.

Let’s just remember that our industry may be part art and part science, but there’s no magic involved.

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