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?

Health IT for Behavioral and Mental Healthcare

Coaching Technology

While the landmark health reform laws enacted in 2009 (HITECH Act) and 2010 (Affordable Care Act, or ACA) have begun transforming certain aspects of the US healthcare system, they have not had a meaningful impact on behavioral and mental health care delivery. Patients in need of these services already face an uphill battle in terms of social stigma and making a decision to seek out care, yet our system compounds such challenges through poor benefit design, uneven IT adoption, and lack of care coordination. An emerging fleet of technology solutions focused on behavioral health care has the potential to improve care, though they are not without their own set of challenges.

> Providers lack adequate incentives to adopt patient-facing digital mental health care tools. This is due both to omission of non-psychiatric mental health specialists in the Meaningful Use program as well as the slow adoption of value-based contracts.
> Vendors of new technology have not placed a premium on making their platforms interoperable with legacy software. New startups have focused most of their efforts on developing self-contained tools geared towards the employer market rather than emphasizing document exchange, shared care plans, or tools for the population health manager to manage mental health needs.
> Given the fragmented nature of the delivery system for mental health care, the market for mental health care IT is quite immature. While there are ample opportunities for one-off improvements (primary care, substance abuse facilities, Veterans Affairs, higher education, employee programs, etc) – only those health systems who can underwrite their own reforms will be the ones taking action.

To read the full article, please submit your information below:

Consumer-Driven Models of Care: Healthcare’s New Front Door

The Revolution

One of the trending topics in healthcare right now is that of the “consumer revolution.” With so many changes happening – the way care is being delivered, who is paying for it, how technology is influencing decision making from doctors to insurers to individuals – the time is ripe for a rethinking of the traditional model of “the doctor will see you now.”

Over the course of 2014, it’s become clear that this trend is here to stay. What’s not yet clear is how exactly these new models will impact the industry. This month’s domain monitor, offers a high level look at some of the specific models and enabling technologies that are slated for a big year of growth in 2015. We will also outline some of the major implications for industry incumbents and break down how various segments of the healthcare market are (or are not) preparing for this sea change.

To read the full article, please submit your information below:

Video Visits: A Market Stuck in Replay is Ready to Fast Forward

Consumer Engagement 

Traditionally, consumer engagement has been more of a marketing and business function, while patient engagement has remained a clinical prerogative. These lines will begin to blur over the course of the next few years, driven largely by the addition of tens of millions of enrollees via HIX, crowded and relentlessly competitive markets jockeying for brand loyalty, and continued consumerization being adopted by health plans, employers, and other industries. Patient-satisfaction scores are already closely linked to hospital CEO salaries, and both public and private payers will maintain or increase the importance of such metrics over the course of this decade. While IT will play a mounting role in extending HCOs’ presence virtually to improve communication and access to care, rolling out adequate customer support for new technology platforms will be a key component as well.

Further down the road, telemedicine programs will grow into more complete, branded offerings, and consumer loyalty will gain new meaning as we enter an era of home-based eldercare where families and caregivers play an elevated role in monitoring and support.

To read the full article, please submit your information below:

Price War Coming to DTC Genetic Testing Market

In today’s NYTimes business section there is a brief article reporting that direct to consumer (DTC) genetic testing start-up 23andMe is slashing the price of conducting a test by a whopping 60% (from $999 to $399).

The cost to do such tests is continuing to drop as the technoloy matures, but a 60% drop, that’s drastic and signals a couple of things:

  1. 23andMe is not getting the kind of traction they hoped for and are now going for a volume pricing model – lower margins, but greater sales numbers to compensate.
  2. This young market is beginning to get crowded and pricing is one key path to differentiation.

Now the question is: How will 23andMe’s competitors respond?  Is this the first salvo in a pricing war to capture market share?

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