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?

WWBR Week of October 6, 2014

Dallas hospital blames ‘flaw’ in ‘workflow’ for release of Ebola patient as a more complete picture of his travels emerges
Lindsey Bever for The Washington Post
“The Ebola patient in the Dallas hospital seems to have been missed because workflow integration doesn’t mean much when workflows are separately integrated. An intake nurse documented the patient’s travel to Africa in the patient’s chart. That data appeared nowhere in the physician’s workflow. The hospital has hurriedly changed physician workflow to include travel history. Pity the poor IT departments that have to foresee all possible contingencies and build these into clinician workflows. Pity the poor clinicians who have to wade through documentation that has no current relevance. Is it realistic to expect every hospital, clinic, and office in the U.S. to have been ready to raise the alarm for the first patient to present with Ebola symptoms?” – Brian

Mass. Becomes First State To Require Price Tags For Health Care
Martha Bebinger for WBUR’s CommonHealth
“In another revolutionary move, MA became the first state to require that health plans divulge the prices of their information on public websites. As this piece points out, there are still wrinkles to iron out, including consistency of prices, common definitions of what’s included, and more. Yet this is a bold step we hope to see mirrored across the nation. Interestingly, health plans contracted with Castlight, Vitals, and others in order to get these lists up and running.” – Naveen

Walmart and the End of Employer-Based Health Care
David A. Graham for The Atlantic
“Wal-Mart announced that they are going to stop offering insurance coverage to ~30,000 part-time workers (workers who work 30 hours or less a week) and follow suit with other large employers including Target, Trader Joe’s, and Home Depot. Whether or not these part-time workers will be better off will largely depend on what state they live but it certainly marks a milestone in the inevitable decline in employer-sponsored health care in the U.S.” – Matt

A Need for Stage 3?
Greg Gillespie for Health Data Management
“As fallout from Stage 2 continues, HDM offers up a handful of questions to some leading CIOs around provider motivation, vendor readiness and the future of the program.” – Naveen

Few ACOs Pursue Innovative Models That Integrate Care For Mental Illness And Substance Abuse With Primary Care
Valerie A. Lewis, et al., in Health Affairs
“Survey results from a national survey of ACOs and followup detailed interviews with a select number of ACOs that looked at the issue of behavioral health and ACOs. While most ACOs are responsible for assuming behavioral health costs, there still remains a lot of work to improve the traditional siloed and fragmented approach of primary care and behavioral health. Some ACOs are practicing innovative care models to better integrate the two but only a small handful had fully integrated behavioral health programs in primary care services delivered by the ACO.” – Matt

Improving Medicare Post-Acute Care Transformation Act of 2014 (PDF link)
US Senate
“Everyone know that Congress does nothing, right? Amazingly, two weeks ago the Senate passed something called “Improving Medicare Post-Acute Care Transformation Act of 2014”. This bill aims to standardize reporting for the major categories of post-acute care providers – home health, inpatient rehab, skilled nursing, and long-term care. It would standardize reporting for patient assessments, quality, and utilization across these disparate care disciplines. It is probably about time that more data be used to help determine the comparative effectiveness of these care venues and for which patients. The bill now goes to the President for his signature.” – Brian

Can Patrick Soon-Shiong, The World’s Richest Doctor, Fix Health Care?
Matthew Herper for Forbes
“An interesting deep-dive on LA billionaire-doctor Patrick Soon-Shiong. The author doesn’t include a whole lot of detail on Soon-Shiongs’s efforts at NantHealth, but it’s not for a lack of trying – as described by John Halamka in the article: ‘The marketing is three years ahead of the engineering.'” – Naveen

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