Healthcare has its fair share of fortune tellers. Rarely are they consistent. However, the predictions of two healthcare investors in California have been so accurate that Fortune magazine now publishes an article each year featuring the duo’s Top Healthcare Predictions.
These predictions will be of interest to clinical laboratory managers and pathologists because several describe the changes coming to the hospitals, physicians, and health insurers who use and pay for medical laboratory tests.
The two individuals with the crystal ball are Bob Kocher, MD, and Bryan Roberts, PhD. Both are healthcare investors and partners at Venrock, a silicon-valley venture capital firm located in Palo Alto, Calif. They’ve been making fairly accurate predictions for the past few years.
Here are their predictions for healthcare in 2019:
- More payer consolidation: The authors foresee that the largest health insurance companies with low administrative costs and high profit margins will become more competitive in obtaining clients. This type of competition could force smaller payers to struggle to gain and retain national accounts and have difficulty competing in the Medicare Advantage and Medicaid markets. They also anticipate “the growth of Medicaid, with several states electing to expand, and Medicare Advantage will also trigger [mergers and acquisitions] in order to enter these growing and more profitable market segments.”
If small health plans are acquired and merged, clinical laboratories and anatomic pathology groups could lose access to patients because the biggest payers have narrow networks and favor the national labs.
- Physician-led Accountable Care Organizations (ACOs) will grow rapidly: Their prediction is that primary care doctors will realize they can make more money and have more successful practices if they detach from hospitals and create independent businesses. With Medicare’s latest ACO regulations favoring doctor-led accountable care organizations over hospital-led ACOs, physicians may find it easier to expand independent practices.
If this prediction comes to fruition, small local medical laboratories may be able to reap the benefits of an increase in the number of physician-led ACOs by delivering enriched data and analytical services to those practices.
- Doctors get less dissatisfied: Kocher and Roberts feel that health systems have listened to the complaints from doctors about their bad experiences using electronic health records (EHRs) and will take the necessary steps to ensure physicians are more satisfied with their EHR experiences. New innovations like machine learning and improvement in voice interfaces should help ease the burden of physicians when using EHRs. Improved voice technology can reduce the time doctors spend typing, clicking, and searching in their databases. The authors noted that “it may be easier to use voice for healthcare than for consumer applications since the vocabulary is smaller and context is far more predictable.”
- Interoperability becomes interoperable: EHRs will start to better communicate with each other across different health systems. The Centers for Medicare and Medicaid Services (CMS) Patients Over Paperwork initiative is intended to help states that are “pushing for connectivity as one tactic to address the opioid epidemic and to improve resiliency from natural disasters, necessitating the need to access data.”
This prediction could be favorable for clinical laboratories and pathology groups that must create and support interfaces between their laboratory information management system (LIMS) and outside EHRs.
- Consolidation in digital health: The authors predict that “growth equity will get tighter in 2019 for small companies that have not achieved product market fit” which “will lead to a flurry of consolidation into platforms.” They also forecast that large healthcare employers may transition from being the early adopters of digital platforms to relying on the advice of partners who have already been using those platforms in their businesses.
- InsureTech takes a lump or two: InsureTech—a portmanteau from the words insurance and technology—as a business sector, may have some setbacks with payers examining and auditing charts more closely for errors and issuing fines accordingly. The practice of upcoding—where a biller assigns a medical code for a more expensive service or procedure than the one that was actually performed—is emerging as an area of risk for providers using the capabilities of InsureTech products and services. CMS actually has a “coding intensity adjustment” in place when reimbursing for Medicare Advantage claims because upcoding has become so prevalent.
- Dialysis disrupted: Dialysis centers will become less plentiful as more patients opt to have their blood cleansed at home. Studies have shown that self-serve dialysis in the home can be safer, more reliable, and less expensive than traditional dialysis centers. Advantages of home dialysis include fewer trips to dialysis centers, more flexible scheduling for treatments, increased privacy, less dietary restrictions, and less problems with the fistula or graft area.
According to the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), there are more than 661,000 people living with kidney failure or end stage renal disease (ESRD) in the US. Approximately 468,000 of those individuals rely on dialysis to rid toxins and excess fluid from their blood and only about eight percent of those individuals were using home dialysis machines in 2016, Yahoo News noted.
- Telemedicine takes off: The authors expect telemedicine usage will more than double in 2019 as more payers, healthcare providers, and patients recognize its benefits. More health plans, including Medicare, are adding billing codes to reimburse patients for telemedicine visits with their healthcare providers. Becker’s Hospital Review in 2016 predicted that seven million people would be using telemedicine services by 2018.
- PBM disruption talk becomes reality: The authors “expect next generation pharmacy supply ecosystem efforts to gain real traction in 2019.” Third-party administrators of prescription drug programs for health insurance plans, known as Pharmacy Benefit Managers (PBMs) will be scrutinized by the government in an effort to determine why drug costs are so high and to find ways those costs can be lowered. As pharmaceutical companies continue to aggressively raise prices for their products, patients are paying more for their medications and intermediaries are reaping the financial rewards. Drugs are currently being marked up an average of 40% by the distribution system, according to Fortune.
- Real progress with new DNA sequencing platforms: Kocher and Roberts see the emergence of new Deoxyribonucleic acid (DNA) sequencing applications and platforms being developed and released into the market. These new technologies could lead to less expensive costs for sequencing services and more competition among genomics companies. This will be a favorable development for clinical laboratories and pathology groups because it will make gene sequencing cheaper, faster, and more accurate.
Fortune is a business magazine, headquartered in New York City, that publishes feature articles on multinational business topics as well as popular ranked lists, including the Fortune 500 list which annually ranks companies by revenue.
Given the track record of the two experts making these predictions, it would be appropriate for the business leaders of clinical labs and pathology groups to consider how each prediction may change how the providers and payers they serve use lab testing services and pay for same.