Five factors that are changing healthcare in 2017

One thing is certain this year—it will be one of unprecedented change for the healthcare industry.

With President Trump's inauguration last month, and his pledge to repeal and replace the Affordable Care Act, everyone is curious what the year will hold. I've reviewed all of the predictions and prognostication for what 2017's top trends will be, and identified what I consider the five factors that will drive the most change in healthcare—in 2017 and beyond.

Trump will increase competition in healthcare
While details of the repeal and replacement of the ACA are still being worked out, you can bank on an accelerated movement to free-market principles from Donald Trump's administration. Trump's business mindset may mean there will be more pronounced winners and losers in the future, as he removes programs and policies that subsidize poorly performing programs.

For consumers, there's hope for more transparency and more choice—and potentially the ability to purchase healthcare across state lines. The president has already promised the removal of state barriers for insurance companies. This means there's a strong possibility of block grants or per capita allotments to states, which would provide more at the state level. That could drive innovation and provide more benefits to more people.

While some programs, like Medicare Advantage, are likely here to stay (it's growing faster than the overall Medicare population), there any many unknowns with healthcare policy under the Trump administration. If Trump moves aggressively to deregulate insurance, uncertainty may rile payers. Making calculated, positive change in a highly complex healthcare industry is a challenge Trump will have to tackle.

Care will become more connected
While telehealth has long been touted as the wave of the future, this year we will see the entire spectrum of connected care leap forward. Telehealth is already fueling new business models to meet consumer demand for easy, affordable, access to services like dermatology1 which can otherwise be expensive and time-consuming. It's also increasing overall healthcare access for populations like diabetics, veterans, and behavioral health patients who simply need additional touchpoints and attention.

This year alone, it's estimated the worldwide number of telehealth users will spike to 1.8 million patients. The lower costs associated with telemedicine will also appeal to patients who become more cost-conscious this year due to likely changes to the Affordable Care Act. On the provider side, connected and remote care can be a powerful tool to meet the Triple Aim via reduced costs and higher patient satisfaction. According to one survey, 78.5% of respondents would be at least somewhat comfortable interacting with a physician via online video or online chat.2 Employers are increasingly adopting telemedicine to cut down on last-minute patient cancellations and no-shows. Advances in machine learning, connected devices, and remote monitoring are converging to provide more proactive care before an emergency.

The independent physician movement will accelerate
Independent practice ownership is declining – since 2015, hospital employed physicians have increased by 50%, and more than 1 in 4 practices are now hospital-owned.3 Despite this, hospitals are still seeing mounting losses, and a recent survey shows that employed physicians see 19% fewer patients than independent practice owners.4 I hypothesize that the trend of physician employment will snap back and start to reverse this year, as physicians increasingly seek their independence. We are already seeing physicians push back on production-based models and request higher base salary guarantees, placing the financial risk on the hospitals.5

Networks will narrow into premier provider networks
In line with market forces, networks are narrowing into more "premier provider networks." Though these offerings will have limited choices, we expect to see the quality of providers in these networks increase, as physicians become more selective with network players in an effort to drive down costs. These premier network offerings have risen from 55 to 64% over the last year.6 Additionally, premier networks will allow for care delivery that spans a patient's entire treatment cycle, allowing for more efficient population health management.

HMOs continue to increase in proportion to PPOs, which will continue to be harder to find. Fifteen percent of exchange-eligible consumers are expected to have no PPOs to choose from in the next enrollment period, meaning less choice in doctors but also less up-front costs for patients. As we see this trend grow, we expect the premier provider arrangement to hold physicians accountable from the inside, as practices will only want to work with other practices who can demonstrate positive clinical and cost outcomes.

ACOs will evolve
With the imminent dismantling of the ACA, ACOs will begin to transition to other models. ACOs have for some time lagged in tracking quality and efficiency, and despite some positive signals, I have concerns about the long-term viability of the ACO model. In 2014, 27 percent of MSSP and Pioneer ACOs earned a shared savings bonus, and in 2015 that number increased moderately to 31 percent.7 Evidence shows commercial ACOs that are larger and more integrated with hospitals had lower costs and higher quality scores compared to noncommercial ACOs. This could be partly because only 15% of non-commercial ACOs have implemented uniform EHR systems, as opposed to double (31%) of commercial ACOs. This demonstrates a lack of progress on IT capabilities across the board, and has caused concerns that ACOs are holding back overall delivery system transformation. Even though commercial ACOs performed better than government ACOs—and despite the influx of more providers into ACOs in 2017—we believe ACOs will eventually transition into clinically integrated networks and community-based networks.

From increased pricing transparency for patients, to more independence for physicians, there's a lot that has the potential to change. The line between winners and losers in healthcare is going to become more pronounced than ever before in the years ahead. Healthcare leaders and stakeholders who want to emerge on the right side of the equation should keep these five factors in focus as they lay their plans for future success. While there's a great deal of uncertainty in the air, I remain optimistic that progress will be made to support the Triple Aim by the time 2018 rolls around.

1 https://techcrunch.com/2016/08/24/customized-online-prescription-acne-treatment-provider-curology-raises-15m/
2 http://www.prweb.com/releases/2016/11/prweb13818679.htm
3 http://www.physiciansadvocacyinstitute.org/Portals/0/PAI-Physician-Employment-Study.pdf
4 http://www.businesswire.com/news/home/20160921005410/en/Survey-17000-Physicians-Finds-Shifting-Practice-Patterns
5 http://www.beckershospitalreview.com/compensation-issues/7-physician-compensation-trends-to-consider-when-establishing-fmv.html
6 http://healthcare.mckinsey.com/sites/default/files/2017-OEP-Plan-Type-Trends-Infographic_VF.pdf
7 http://healthaffairs.org/blog/2016/09/09/medicare-accountable-care-organization-results-for-2015-the-journey-to-better-quality-and-lower-costs-continues/

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