Rick Shumway, president and CEO of Stanford Health Care - ValleyCare in Pleasanton, Calif., joined the Becker's Healthcare podcast to talk about disruptors in healthcare, and how successful Silicon Valley can be in care delivery.
Healthcare is a trillion-dollar industry that makes up a fifth of the U.S. economy. It's too big of an opportunity for innovators to ignore, Mr. Shumway said. In Silicon Valley, new disruptors are emerging on a daily basis to claim a piece of the healthcare sector market share.
"The history of healthcare innovation is really littered with the remains of a lot of well-intentioned attempts. You look at the Haven initiative, or the original managed care models in the 1990s, or Theranos, and I think we can become a little jaded to all of this," said Mr. Shumway. "We could say our current innovators are destined for the same outcome. But in my opinion, I really think that's a little bit dangerous to think that way because the industry is in a pretty seismic shift that we haven't seen in a generation."
Cost pressures are driving that shift in healthcare, Dr. Shumway said, which places a tremendous amount of pressure on organizations to change.
"Unfortunately, there's not a big light at the end of the tunnel," he said. "The cost rate increases that we're seeing in the delivery sector far outpace the revenue increases for what we're doing. The reality is business as usual in our current state is not tenable. We've had to change things because of the way cost pressures are evolving, and we'll have to continue to change the way business is done even if it's just for survival."
Dr. Shumway predicted healthcare providers and insurance companies will have to become more comfortable with each other as the economy continues to recover from the COVID-19 pandemic, inflation and more.
"We're experiencing common threats in various markets, and that's going to force better collaboration," he said. "We are going to have to, as a delivery system, expand our friend circles to insurance providers, who are becoming care providers. That puts the current models as they exist today at risk, and so you start to ask yourself, what are delivery systems going to be needed for?"
Hospitals and health systems will still be vital for tertiary and quaternary care, and regional centers of excellence will be important partners to innovators looking for value-based care providers. There is also opportunity in virtual care and home health, but many health systems haven't heavily invested there because insurers don't reimburse well.
Disrupters like Amazon and CVS Health are getting into that space. Amazon plans to acquire One Medical, a digital and in-person primary care provider, for $3.9 billion and CVS Health is reportedly interested in bidding on Signify Health, a $4.7 billion home health and tech company.
"Every healthcare leader in the country says this is an important part of the future transformation strategy, but despite that, people are still reticent to over-invest in it because it's not being paid for," said Dr. Shumway. "It's a disparate pay structure. But you look at this deal between Amazon and One Medical, that's going to push the payment models and payment providers in a different direction. Payers are going to have to rethink their current strategies. Delivery systems are going to have to change the way they do business and force these partnerships with potentially previous opponents to remain competitive."