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As health care insurance companies have shifted from dealing with brokers and employers to a direct-to-consumer model, many within the industry are looking towards digital distributive technology to help orchestrate this transition.
"2017 will be the year we see the mass market adopt a more consumeristic approach to health care," says Michael Rea, CEO of Rx Savings Solutions in Overland Park, Kansas. "We leverage technology in every area of our lives to make buying decisions."
According to the Office of the National Coordinator for Health Information Technology, nearly 87 percent of office-based physicians had adopted some form of electronic health record as of 2015, and 64 percent of physicians were using it to exchange secure messages with patients.
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New disruptive technologies for the business-to-consumer space. Protecting health care information is going to become more vital as traditional players find new technologies to minimize costs while shifting their focus from businesses to consumers.
One example of this digital disruption is on-demand health care, which is making physicians more accessible to patients, says Kaveh Safavi, Accenture's senior managing director for health industry in Chicago. According to Accenture research, funding for on-demand health care services will quadruple from more than $200 million in 2014 to nearly $1 billion by the end of 2017.
"Investment in on-demand health care and collaboration between industries will ultimately precipitate a shift away from a goods-and-services model to a life-care model that gives patients personalized services that address a multitude of daily needs," Safavi says.
As a result, Safavi says large payers are now reimbursing virtual doctor's appointments, with government backing as the number of states with telehealth parity laws is on the rise. At the same time, on-demand virtual visits are less expensive for consumers, up to 40 percent less expensive for primary care, 28 percent less expensive for urgent care, and 3 to 7 percent less expensive for emergency-room visits, Safavi says.
This is helped by the large number -- roughly 190 million in the U.S. that own smartphones -- as payers want to create "best-in-class" benefit packages with new products and services that will attract and retain members, Safavi says, as approximately 57 percent of seniors have become interested in digital health options.
"Accenture research suggests that 86 percent of health care executives agree that organizations are increasingly pressed to reinvent themselves and evolve their businesses because of outside disruption," says Safavi.
Safavi says many of these organizations are turning to corporate venture capital to invest in external startup companies that can develop new products and services that they need, but can't develop on their own. "The number of CVC investments by traditional health care organizations has more than doubled in the past four years," Safavi says. "And Accenture predicts that health care-focused CVC investments will reach $7.5 billion annually by 2020."
A growing importance on health care data, analytics and algorithms. Like all industries, there is a strong focus on the collection of data via the Internet of Things, the nebulous network that connects anything digital.
"The importance of collecting remote data from digital health devices and providing connected care will change the way health care is delivered and how patients are managed," says Michael "Mick" Farrell, CEO of ResMed in San Diego. "If we can truly understand all of the points in which patients interact with their therapies and the steps along the way in which physicians, payers and providers need to intervene, data analytics can improve the quality of care and increase efficiency so that patients receive the optimal treatment at the precise moment of need."
This is "well beyond the overused term of big data," Farrell says. "It is really about algorithms that can discern actionable information that can improve patient outcomes," he says.
Cybersecurity will continue to be a growing issue. The Brookings Institute estimates 25 percent of data breaches happens in health care. "We have seen an alarming rise in cyberattacks across the industry in 2016," Safavi says. "This will continue into 2017 and beyond as attacks become both more sophisticated and commonplace."
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The impact of data breaches will be massive problem for health care organizations and patients that will require proactive efforts such as embracing the cloud to boost IT agility and to reach customers faster, Safavi says.
"Accenture predicts over the next five years cybersecurity breaches will stand to put $305 billion of cumulative lifetime patient revenue at risk for health care providers," Safavi says. "These breaches will likely impact 25 million people (1 in 13 patients) with 25 percent of those patients subsequently becoming victims of medical identity theft and suffering personal financial loss."
Look for health care companies to incorporate technologies to improve data integrity in areas for secure electronic health care records, he says.
More telehealth and value-based care. As the wearable technology trends continue to grow and Internet connections get faster, many hospital facilities and doctors are using mobile and web-based devices to connect with patients virtually.
Nick Vennaro, executive vice president and co-founder of Capto Consulting, a management consulting firm in Denver, says many hospital and medical providers are building facilities in remote areas where patients have to go for the satellite system or they are wearing a portable device where data gets sent and they can video chat in their home with a physician. In more urban areas, he says this can even be used for a physician to see what type of triage setup needs to be created as a patient is being transported via ambulance to a hospital.
At the same time, the health care system is becoming more focused around the quality of the outcomes, not just the actual procedures that are being done, Vennaro says. That means financial incentives are being given around performance of the health care providers based on patient outcomes as the industry gravitates away from a business-to-business model towards a business-to-consumer model.
"In the fee-for-service model your doctors had an incentive to bill more," Vennaro says. "Incentives are now being paid for the quality of the outcomes in the value-based system. "You are no longer paying for each individual service, but you are paying for the overall result."
Investing considerations. Some health tech experts suggest looking at health care technology stocks, including software company Simulations Plus (ticker: SLP), which conducts toxicity modeling and simulations for companies developing new drugs; Veeva Systems ( VEEV), a cloud computing company that works with pharmaceuticals; data analytics company Medidata Solutions ( MDSO); HMS Holding Corp. ( HMSY), which specializes in cost containment, payment accuracy programs and fraud prevention; and Cerner Corp. ( CERN), a health record systems provider.
"Investors and innovators in our industries -- therapies, biopharma and medtech -- need to fully embrace digital health in order to support the future of connected health care," Farrell says. Investors should consider companies that truly "complete the circuit of providing care and data" for the best possible outcomes, Farrell says. "Investors should select companies that bring software engineers and informatics scientists to the table alongside the medical and technological teams," he says.
Rea says investors need to make sure any companies they invest in can demonstrate return on investment and establish themselves as long-term players in the health care arena.
[See: 7 Best Tech Stocks to Buy for 2017.]
"Investors should avoid ideas or companies without proof of concept," Rea says. "The complexity of the health care environment is unlike any under industry. ... Putting money to work should be done via technologies and companies who understand this and have been successful working in it."
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