2019 Predictions: a rocky road for hospitals, new players, artificial intelligence and more
The landscape for health care has significantly changed with the mid-term elections that resulted in a shift of control of the U.S. House of Representatives from Republicans to Democrats. What can we expect in 2019?
Health Care Reform and the Affordable Care Act
Given the Democrats’ control of the House, the only changes the Trump administration can make to the ACA, other than those that would have support from the Democrats, are those that the administration can make under their rule-making authority. I don’t expect to see any significant changes to the ACA in the next two years, unless the ruling in Texas v. United States is upheld on appeal. I wrote about the case and the ruling for a post Dec. 17.
Medicare for All
“Medicare for All,” the idea of a publicly funded, single-payer health insurance program for all Americans, has been championed by progressive Democrats. Public support for such a program has been growing and has reached majorities in both parties, though support significantly drops off, especially among Republicans, when the discussion turns to payment for this through new and increased taxes.
Political support for Medicare for All is picking up steam, given that health care was the single most important issue for voters and Democrats gained the largest pick-up of Congressional seats since Watergate. It has been particularly fascinating to me that Medicare for All supporters also won elections in swing districts and traditionally conservative states.
Despite the growing support, there is no chance that Medicare for All will come to pass in the next two years. President Trump would veto it, even if it could get enough support in the Senate, which is highly unlikely. We might see the House try to pass a Medicare for All bill to get Republicans to vote against it in the face of increasing public support in anticipation of the 2020 races.
Proposition 2 passed by popular vote last month in Idaho, but there remain two threats to Medicaid expansion in Idaho.
One is whether the Legislature will vote to overturn the law or refuse to fund it. I predict that neither will happen. Prop. 2 won by a pretty clear margin. I think that lawmakers will realize and respect that the vote represents the will of the people. I do believe that lawmakers will fund the expansion, as I think they will believe it is their responsibility to the people to do so.
There is some concern that Idaho may seek to implement work requirements as some other states have, but I think that while the Legislature will look at this, they will realize that putting a process in place to monitor work status is expensive and will add to the bureaucracy of government and ultimately decide against it.
The other threat is a constitutional legal challenge to the law that will be heard by the Idaho Supreme Court early in 2019. I predict that the challenge will fail, and the Supreme Court will uphold the validity of the law.
Next year will be a very challenging year for hospitals. Among the negative factors that will result in weakened financial performance: a continuing payor mix shift to governmental payers (Medicare and Medicaid), which is lower-margin or even negative-margin business; an increase in bad debt as employers and insurers continue to shift more costs to patients in the form of deductibles, co-insurance and co-pays; and a continued shift of business activity from inpatient to less profitable outpatient services.
Medicare for All may or may not be an existential threat to insurers, depending upon whether there is still a role for insurers to administer plans for the Medicare program, as they currently do with Medicare Advantage. No doubt insurers will be developing their lobbying strategy.
Insurers face another threat as more providers take on managing risk. Payers are, for the most part, reluctant to become third-party administrators. For those that fear this, the adoption of risk by providers remains low. However, the pressures on providers to take on risk will only increase over time.
On the other hand, some insurers are embracing this change and realizing that if providers successfully manage risk, this will confer a premium advantage that will result in market share gains when they are able to offer and sustain lower premiums than those plans that retain risk and rely on traditional unit cost pressures to keep costs down. This will be a particular challenge, given that I think premiums must and will stabilize close to current levels to appease regulators and to avoid pricing more people out of the market.
Some insurers will enter the provider space. Others will be acquired by providers, as we saw recently with the acquisition of Aetna by CVS Health. It remains to be seen whether CVS can leverage its acquisition of Aetna to lower costs and advantage Aetna health plans by enabling them to keep premiums down compared with competitors. As best I can tell, CVS is pinning its hopes on reducing unnecessary hospital admissions by managing patients more effectively in its MinuteClinics; I am unaware of any data showing that retail medicine services have been able to do this.
New Market Entrants
2019 will usher in the next generation of disruptive market entrants. One example: Carbon Health, a health-care startup that is trying to disrupt primary care by changing the model from one that is centered around doctors and hospitals to one that is centered around the patient. Key to this is the use of technology, including video visits and an artificial intelligence-assisted messaging system. Other startups similarly are attempting to leverage technology to disrupt primary care.
Babylon is a disruptor that seeks to combine the “computing power of machines with the best medical expertise of humans to create a comprehensive, immediate and tailored health service.” Babylon offers telemedicine services and a symptom-checker. I used the symptom-checker while I had a disease in mind, answering questions as if I had the symptoms of that disease, and it didn’t identify the disease as the most likely diagnosis, but it did fairly well and came up with a reasonable alternative diagnosis. Babylon also states that it uses artificial intelligence to help patients understand their current health condition and gives them practical insights into staying healthy.
These new market entrants are worth keeping an eye on to see if they can improve the outcomes of chronic diseases, better coordinate care, reduce unnecessary emergency room visits and admissions and reduce the total cost of care.
Many are variations of direct primary care (for example, offering subscription services for monthly payments above and beyond insurance premiums for prompt access and free office visits), so if traditional primary care practices can figure out how to make their services easily accessible, as I predict they will, the disruptees will become the disruptors.
Up until now, AI’s impact on health care has been limited. 2019 will be an inflection point. AI will improve the speed and accuracy of medical diagnosis by analyzing data quickly and accurately. These applications will improve the efficiency of physician workflows.
The research and development process for medications is painfully slow and expensive. AI will be able to explore chemical and biological interactions and early-stage clinical data to identify new treatments that are much more likely to prove to be effective, especially in the area of cancer treatments.
AI also has the potential to automate surgical procedures by robots, assisting the surgeon or in some cases, replacing the surgeon. Eventually (not in 2019), this technology could be used to perform emergency surgery in rural areas where there is no surgeon and little time to transfer the patient to a metropolitan center.
The Internet of Medical Things (IoMT)
Technology will advance remote monitoring of patients through wearables, smart sensors and mobile apps. Thirty billion IoMT devices are expected to be deployed worldwide by the end of 2019. Uber and Lyft are already creating health-care divisions to connect patients with providers. Uber will deliver meals; don’t be surprised to find Uber and Lyft delivering prescriptions to patients’ homes from the pharmacy.
Telemedicine is not a new concept, but its adoption has been rather slow. Expect utilization to increase significantly in 2019. More and more insurance companies are providing this as a covered benefit. As more people experience it, they will be repeat users and will expand use through word of mouth.
Virtual/Augmented Reality (VR/AR)
VR/AR has tremendous utility in clinical education and training. Expect more medical and nursing schools to adopt this technology. We will also see more use of VR/AR in surgery to assist and guide the surgeon in small spaces of the body or under complicated circumstances. This technology may also assist first responders in caring for the ill and injured, while recording critical information about the patient prior to arriving at the hospital. Finally, there is great potential for VR/AR to assist patients in treating their pain and reducing the use of addictive opioids.
Big Data and Data Analytics
The most widespread application of big data in health care is electronic health records systems. Data analytics will be developed that allow providers to glean meaningful, actionable data to improve care for patients and populations of patients, the insights from which would not be available from a casual review of the medical records. Predictive analytics will be developed that allow providers to identify patients at high risk for admission to the hospital or deterioration in their conditions, making possible proactive outreach and modification of their treatment and care plans to avoid costly hospitalizations, complications or even death.
St. Luke’s Health System
St. Luke’s Health System is going through a transformation. We are well on our way from fee for service to pay for value, with nearly a third of our revenue at full risk (global capitation). We are going through an organization design reshaping that moves us away from the hospital-centric model of most health systems to one that is truly population health-based. We are also focusing our service lines on improving outcomes and lowering the total cost of care and completely redesigning our end-to-end utilization. My predictions for next year are that we will see measurable improvement in outcomes and a bend in the cost curve for those populations we have under risk agreements.
About The Author
David C. Pate, M.D., J.D., is president and CEO of St. Luke’s Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.