Healthcare Predictions For 2015

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We felt small tremors in 2014 of the seismic changes underway. In 2015, I predict five changes to the core of the U.S. healthcare system: insurance, pharmaceuticals, supplies, medical services and payments. Let’s take a look at each of these trends, what they mean for the healthcare sector, and what they mean for you.

Walmart becomes your healthcare insurer

This October, Walmart tipped its hand by launching a healthcare insurance exchange online. However, the insurance products currently sold on its exchange do not have Walmart as the carrier, which will change in 2015.

Walmart’s public announcements thus far provide a clear preview of the insurance plan’s future design. Primary care through retail clinics and $4 generic drugs at the pharmacy will drive traffic into stores. For specialty care, the plan will leverage the Centers of Excellence program that Walmart already offers to its 1.2 million insured employees. In this program, consumers pay little to nothing out-of-pocket for knee, hip surgery, and cancer treatment if they go to a short list of high-quality medical centers like Mayo, the Cleveland Clinic, Mercy and Geisinger.

Startups sell into big pharma and become profitable

Despite a 5x increase in venture investments, most digital health companies are not profitable.  Digital health CEOs should look at pharma as its paying customer. Despite their vast differences, pharmaceutical manufacturers are starting to pay tech startups to solve their complicated problems.

Next year is going to be a tipping point, because spending and hiring within pharma’s commercial organizations are changing fast. Plus, the FDA published draft guidance on social media in July 2014. Suddenly, these corporations have large eMarketing teams and VPs of digital health. We are seeing CIOs from companies like Dell working at Merck. These indicators tell me that 2015 will be the year when pharma is willing to shop for best-in-breed companies that address their business problems.

Amazon undercuts the medical supply chain

Amazon sells a dizzying array of products. Catheters and surgical gloves are not on the market yet, but they will be soon. Doctors and practice managers are just like the rest of us — they love Amazon Prime for their homes, so why not for their practices?

Amazon will first target small practices and cutout group-purchasing organizations that take an undeserved cut of savings that could be passed on to physicians. If Amazon can ship you toilet paper in two hours, it can supply a small practice with gloves and gowns. The volume from these accounts will justify free shipping, especially when Amazon moves upstream into higher-margin products such as sutures, syringes and other commoditized supplies.

Hospitals become a channel for peer-to-peer lending

If you understand the flow of payments in healthcare, you can predict the trends. Consumers and employers are purchasing insurance plans with high deductibles. As a result, the first dollar that hospitals earn is now coming from consumers.

When they don’t pay, it hurts providers financially. What consumers don’t pay shows up as accounts receivable on hospital balance sheets and eventually turns into bad debt.

Many consumers are able and willing to pay their medical bills, they just can’t do it all at once. Peer-to-peer lending companies have paved the way for unsecured structure notes, where an individual’s loan can be financed by others.

Latinos become the most desired healthcare segment in the U.S.

There are 54 million Latinos living in the United States, constituting 17 percent of the population.

As hospitals compete for volume, they cannot ignore 1 out of 5 Americans. In order to win the loyalty of this untapped customer segment, we will see Latino-branded services with evening and weekend hours to serve dual-income families. Since these services will be built from scratch to provide high-quality care at low prices, they might leap frog the care that the rest of the population currently receives.

Change has historically come slowly and reluctantly to the healthcare industry, but thanks to widespread demand from the government, payers, and consumers for improvement in coverage and care, it seems to be speeding up.

I predict, and hope, that 2015 will be the year when leaders across the healthcare spectrum will welcome innovation and embrace much-needed change.

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