A Vision for U.S. Healthcare's Radical Makeover

7/31/2019 A Vision for U.S. Healthcare's Radical Makeover

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A Vision for U.S. HealthcaresRadical MakeoverJust as the publishing and music industries were disruptedand rebuilt by powerul transormative levers, the healthcareindustry is on the verge o a similar disruptive change thatwill signifcantly reshape our experiences and reorient ourexpectations across the provider and payer value chain.


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2 FUTURE OF WORK September 2012

The U.S. healthcare model is unsustainable. This is not news. What is new, however,

is the very tangible evidence o an industry being reinvented, rom how care is

managed, to how it is paid or, to how it is delivered.

Healthcares unsustainable cost equation can be highlighted in numerous ways:

healthcare as a percentage o gross domestic product (17.9% in 2011); 1 healthcare

expenditures as a percentage o the ederal budget (23% in 2011);2 and the transer

o rising healthcare costs to employers and consumers (since 2008, the annual cost

o insurance coverage or a amily o our has risen nearly 25%, rom $15,609 tomore than $20,728).3 These actors have led to additional concerns: a lack o clarity

and transparency about prices, dissatisaction among patients and physicians with

how care is delivered and growing questions about how to pay or care.

The industry, as well as state and ederal agencies, have been responding to these

issues, generating these strong market currents:

Redistributed accountability and risk, as lines between payers and providersblur. Large healthcare plans are acquiring hospital systems and home care com-

panies; hospital systems create and sell health plans. We see payer and provider

clients working more closely together to improve quality while fnding ways to

reduce the costs o therapies and procedures.

Rise o integrated health management. The industry is experimenting withAccountable Care Organizations (ACOs) and Patient-Centered Medical Homes

(PCMHs). These entities coordinate a comprehensive range o care or patients

and consumers under a single, oten virtual, roo. ACOs and PCMHs hope to

streamline the healthcare value chain or consumers and patients, eliminating

the need or them to fnd their own specialists and coordinate their own care.

Increasing vertical/horizontal integration and diversifcation. Merger and ac-quisition activity is brisk across the industry. Among our client base, we see sig-

nifcant interest in broadening rom local to regional and even national customer

bases through mergers and acquisitions. Healthcare players are also expanding

their expertise, with health plans purchasing caregivers (e.g., WellPoint intro-

duced a patient-centered primary care program) and providers launching their

own health plans to consumers, such as that administered by the University oPittsburgh Medical Center.

The retailization o healthcare. Healthcare clinics are now available in phar-macies, big box retail outlets and grocery stores, and such outlets will grow.

More marketing o services and health plans will be direct to consumers, with

the industry oering more individualized products and a greater emphasis on

customer service.

Despite the momentum behind these market orces, they cannot transorm health-

cares business model. These initiatives the M&A activity, ACOs, redistributed

fnancial risk, etc. generate only incremental improvements in cost reduction,

quality and efciency. Conversely, creating a truly sustainable oundation or

healthcare will require the industry to eliminate substantial costs, embrace new

ways o delivering care and improve the quality o that care.

Achieving those goals means the industry must combine incremental improve-

ments with the power o truly disruptive transormative orces, rom new

technology, to radically dierent diagnostic tools, to virtualized means o caring or

patients. In other industries, similar disruptive orces have dramatically changed

cost and service delivery equations. Think along the lines o how Apple transormed

the music business with the iPod, how Amazon is reshaping publishing with its

electronic delivery model and how Netix reimagined the home video market.


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COGNIZANTI THOUGHT LEADERSHIP 3

Disruption and reinvention o the same order is required in healthcare. And it is

already occurring. Signs o radical transormation are emerging, driven by powerul

levers that are enabling the reinvention o the industrys business model.

Transforming Healthcares Business ModelRethinking healthcare to create a new, sustainable business model requires

existing players, as well as newcomers to the industry, to disrupt current models

by harnessing the ollowing transormative orces some o

which already are reshaping the industry.

Technology: Portions o the healthcare value chain will beradically transormed as segments o the industry are dis-

intermediated through new business models, new sotware

and new diagnostic capabilities. Some examples: The U.S.

Food and Drug Administration is evaluating whether certain

prescription drugs could be dispensed through sel-serve

kiosks that ask patients about their symptoms and make

drug selection suggestions.4 Tiny robots tethered to physi-

cians assist in a variety o surgeries, and researchers say

these are precursors to sel-guided nanobots that will revo-

lutionize surgery.5 Researchers at the University o Geor-

gia have developed a quick, inexpensive way to test or u

viruses using nanoparticles that can be used in any clinic.6

Innovations like these shake up healthcares traditional structures, making it

possible to eliminate costs while maintaining and even improving access to and

the quality o care.

Creating a truly sustainable

oundation or healthcare

will require the industry to

eliminate substantial costs,

embrace new ways o

delivering care and improve

the quality o that care.

Figure 1

The Emerging Healthcare Ecosystem

Pharma

Rx RegistriesRx Behavioral DataRx Generic Profiles

Disease ManagementServices

Wellness IncentivesDisease ManagementCoachingRx Education

Rx Vitals UpdatesRx Medical Conditions

Rx TreatmentsRx Medical Outcomes

Rx RegistriesRx Medical Outcomes

ePrescriptionsReplenishmentRx Compliance

HealthcareProviders

Treatments Rxs

DrugsCo-Pays

Rx (Refills)AllergiesConcomitant RxsAdverse Events

WellnessOutcomes/BehaviorUpdates

Benefits EligibilityFormulariesPayments

Benefits EligibilityFormulariesPayments

Benefits Eligibility

FormulariesClaims PaymentsWellness Incentives

PremiumDiscounts

TreatmentsRxs

OutcomesEmployeeEnrollment Data

Employers

Payers

EHR/PHR

Wellness Programs

Wellness Incentives

Child HealthMonitoringAlerts

School NurseCase Manager

AlertsPeriodic Reports

Dependent MonitoringInterventions

Family HealthManager

Call Center

Coaching

Consumers

Disease ManagementCoaching

Disease ManagementEducation

Wellness Education

DrugInfo


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Virtualization: Technology innovation will create new business models capableo providing care anywhere and allowing new entrants to leaprog bricks and

mortar and go directly to virtualized, integrated healthcare models. All health-

care will not be local.

This is already becoming true: Web sites such as Consult A Doctor (consultadr.

com) and Virtuwell (virtuwell.com) let anyone register and receive an e-consult

rom a physician or other caregiver. Partners Healthcare oers e-mail-based

second opinions to patients and their physicians. Patients in remote villages

Quick Take

Helping consumers and patients fll an active

role in healthcare is an essential component

o the new healthcare business model. The

explosion o mobile devices and apps dovetails

with this requirement. Mobile health, orm-health, ulflls two key needs: enabling

consumers to manage their health service rela-

tionships more easily and giving individuals

powerul portable tools or managing chronic

conditions and staying well.

One application we have developed at our

clients request will allow consumers to easily

manage their health plans rom a variety o

computing platorms, including smartphones

and tablets. The app enables them to search

or providers, receive immediate explanation o

benefts notices, get messages about coveragechanges, obtain a secure ID card or use at

physician ofces and emergency departments,

and use a variety o ease-o-use eatures, such

as click-to-call.

Another app oers personalized wellness

management via smartphone or tablet (see

below). This app enables patients and members

to easily enter or automatically download

health inormation, such as blood pressure,

blood sugar, cholesterol levels, weight, body

measurements, etc. Then, in easy-to-read

charts, the app shows them how their currentresults relate to their goals and oers a variety

o tips and inormation to help them achieve

those goals.

Authorized physicians may access data rom

the app to monitor patient progress more

requently, without the time or expense o

ofce visits. Plans and physicians may also

customize the app to be alerted to changes in

a patients condition that require intervention.

Employers may even use the app in wellness

campaigns, with games and graphics encour-

aging participation. The objective o theseeatures is to prevent minor conditions rom

escalating to more serious problems that cost

more to treat and manage.

Apps like these will put health management

tools literally at the fngertips o consumers

and patients, giving them the more active role

in their health choices they are demanding

and that will help reshape healthcare.

Mobilizing via M-Health

4 FUTURE OF WORK September 2012


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throughout the world are accessing high-quality healthcare through mobile and

telepresence applications.7

Globalization: Due to technology advances and process virtualization, the in-dustry will have access to the highest-quality/lowest-cost services anywhere,

creating a unique opportunity to transorm care delivery in the U.S. and around

the world. Sustainability will require leveraging global supply chains and oper-

ating systems or quality and talent (e.g., oshore reading o radiology images

and coding medical charts), thus eliminating major portions o cost. Similarly,U.S. health providers can oer their expertise to expanding global markets, as

Childrens Mercy Hospitals & Clinics in Kansas City has done

in creating a telemedicine partnership with a large hospital

in Guangzhou, China.8

Disruptive innovation: Sophisticated medical diagnosticprocedures will continue to move to less expensive set-

tings, rom hospitals, to physician ofces, to retail clinics,

to homes. Researchers and entrepreneurs can draw on the

200 terabytes o human gene sequence data generated by

the 1000 Genomes Project, which is available ree and on-

line.9 Small labs can already use more aordable genome

sequencing tools rom companies such as Roche and Illu-

mina, Inc. A logical next step is making gene-sequencing

part o a typical checkup so that a persons care can be

truly personalized or the ultimate in preventive care and

disease management.

Next-generation analytics: Clinical decision support systems that leverageartifcial intelligence and big data will revolutionize diagnostic practices, per-

sonalized care planning and actual patient care. Blue Health Intelligence, the

analytics arm owned by Blue Cross Blue Shield Association, has launched a pilot

program using predictive analytics to improve the care o Arkansas diabetes

patients while reducing costs.10

Similarly, our clients increasingly are using the big data stores generated by the

explosion o cloud-powered mobile and social computing with advanced analytics

to enable act-based decision-making. Doing so moves companies rom historical

reporting on transactional data to more proactive planning, enabled by the rich

insights contained within the terabytes o data generated by clinical systems.

Demographic shits: Consumers want their healthcare accurate, ast and reli-able, and are prepared to be more involved in it. We are seeing an explosion in

sel-care ueled by mobility, technology and diagnostic innovation. More than 44

million healthcare apps will be downloaded this year, and the number o U.S. pa-

tients remotely monitored will rise to 3 million.11 Evidence is growing that mobile

health, or m-health helps individuals take better care o themselves. Mobile

remote coaching and fnancial incentives improved diet and wellness activities

among patients managing chronic conditions, according to a study backed by

the National Institutes o Health.12 Our clients are working with us to develop

apps to make care more convenient and personal or consumers, patients andphysicians (see sidebar, next page).

A healthcare model incorporating these orces would necessarily be a dynamic one.

Just as consumers frst experience the convenience and lower cost o e-books rom

Amazon or buying music one tune at a time rom Apple and then come to expect

similar benefts rom all their suppliers o books and music, the new healthcare

business model similarly will shit expectations with new healthcare experiences.

Further, transormative processes are already under way. Trends such as techno-

logical innovation and virtualization will continue to reshape healthcare, regardless

A logical next step is making

gene-sequencing part o a

typical checkup so that a

persons care can be truly

personalized or the ultimate

in preventive care anddisease management.


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6 COGNIZANTI THOUGHT LEADERSHIP September 2012

o regulatory shits. The question is how much o the transormation will be driven

by entrepreneurial new entrants to the industry and how much by established

players reinventing themselves. It may be easier or the new entrants to envision,

and establish, new models.

How to Embrace ReinventionIt is vitally important to understand that radically transorming healthcare will not

be accomplished through an incremental, piecemeal approach, such as deploying

a mobile technology here or a new sel-care option there. Reinventing todays

healthcare model requires visionary thinking and strong champions to overcome

embedded practices and the common belie that a series o small improvements

will add up to radical change. Instead, the model must reimagine how healthcare

can be delivered, how its quality can be measured, how it will be priced and who will

pay or it.

Prospering perhaps even surviving in this rapidly changing world will depend on

how well your organization understands where it will ft in the new health ecosystem

and how it will achieve that position. Consequently, organizations need to devote

time and resources to visioning and planning to provide the necessary oundation

or solid execution. Our experience tells us that without this preparation, organiza-

tions can quickly lose their customer base to new entrants or competitors that have

been more adept at reinventing themselves. We, thereore, recommend taking the

ollowing steps to get started on participating in the new era o healthcare:

Develop a broader strategic vision o how the industry could change. Un-derstand the trends and other orces reshaping the industry and consider vari-

ous end state scenarios. End states might range rom all primary care being

delivered virtually and/or at retail clinics, to a steady increase in individuals and

employers paying or a wider range o care directly instead o through health

insurance plans, to a dozen healthcare super entities oering comprehensive

cradle-to-grave services under a single banner.

Determine your company or organizations role in the new healthcare value

chain, as well as where other entities will ft. Who are your current competi-tors? Where might new competitors arise? What parts o your business are grow-

ing?

What are the implications or your company or organization depending on itsrole in a particular scenario? A health plan might see that trends such as direct

contracting with employers and hospital system-driven ACOs are on the rise in

its market area and determine its best ft is to oer inormation processing and

risk management to those ACOs.

How will customer behavior or buying patterns change? Will social networksbe a strong inuence on your customer base? This is likely to be the case among

the millennial population. Similarly, digitally connected consumers tend to want

mobile transactions and be accustomed to smaller-dollar transactions.

What customers will you want to attract/win in the uture? And a corollary:What will be a best-in-class experience or those customers? Defning your tar-

get population is critical to understanding the types o reinvented processes

and rewiring youll require. Serving a younger, healthier population will require

a strong, customer-centric mobility strategy. I long-term care patients are your

target, its caregivers that will require mobile devices to deliver clinical intelli-

gence at the point o care.


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ENABLER 8: FLEXIBLE SERVICE DELIVERY (NINTH OF A MULTI-PART SERIES) 7

Toward the New Sustainable Model: A RoadmapWith your vision and strategic plan in place, your organization is better equipped to

understand or create a role or itsel in the reinvented healthcare value chain and

how its business model must change to support that role.

To create the roadmap to your uture, you must understand how to use transorma-

tive levers new technologies, virtualization, globalization and diagnostic innovation

to achieve the position you want in the transormed industry. I you have manymultinational employers in your region with highly mobile employees, and your goal

is to provide anytime, anywhere care to them, you will need to investigate global,

virtual resources, as well as mobile and telepresence technologies.

Containing the costs o reinvention is critical, so consider identiying potential

partners and allies that have the skill sets you require. Look outside the healthcare

industry; telecommunications and other high-tech companies may have more o the

capabilities you need.

As you defne the necessary transormation activities, create and implement a

governance model to guide and monitor these activities.

Reinventing healthcare delivery undoubtedly will be challenging, requiring shits in

thinking, training and attitude rom consumers, as well as caregivers and industryplayers. Paradigm shits oten seem unlikely, even impossible, beore they occur.

But when they do, we can hardly imagine how we lived without our e-books, smart-

phones and streamed video.

In the near uture, as we text our nurse-coordinators with questions, use our apps

to monitor resting heart rates, transmit home test data and write smaller checks or

healthcare procedures, well marvel at how long we managed with our outmoded

current system.


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8 COGNIZANTI THOUGHT LEADERSHIP September 2012

About the AuthorsPatricia (Trish) Birch is a Cognizant Vice President and leads the companys

Healthcare Consulting Practice within Cognizant Business Consulting. She has

25 years of experience in healthcare operations and management consulting and

serves on the board of directors of Sylvania Franciscan Health, which provides

healthcare services in the midwest and south-central U.S. Trish is also a published

author and speaker on issues facing the healthcare industry. She earned a BSBA in

Finance from Boston University and an MBA from Jacksonville University. Trish can

be reached at [email protected].

Bill Shea is an Assistant Vice President within Cognizant Business Consultings

Healthcare Practice. He can be reached at [email protected].

The authors acknowledge the contributions of Jagan Ramachandran and Dr. Keerthi

Kumar, consultants with Cognizant Business Consultings Healthcare Practice.

Footnotes1 National Health Expenditure Projections 2011-2021, Centers or Medicare &

Medicaid Services, http://www.cms.gov/Research-Statistics-Data-and-Systems/

Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/

Proj2011PDF.pd.

2 Historical Tables, Ofce o Management and Budget,

http://www.whitehouse.gov/omb/budget/Historicals.

3 2012 Milliman Medical Index, Milliman Research Report, May 2012,

http://insight.milliman.com/article.php?cntid=8078 .

4 FDA Considers Expanding Defnition o Nonprescription Drugs,

U.S. Food and Drug Administration, March 23, 2012,

http://www.da.gov/Drugs/ResourcesForYou/SpecialFeatures/ucm297128.htm.

5 Snakebots Aid Docs in Surgery, Associated Press, May 29, 2012,

http://www.modernhealthcare.com/article/20120529/INFO/305299965/

snakebots-aid-docs-in-surgery.

6 New Flu Test rom UGA, Athens Patch, Oct. 27, 2011,

http://athens.patch.com/articles/new-u-test-rom-uga.

7

Stephanie Novak, Exploring the Role o Mobile Technology as a Health CareHelper, The New York Times, May 13, 2012, http://www.nytimes.com/2012/05/14/

world/arica/exploring-the-role-o-mobile-technology-as-a-health-care-helper.

html?_r=1.

8 David Twiddy, Childrens Mercy Starts Telemedicine Partnership with Chinese

Hospital, Kansas City Business Journal, May 25, 2012, http://www.bizjournals.com/

kansascity/print-edition/2012/05/25/childrens-mercy-starts-telemedicine.html.

9 1000 Genomes Project Data Available on Amazon Cloud, NIH News, March 29,

2012, http://www.nih.gov/news/health/mar2012/nhgri-29.htm.

10 Blue Health news release, March 30, 2012.

11 Mobile Healthcare Opportunities: Smartphone Apps, Monitoring

& mHealth Strategies, 2011-2016, Juniper Research, Dec.1, 2011,http://www.juniperresearch.com/reports/mobile_healthcare_opportunities .

12 NIH-Funded Study Examines Use o Mobile Technology to Improve Diet and

Activity Behavior, NIH News, May 30, 2012, http://www.nih.gov/news/health/

may2012/nhlbi-30.htm.
http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdfhttp://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdfhttp://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdfhttp://www.whitehouse.gov/omb/budget/Historicalshttp://insight.milliman.com/article.php?cntid=8078http://www.fda.gov/Drugs/ResourcesForYou/SpecialFeatures/ucm297128.htmhttp://www.modernhealthcare.com/article/20120529/INFO/305299965/snakebots-aid-docs-in-surgeryhttp://www.modernhealthcare.com/article/20120529/INFO/305299965/snakebots-aid-docs-in-surgeryhttp://athens.patch.com/articles/new-flu-test-from-ugahttp://www.nytimes.com/2012/05/14/world/africa/exploring-the-role-of-mobile-technology-as-a-health-care-helper.html?_r=1http://www.nytimes.com/2012/05/14/world/africa/exploring-the-role-of-mobile-technology-as-a-health-care-helper.html?_r=1http://www.nytimes.com/2012/05/14/world/africa/exploring-the-role-of-mobile-technology-as-a-health-care-helper.html?_r=1http://www.bizjournals.com/kansascity/print-edition/2012/05/25/childrens-mercy-starts-telemedicine.htmlhttp://www.bizjournals.com/kansascity/print-edition/2012/05/25/childrens-mercy-starts-telemedicine.htmlhttp://www.nih.gov/news/health/mar2012/nhgri-29.htmhttp://www.juniperresearch.com/reports/mobile_healthcare_opportunitieshttp://www.nih.gov/news/health/may2012/nhlbi-30.htmhttp://www.nih.gov/news/health/may2012/nhlbi-30.htmhttp://www.nih.gov/news/health/may2012/nhlbi-30.htmhttp://www.nih.gov/news/health/may2012/nhlbi-30.htmhttp://www.juniperresearch.com/reports/mobile_healthcare_opportunitieshttp://www.nih.gov/news/health/mar2012/nhgri-29.htmhttp://www.bizjournals.com/kansascity/print-edition/2012/05/25/childrens-mercy-starts-telemedicine.htmlhttp://www.bizjournals.com/kansascity/print-edition/2012/05/25/childrens-mercy-starts-telemedicine.htmlhttp://www.nytimes.com/2012/05/14/world/africa/exploring-the-role-of-mobile-technology-as-a-health-care-helper.html?_r=1http://www.nytimes.com/2012/05/14/world/africa/exploring-the-role-of-mobile-technology-as-a-health-care-helper.html?_r=1http://www.nytimes.com/2012/05/14/world/africa/exploring-the-role-of-mobile-technology-as-a-health-care-helper.html?_r=1http://athens.patch.com/articles/new-flu-test-from-ugahttp://www.modernhealthcare.com/article/20120529/INFO/305299965/snakebots-aid-docs-in-surgeryhttp://www.modernhealthcare.com/article/20120529/INFO/305299965/snakebots-aid-docs-in-surgeryhttp://www.fda.gov/Drugs/ResourcesForYou/SpecialFeatures/ucm297128.htmhttp://insight.milliman.com/article.php?cntid=8078http://www.whitehouse.gov/omb/budget/Historicalshttp://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdfhttp://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdfhttp://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/Proj2011PDF.pdf


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A Vision for U.S. Healthcare's Radical Makeover