By Rutesh Shah, CEO, Infostretch
The healthcare industry is ripe for disruption and transformation. According to McKinsey & Company, U.S. pharma is “in a state of flux.” Seismic shifts are happening, from significant merger and acquisition (M&A) activity to pharmacy store closures to changes in strategic partnerships between major health insurers and pharmacy benefit managers (PBMs), and the seemingly inevitable entry of Amazon into the market. Moreover, the healthcare ecosystem continues to face challenges as it attempts to comply with regulations like HIPAA and HITECH.
During this period of change, McKinsey’s research establishes three imperatives for healthcare businesses to consider. The first is to pursue business models that deliver a lower total cost of care for consumers and employers. The second involves leveraging data aggregation and big data analytics to generate insights and create value, and the third is to put the consumer at the center of everything by creating innovative ways to bring more consumer-driven insights and actions into the business.
The growth in digital health indicates that many businesses are acting on these imperatives and are finding commercial success. The digital health sector currently is estimated at $86.4 billion and is predicted to grow by almost 30 percent year-over-year through 2025. But with such a vast and complex industry like healthcare, it is challenging to appreciate the realities of digital disruption without drilling down into specific sub-sectors and profiling some of the disruptors that are in the process of altering their landscapes.
Following are some examples of how the “value pool” is shifting in this industry, resulting in cost savings for patients through the elimination of waste.
Pharmacy benefit management value pool shifts by removing inefficiencies
Pharmacy benefit management (PBM) includes third-party administrators for prescription drug programs at insurance companies, businesses, self-insured employers and government health plans. PBMs have a vast market valuation of $368 billion, as of 2018, within the U.S. healthcare system and an expected annual growth forecast of more than 9 percent.
Despite the size of the market, however, many PBMs do not have the technical sophistication to flourish in the digital world, which has given rise to companies such as RxSense. Previously a PBM, RxSense pivoted to meet the real-time needs of customers by providing a business-to-business (B2B) digital platform for the whole PBM industry. Its goal is to bypass problems with legacy PBM systems, including a lack of innovation, inefficiencies, inflexibility and challenges around accuracy and transparency.
The next step beyond digitization for players such as RxSense will be the application of artificial intelligence (AI) and machine learning technologies to further increase administrative efficiency, drive down costs and, ultimately, improve clinical outcomes.
Traditional pharmacy value pool shifting with digital technology and coupons
Compared with the rest of the world, drug prices are too high across the U.S., and many companies are trying to solve this problem. The high prices are rooted in how drug manufacturers charge to recover the high cost of research and development (R&D) and compliance overheads.
To address this complex problem in a simple way, companies like GoodRx gather prices for more than 70,000 pharmacies across the U.S. and present up-to-date information about what drugs cost from different pharmacies, empowering the patient to select the most cost-effective solution for their drug purchase.
According to GoodRx, more than 10 million Americans use its service before buying drugs, resulting in savings of more than $9 billion in prescription drug expenses since 2011.
Hospital infusion value pools shifting with digital medicine
According to a recent study, around half of those with a health condition skip their medication on occasion, creating a number of challenges. Not only can non-adherence to medication negatively impact a person’s health, but it can also result in additional visits to caregivers, hospital emergency rooms and even long-term hospitalization. Non-adherence to medication is estimated to cost the U.S. healthcare system as much as $300 billion a year.
To address such problems, Proteus Digital Health has developed a digital solution to help patients achieve their health goals by taking their medications as prescribed, including patients who have not been able to reduce their A1C or blood pressure levels because of difficulty following prescribed dosage schedules. Digital medicines use ingestible sensors, a wearable sensor patch, a mobile app and a provider portal to give patients, their healthcare providers and caregivers accurate, real-time information needed to monitor, maintain and amend treatment schedules.
By gaining access to Proteus’s accurate and timely data, healthcare providers can diagnose the root cause for non-adherence and offer the appropriate corrective response, giving physicians improved clinical outcomes by determining the effectiveness of medication treatment.
Patient care value pool shifting with DevOps
Driven by the knowledge that patients increasingly expect digital capabilities from healthcare providers, one of the nation’s largest healthcare provider sought to increase the speed and efficiency of its digital output. In 2016, the company began modernizing its software engineering process by implementing a DevOps strategy at scale throughout the enterprise. They adopted a microservices architecture that incorporates loosely coupled, modular software building blocks, cloud and platform as a service (PaaS) technology.
A key aspect of this DevOps initiative was to acknowledge and address the culture change required for developers and testers to change workflow behaviors and processes. This was accomplished in large part by tapping a network of “change leaders” that helped others in the organization understand and accommodate for the new digital processes.
The DevOps strategy has positively impacted its patients, who can now complete forms and pay for services from any location, and teleconsult or videoconference with doctors. Millions of their members registered for self care on the company’s website, and more than 60 percent of patient encounters occurred via the website or mobile apps. Moreover, patients have digitally filled 28 million prescriptions online and viewed more than 50 million lab results.
As these examples indicate, the best way to avoid being digitally disrupted in the healthcare market is by becoming a technology disruptor, and this holds true for or both legacy and digital native healthcare organizations. Healthcare market leaders will be those that embrace the radical changes driven by digital technologies.