In the emerging Smart Health Market, a greater portion of buying power is shifting to consumers. As families become more sensitive to costs, they’re also demanding a system that works for them.
And what works? In a word: convenience!
There’s no doubt that consumer expectations for convenience in every aspect of life are energizing the trend toward “distributed sites of care.” What we mean is that care delivery is distributed among many sites, rather than being concentrated exclusively in the hospital and doctor’s office.
Let’s look at three recent indicators of the rise in distributed sites of care.
We might argue that telehealth is the ultimate example among the distributed sites of care. Telehealth can be delivered anywhere internet access is available, from retail stores and rural clinics to family homes and smartphone screens.
Recent data shows how this channel has taken off. From 2012 to 2017, national utilization of telehealth among the commercially insured grew 1,202% — with growth of 52% in 2017 alone. (FAIR Health) To be clear, the growth has had less to do with the nuts n’ bolts of technology and more to do with the policy changes that are allowing for reimbursement of telehealth.
For example, CMS just finalized a rule allowing Medicare Advantage plans to include telehealth delivered at home as part of the basic benefits package in 2020. (CMS) In Ohio, Governor Mike DeWine recently proposed a rule requiring state-regulated plans — which insure 1.7 million people — to cover telehealth to the same extent that in-person care is covered. (Cleveland Plain Dealer) Turns out Ohio is already in the top three when it comes to use of telehealth.
It wouldn’t be surprising to see telehealth reach critical mass within the next three years.
2. Easy-Access Care
When a consumer’s only option for care is a large hospital or doctor’s office, access often becomes an issue. That pain point has created serious opportunities for urgent-care and retail clinic expansion. Hundreds of new sites are opening every year.
But the opportunity era in this segment isn’t limited to treating simple acute conditions anymore. Easy-access primary care, backed by nontraditional players, is beginning to emerge as the next iteration.
Walgreens, for example, just announced it’s opening primary care offices in several Houston stores with as many as eight exam rooms and 2,500 square-feet of space. Note that this is in addition to its retail clinics. (Walgreens) Also, by this time next year, BlueCross BlueShield of Texas will be cutting ribbons on its new payer-owned primary care offices, which will include ancillary lab and imaging services. (BCBSTX)
The crossover here might have some health systems concerned about losing market share, and rightfully so.
3. Home-Based Care
Home-based care is still trying to find its momentum as a distributed site, but a lot of opportunity for growth remains.
In Medicare fee-for-service in 2017, there were 3.7 million home health admissions, a 0.5% increase over 2016. About 11,500 home health agencies served the population. (CMS) No doubt the number will grow as consumer demand and quality metrics support the case for more at-home care.
In fact, new data has demonstrated that home-based care can be appropriate and cost-effective even after a visit to the emergency department.
Medicare patients in a recent study who received care at home immediately after an emergency visit accumulated total costs of $13,012 over 90 days, compared with $20,325 for patients who were treated in the hospital. And readmissions were lower too, with 23% of the home-health folks experiencing hospital admissions and 33% of the inpatient folks experiencing readmission. (American Journal of Accountable Care)
Our Take: The Smart Health Market will reward the providers who have scale, but that scale must be built on high-quality, convenient, distributed sites of care. Traditional health systems will need to create more accessible care channels or at least partner with organizations to provide them. And the biggest challenge within the distributed sites of care will be reimbursement, of course.