New players are entering the U.S. healthcare system and presenting potential challenges for traditional healthcare providers. Pharmacy retailer CVS is acquiring healthcare insurance giant Aetna, and also operates more than 1,000 MinuteClinics. Community health centers where patients can get their minor emergencies, vaccinations, and workplace physicals taken care of with no wait. Walmart is considering acquiring healthcare insurer Humana, which recently acquired a 40% stake in home healthcare provider Kindred Healthcare. Amazon, Berkshire Hathaway, and JPMorgan Chase are creating a healthcare company to address the spiraling healthcare costs for their own employees. Should they succeed, there's no telling how many employers will either emulate them or hire their healthcare expertise to benefit their own employees.
What does this all mean? That the distinctions between employers, payers, providers, and healthcare-related retailers are becoming more blurry by the week.“I think the biggest challenge in healthcare today is to recognize all the disruptions that are going on inside the market space," says Terry Carroll, Chief Digital Officer of the SPRING Network, which focuses on organizational strategy design. He has served several major healthcare provider organizations including Dartmouth-Hitchcock, Fairview Health Services, Detroit Medical Center, and Baystate Medical Center.
“Whether you look at CVS/Aetna, which is trying to push toward the retail approach or Amazon/JP MorganChase/Berkshire Hathaway, they're going to be bringing technology models and managing large populations that are more directly under their control. It is a fundamental shift."
What's driving these changes? As healthcare companies seek economies of scale, consumers are seeking convenience, explains David Chou, Chief Information and Digital Officer for Children's Mercy Hospital, Kansas City. “Everyone's trying to get to scale to play in the population health and wellness game," he says. “This would never have happened five years ago." Furthermore, the “on demand" economy is moving many aspects of medical services toward commodity status. “I'd rather use a telemedicine virtual care provider right now and pay a little more than go to my own facility to get treated," Chou adds. “People want that convenience, which is going to change how we operate."
Carroll says the technological sophistication of players like Amazon will present challenges for traditional providers who aren't used to operating in a 24/7, on-demand environment. “Our ability to utilize the same kinds of capabilities that these companies are bringing to the table is going to be a huge challenge for us, because they're not models that we're used to."
Things could be worse, notes Joe Dudas, Division Chair of Enterprise Analytics for Mayo Clinic. It took retailers 30 to 40 years to develop a technology infrastructure—point of sale inventory management systems, bar-coding, electronic commerce—while the healthcare industry has been installing equivalent systems rapidly over the past decade. “Modern-day medical records haven't been around that long and it was really just the last administration that forced that transition," he says. “Now that infrastructure is in place. The next step is going to be consumerism, and then quickly thereafter virtual care. It's going to follow a very similar transition, but happen a lot faster than when it happened in retail."
It is essential for labs to be ready to think in different paradigms as their organizations face these new players, whether they turn out to be competitors or partners. A lab may have to adopt unfamiliar technologies, do battle to maintain its position against a new retail lab company, or develop special services as part of an employee health monitoring program for a large employer. One piece of good news, Carroll says, is that the next generation workforce—both technology developers and healthcare providers— are “digital natives" who will have a fundamentally different approach to solving problems. “They think radically differently," he says. “I think we are going to see some real fundamental shifts in the way health and healthcare is delivered across this country. And I think it's time for that to happen, quite frankly."
Lab leaders must be prepared to participate in integrating multiple data sources to answer key questions about the value of their medical services, says Diane Kremitske, vice president of laboratory operations at Geisinger Health System. "What was the effect of having that test performed?" Kremitske asks. "Did it keep the patient out of the specialty office? Did it reduce length of stay?" Those types of questions can only be answered by combining multiple sources of data, from the lab itself, from the EHR, administrative systems, and insurance claims.